High mortgage rates and tight inventory are slowing home sales in the D.C. region, leading to predictions of a slowdown in the housing market and the possibility of a market freeze if inflation and interest rates increase.
The current housing market is facing challenges due to rising interest rates and higher prices, leading to a slowdown in home sales, but the market is more resilient and better equipped to handle these fluctuations compared to the Global Financial Crisis, thanks to cautious lending practices and stricter regulations.
New home sales in the US increased by 4.4% in July, outperforming expectations and highlighting the continued demand for new construction due to a shortage of existing affordable homes. Despite rising mortgage rates, buyers are turning to new homes, causing a decline in sales in the resale market. However, as mortgage rates continue to rise, builder sentiment may be negatively impacted and prices may need to be adjusted to attract buyers.
Rising interest rates and a shortage of inventory are causing potential home sellers in Reno-Sparks to stay put, leading to a decrease in sales inventory and higher prices for buyers.
Mortgage rates topping 7% have led to a significant drop in mortgage applications for home purchases, with last week seeing the smallest volume in 28 years. The increase in rates, driven by concerns of high inflation, has priced out many potential buyers and contributed to low housing supply and high home prices. As a result, sales of previously owned homes have declined, and homeowners are reluctant to sell their properties due to the higher rates. Some buyers are turning to adjustable-rate mortgages to manage the increased costs.
The housing market in 2024 is expected to remain challenging for both buyers and sellers, with high mortgage rates, steep home prices, and low inventory levels, but if mortgage rates cool as predicted, market activity should increase.
Sales of existing homes have declined due to the rise in mortgage rates, but the demand for new homes is increasing as buyers are hesitant to sell their current homes with low-interest mortgages.
Despite high interest rates, house prices in the US have not declined, leading to frustration and confusion in the housing market as buyers face fierce competition and limited inventory.
The U.S. housing market is projected to remain stagnant until 2024 due to high mortgage rates and limited supply, according to Fannie Mae economists.
Zillow predicts that US home prices will continue to rise, with a 6.5% increase over the next 12 months, driven by tight inventory levels and high demand, while other firms like Moody's Analytics and Morgan Stanley believe there may be a decline in home prices by the end of 2024.
Home prices in the U.S. rose for the fifth consecutive month in June, despite high mortgage rates, with national prices increasing by 0.9% and only down 0.02% from their peak in June 2022, according to the S&P CoreLogic Case-Shiller index. However, there were significant regional differences, with cities on the West Coast experiencing some of the biggest declines. The housing market continues to face challenges due to low inventory and slow new construction.
Home prices in the US have continued to rise for the fifth consecutive month, reaching near all-time highs, although high mortgage rates could impact further price gains for the rest of the year. Cities in the Midwest and New England saw the most notable price acceleration, while cities in the West experienced year-over-year price drops. Low inventory remains a challenge, with few homeowners wanting to sell, leading to higher prices and increased competition for available homes. In contrast, the rental market is offering more affordability as rental inventory increases.
Stocks are expected to decline as mortgage rates soar, causing many Americans to be unable to move and resulting in a bubble in home prices, according to economist David Rosenberg.
US housing inventory continues to be tight, with a 9.2% decrease in the number of homes for sale compared to last year, marking the fourth consecutive month of annual declines, although total inventory has shown monthly increases and is up 19% since January.
In August, the number of homes actively for sale decreased by 7.9% compared to the previous year, while the total number of unsold homes, including those under contract, decreased by 9.2%.
The recent downturn in global property prices is ending as average home prices are expected to fall less than anticipated and rise into 2024, according to a Reuters poll, due to factors such as high savings, limited supply, and rising immigration. However, this poses challenges for first-time homebuyers and rental affordability is expected to worsen.
Home prices, which had been steadily rising since January, may be starting to decline again due to weakening month-to-month gains and higher mortgage rates.
Low inventory, high mortgage rates, and high prices have created a difficult housing market, making it challenging for house hunters to break into the market and leading to a substantial decline in purchases by real estate investors.
The housing market is entering its slow season and home sales may be impacted by high mortgage rates, but home builder stocks could remain strong.
Rapidly falling house prices have caused a "cost of owning crisis," with tens of thousands of homeowners falling into negative equity over the past year, making it difficult to sell or remortgage properties. Experts predict that more households will face difficulties as house prices continue to decline, with the Government's tax and spending watchdog expecting a 10% fall in prices. However, there are expectations of a rebound in house prices in the future, particularly for those intending to live in their homes for several years.
Homebuilders are thriving due to a chronic shortage of existing housing inventory, leading to increased home prices and strong sales, according to KB Home CEO Jeffrey Mezger. The lack of inventory is also reflected in the significant drop in active home listings, with only Austin returning to pre-pandemic levels, while other markets have experienced substantial declines. Despite rising mortgage rates, the scarcity of existing inventory has prevented a steep national home price decline.
