Housing bubble11/15/2023 ![]() ![]() Solid demand, a lack of existing inventory and improving supply chain efficiency helped shift builder confidence into positive territory for the first time in 11 months. New homes sales and builder confidenceīuilder confidence in the market for newly built single-family homes in June rose five points to 55, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released in June. “However, right now, even if we do head into a recession later this year, the labor market is still extremely tight and major job losses still seem unlikely,” Sturtevant says. If there were significant job losses, we could see an increase in the number of people unable to make their mortgage payments and who would therefore have to list their homes for sale, says Sturtevant. Is there a labor shortage: It's easing in most places, but not much in the South. “Supply is still very, very low which would keep home prices from collapsing even if we saw a downturn in demand,” says Sturtevant. Unsold inventory sits at a 3.0-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022. Total housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6% from one year ago (1.15 million). There has been limited supply as 85% of mortgage holders are locked in to sub-5% mortgage interest rates, which discourages current homeowners from selling their home and buying another at today’s elevated interest rates. Inventory in the first quarter averaged 1,630,000 listings at any given time, down 40% from the first quarter of 2019, a year before the onset of the COVID-19 pandemic, according to the National Association of Realtors. Who wins under debt deal? Everyone, and here's why. Hot jobs market: Booming 339,000 jobs added in May but unemployment rises to 3.7% Seventy-four percent of homes sold in May were on the market for less than a month, according to NAR. Properties typically remained on the market for 18 days in May, down from 22 days in April but up from 16 days in May 2022. In the last month one-third of homes sold above the listed price and the typical home received three offers." “However, there is strong demand for housing. "The housing market cannot compare to last year’s intense spring home buying market,” says Jessica Lautz, NAR deputy chief economist and vice president of research. While housing prices have dropped slightly year-over-year since February, a lack of inventory and a strong jobs market have contributed to stubbornly high home prices despite much higher mortgage rates. New homes: The great housing inventory divide: New construction vs existing-homes Has the housing market slowed down? “For a plunge in home prices-like we saw in 2008, for example-we would need demand to pull back dramatically and/or supply to increase significantly.”īest metros: New to adulting? Recent college grads can find a friendly housing market in these 10 cities “Despite uncertainty in the economy and the housing market right now, there is little to suggest that the housing market is poised for a crash,” says Bright MLS Chief Economist Lisa Sturtevant. So, does this mean a housing crash could be on the horizon? Housing experts don’t believe that to be the case. Instability in the banking sector, headlines about layoffs, and growing recession risks are also causing prospective homebuyers to hold back. Meanwhile, elevated mortgage rates − which have doubled since early last year − have constrained homebuyers’ purchasing power. The median existing-home price in May rose to $396,100, a which is 3.1% lower than the previous May’s median price of $408,600, according to data released in June by the National Association of Realtors (NAR). However, the median price of a home increased month-over-month for the fourth consecutive month in May. There is little debate whether the Federal Reserve’s inflation-fighting tactic was effective in cooling down the hot pandemic housing market.įor the first time in 131 months, home prices fell year-over-year in February, ending the longest price growth streak. Watch Video: How the housing market could be shifting to favor buyers ![]()
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