Spring Market Upswing?
Although prices have started dropping since last June, they are still higher than before. Now that demand is returning to the market due to a minor decrease in mortgage rates; prices are pushing back.
According to CoreLogic’s most recent data, U.S. home prices were 6.9% higher than they were a year earlier in December. That was the lowest annual appreciation rate during the latter part of 2020 summer. A high of 20% in yearly price growth was reached in April.
Fannie Mae’s monthly survey of homebuying sentiment revealed an improvement in January for the third consecutive month. The percentage of consumers who believe now is an excellent time to sell a home rose from 51% to 59% in the survey of consumers, who nonetheless projected prices to either decline or flatten over the coming year.
Some real estate professionals are noticing an earlier-than-normal spring market boom, with open houses experiencing more foot traffic in recent weeks. More available inventory could encourage more buyers to return to the market. Bidding wars reportedly returned, according to some.
The nation’s homebuilders are also reporting a rise in demand. According to the National Association of Home Builders, homebuilder sentiment increased in January for the first time in a year. According to builders, current sales, buyer traffic, and sales projections for the following six months increased as lower mortgage rates fuel the new demand.
February: Largest Homebuilder Sentiment Improvement in a Decade
According to the National Association of Home Builders/Wells Fargo Housing Market Index, homebuilder confidence in the market for newly constructed single-family homes increased 7 points to 42 in February – the most significant monthly growth since June 2013 and the highest reading since September.
Builders claim affordability is improving as mortgage rates recover from their highs from the last fall and stabilize in a limited range. According to Mortgage News Daily, the average rate on the popular 30-year fixed mortgage peaked at 7.37% in October last year but spent most of January in the mid-6 % zone. In the past two weeks, rates have marginally increased, reaching mid-6%.
“The nation continues to face a sizeable housing shortage that can only be closed by building more affordable, attainable housing,” said NAHB Chairman Alicia Huey. Yet, considering the increased cost of labor and materials, she pointed out that it is still challenging to provide affordable housing.
Goldman Sachs Predicts Bottom of the Housing Market May Be In Sight
In 2023 Housing Outlook: Finding a Trough, published on January 23, Goldman Sachs changed direction after cutting its forecast for the U.S. housing market two weeks earlier in a paper titled Getting Worse Before Getting Better.
Researchers at the investment bank now anticipate that national property values will conclude 2023 down just 2.6% rather than the 6.1% decline they originally predicted would occur in 2023.
According to Goldman Sachs, national home prices will be down around 6% from their June 2022 peak by the time U.S. home prices bottom out this summer. Before this, Goldman Sachs experts anticipated that the peak-to-trough fall would be closer to 10%. Goldman Sachs attributes adjustment to an increase in homebuyer demand.
Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.
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