This Week in Real Estate

Good Morning!

The Commerce Department reported This Week in Real Estate that single-family construction grew 3.4% in August, however home building permits fell in August to the slowest pace in more than two years. Some economists point to the stubborn housing shortage as a saving grace that could keep the real estate market from a deep downturn. By some estimates, the nation was short about 5 million homes before the onset of the pandemic. “The shortage is not going away soon,” says Lawrence Yun, chief economist for the National Association of Realtors. “The near-term single-family outlook is complicated due to high mortgage rates. But the long-term outlook for homebuilders is bright due to the need to build more to fully relieve the housing shortage.” Below are a few newsworthy events from the third week of September that influence our business: 

 

* US Home Sales Slipped, Prices Grew More Slowly in August. The National Association of Realtors said Wednesday that existing home sales fell 0.4% last month from July to a seasonally adjusted annual rate of 4.80 million. That’s higher than what economists were expecting, according to FactSet. The national median home price jumped 7.7% in August from a year earlier to $389,500. As the housing market has cooled, home prices have been rising at a more moderate pace after surging annually by around 20% earlier this year. Before the pandemic, the median home price was rising about 5% a year. The August sales report is the latest evidence that the housing market, a key driver of economic growth, is slowing from its breakneck pace in recent years as homebuyers grapple with the highest mortgage rates in more than a decade, as well as inflation that is hovering near a four-decade high. Surging home loan rates don’t just make homes less affordable, they also discouraging homeowners who locked in an ultra-low rate the last couple of years from buying a new home. That, in turn, can limit the number of homes that are available for sale. “That lock-in effect is continuing to impact inventory and I think it will continue to impact inventory going forward,” Yun said.

Full Story…   https://www.washingtonpost.com/business/us-home-sales-slipped-prices-grew-more-slowly-in-august/2022/09/21/d86ac028-39b5-11ed-b8af-0a04e5dc3db6_story.html

 

* Mortgage Demand Rises for The First Time in Six Weeks, Despite Sharply Higher Interest Rates. Mortgage application volume increased last week for the first time in six weeks, according to the Mortgage Bankers Association, despite a rise in interest rates. Applications to refinance a home loan, which are usually very sensitive to big rate swings, actually rose 10% for the week, although they were still 83% lower than the same week one year ago. “The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as Labor Day-adjusted results the prior week,” Kan said. Mortgage applications to purchase a home rose 1% for the week but were 30% lower than the same week one year ago. Still, prices have not really eased much yet, and with rates as high as they are now, affordability is historically weak.

Full Story…   https://www.cnbc.com/2022/09/21/mortgage-demand-rises-for-the-first-time-in-six-weeks.html

   

* Housing Starts Rebound, Builders Aim to Win Buyers Back. Even as demand for new homes fizzles - about a quarter of homebuilders are reducing their prices to attract more buyers as foot traffic falls - single-family construction jumped 3.4% in August, the Commerce Department reported Tuesday. Economists are calling it a “surprising bounce back” after five consecutive months of declines. Lawrence Yun, chief economist for the National Association of Realtors, lays the blame for the new-home market’s slump squarely on mortgage rates. “However, this month’s increase in housing starts implies that builders still see profit opportunities, even as they concede on prices,” Yun says. “Material prices, including for lumber, have been moderating, and fully completed homes are selling fast.” Home building permits - a gauge of future construction - fell in August to the slowest pace in more than two years, the Commerce Department reports. However, some economists point to the stubborn housing shortage as a saving grace that could keep the real estate market from a deep downturn. By some estimates, the nation was short about 5 million homes before the onset of the pandemic. “The shortage is not going away soon,” Yun says. “The near-term single-family outlook is complicated due to high mortgage rates. But the long-term outlook for homebuilders is bright due to the need to build more to fully relieve the housing shortage.”

Full Story…   https://magazine.realtor/daily-news/2022/09/21/housing-starts-rebound-builders-aim-to-win-buyers-back

 

Have a productive week.

 

Jason