A lot to watch in the coming months regarding home sales, house price data, inventories, and at a larger scale, the Federal Reserve.
Recent housing data has been positive with the National Association of Home Builders (NAHB) reporting that builder confidence shifted into positive territory for the first time in 11 months. Looking ahead, NAHB Chief Economist Robert Dietz said, “The Federal Reserve nearing the end of its tightening cycle is good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans.”
Look for sales of new homes to continue to increase with high inventories compared with sparse inventories in the existing home sector. The NAHB said that new home inventory was 31% of total inventory in May. Historically it is typically 10% to 15%. Further, the pace of resales is down 20% from a year ago, while the rate of new home sales is up 20% from a year ago.
On the home price front, the latest annual gain seen by CoreLogic was 2%, well below the lofty 20% gains seen in June of 2022. Forecasts show annual U.S. home price gains increasing to 4.6% by April 2024.
And that takes us to the Fed. Fewer Fed rate hikes and a gradual improvement in mortgage rates could give added support to the housing sector.
Bottom line: The home purchase market will never go away because new families are formed every day and the need for housing will always be a constant demand in the U.S.
Source: Mortgage Market Guide