The housing market has experienced significant changes, with high mortgage rates and low inventory leading to slower sales and longer time on the market, but experts predict that mortgage rates will eventually decrease and home prices will continue to appreciate, with no imminent crash expected; the market is expected to shift towards a more balanced state in the next five years, and the suburban market is predicted to remain strong, particularly in areas with rising populations.
The current housing market has defied expectations of a downturn in real estate prices caused by surging mortgage rates, with prices and demand remaining strong due to increasing household formation among baby boomers, according to a Wall Street economist.
The housing market activity remains subdued due to fluctuating mortgage rates and low housing supply, leading to decreased demand and affordability challenges for potential homebuyers.
Furniture retailers are experiencing a significant sales slump as consumers shift their spending away from large-ticket furniture pieces and towards other categories, reflecting a broader shift in spending patterns since the pandemic. Factors such as rising home prices, high mortgage rates, and reduced home purchase activity have contributed to the slowdown, although some retailers are optimistic that furniture purchases may increase in the future.
Mortgage rates remain elevated, slowing housing market activity, and while home prices are not likely to fall significantly, rates are projected to decrease in 2023 and 2024.
Real estate investor Sean Terry predicts a "Black Swan" event in the US housing market within the next year due to affordability pressures caused by high interest rates and housing prices, which could lead to a market crash. However, experts argue that a crash like the one in 2008 is unlikely due to the current housing shortage and limited supply of homes. The future of the housing market will depend on factors such as economic stability, mortgage rates, and homebuilders' ability to increase supply.
Record-high mortgage payments and low home inventory are making the housing market historically unaffordable for Americans, with homebuyer demand and listings both experiencing significant declines.
Buyers in the housing market are resilient as they face low inventory and high prices, with nearly half of homes selling above list price and many making multiple offers to secure their dream homes, according to a survey by Bright MLS.
The Greater Boston housing market experienced a slow month in August, with home sales dropping to their lowest point for the month since 2010, primarily due to higher interest rates and a shortage of available homes for sale, leading to increased competition and higher prices for buyers.
US home building declined in August, with housing starts dropping to the lowest level since June 2020 due to elevated mortgage rates and limited inventory, despite an increase in building permits.
The U.S. housing market is facing a shortage of homes, which is driving up prices and making it difficult for buyers to find affordable options, and the problem may get worse as builders become less confident and hesitant to construct new homes due to high mortgage rates and construction costs.
U.S. home price growth increased to 2.5% year-over-year in July, with Miami, St. Louis, and Detroit driving the growth, while 11 states saw annual home price declines, according to CoreLogic's latest home price index data. Rising mortgage rates and a lack of inventory are putting pressure on potential homebuyers, and pending home sales have seen slight upticks, particularly in the West and South regions.
In this article, the stock mentioned is KB Home (NYSE:KBH). The author's recommendation is to buy and hold the stock.
The author's core argument is that KB Home is well-positioned in the housing market, particularly because it serves first-time and second-time homebuyers, who represent a growing pool of potential buyers. The author also points out that KB Home has a strong balance sheet, generates significant cash flow, and has been reducing its debt and repurchasing shares.
Key information and data provided in the article include:
- KB Home's fiscal Q3 earnings, where it earned $1.80 on revenue of $1.59 billion, surpassing expectations by $0.38.
- The decline in KB Home's earnings and margins due to a 14% decrease in revenues and declining average sales prices.
- The decline in deliveries and sales prices, as well as the decline in homebuilding gross margins.
- The increase in net new orders and the stabilization of the backlog, indicating steady demand.
- The improvement in KB Home's balance sheet, reduction of debt, and focus on share repurchases.
- The favorable macro environment for KB Home, with the rise in millennials becoming homebuyers, supply constraints, and a significant housing shortage.
- The expectation of strong profits for the next few years and potential for double-digit returns.
- The current valuation of KB Home's shares and the potential upside.
Note: The article is an opinion piece by the author and not financial advice.
Despite a recent slump, research firms including Freddie Mac, Zillow, and the National Association of Realtors predict that home prices will continue to rise in 2024 due to a shortage of housing inventory and strong demand, with NAR forecasting a 2.6% increase. However, Moody's Analytics and Morgan Stanley expect home prices to slightly decrease in 2024 due to declining affordability and increased housing supply.
Home prices continued to rise in August due to low inventory and high mortgage rates, causing a drop in home sales, according to a report from the National Association of Realtors.
The United States housing market has seen a 21 percent decline in previously occupied home sales over the past year, continuing the slowdown caused by rising interest rates, while prices continue to rise despite the decrease in sales, leading to a shortage of affordable homes and worsening home affordability for the foreseeable future.
Sales of previously owned homes in the US fell for the third consecutive month in August, as higher mortgage rates, rising prices, and a lack of available properties have limited homebuyers' options.