Many aspiring homebuyers are wondering when they see house prices start to fall. What do we need to know about the housing market now?Click here for the lowest mortgage rates.) So I asked Robert Dietz these questions. Since joining the National Association of Home Builders (NAHB) in 2005, Dietz has served as the association’s Chief of Economics and Housing Policy, where he is the Economist and Senior Vice President. , industry research, and housing policy research. Here’s this idea of the housing market right now.
Mortgage interest rates will continue to rise.
Dietz said the housing market is likely to continue to see interest rates rise in the near future as the Federal Reserve tightens monetary policy. “With inflation easing, the Fed should expect to maintain these tightening terms for much of 2023. Then, in 2024, housing demand, both new and existing It will help to recover and boost housing construction to reduce deficits on existing homes,” Dietz said. (Click here for the lowest mortgage rates.)
Builders will build fewer homes: In fact, 2022 will be the first year since 2011 that single-family home construction will fall year-on-year, he says.
After a construction boom in late 2020 and 2021, the residential building sector is shrinking, Dietz said. “Builders sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), has fallen over the past eight months to its lowest level since 2014. “Sales and buyer traffic, and lower sentiment point to a continued decline in single-family home construction in the next quarter,” Dietz said.
He said home construction has shrunk as home affordability has fallen to its lowest level in more than a decade amid rising mortgage rates. combined with the high cost of construction, which has dampened demand from homebuyers.
But in the very short term, there could be more inventory for buyers to choose from..
“In the short term, higher interest rates will drive homebuyer pricing, but NAHB estimates that given the current U.S. population size and household characteristics, the market still holds about There is a shortage of 1 million homes, which just as housing drove a weakened economy in 2022, a persistent housing deficit could help the housing sector lead the way to a rebound in economic growth. I mean,” Dietz says.
The current market may be reminiscent of the housing crisis of 2007-2009, but that housing boom and bust was driven by weak mortgage underwriting and excess housing supply, Dietz said. “By contrast, today’s market is characterized by a housing shortage that requires navigating difficult affordability conditions, but ultimately expands housing to meet future demand. ,” says Dietz.
There are other ways to offer big bucks to many buyers.
Thanks in part to remote work, buyers may be able to buy homes in a wider market area than before, potentially expanding their ability to make more money. “Currently, up to one-third of the U.S. workforce thinks of a weekly commute rather than a daily commute in terms of time and transportation costs. Additional construction has taken place on the outskirts of the apartment complex,” says Dietz. (Click here for the lowest mortgage rates.)
The renovation market will continue to expand through the current downturn as homeowners demand more space, greater energy efficiency and aging trends continue for baby boomers.
“This reinvestment in the existing housing stock will strengthen the existing home sales market when the housing market enters recovery mode following a fall in inflation,” Dietz said.
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