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The punishment of real estate in the US continues its course with an eye on mortgages

Date: March 29, 2024 Time: 13:52:14

House prices continued to cool in November in the United States, according to the latest available official indicators. In addition, the most recent data suggest that the slowdown will not be the last, so the real estate puncture will continue even more, despite the decline that has already accumulated so far this year.

In November, according to the latest data published in this first week of February, house prices rose by an unadjusted 7.7% year-on-year, as indicated by the figures of the S&P CoreLogic Case-Shiller index. The annual figure is lower than the 9.2% increase registered in October, but it maintains that downward tone.

Prices in the 20-city Case-Shiller indices cooled similarly: The index that tracks prices in 20 of the country’s largest cities rose 6.8% year-on-year, down from 8.6% the previous month. But the cooling was to be expected.

At the beginning of the week, the FactSet consensus estimates expected the Case-Shiller index of the 20 cities to be 6.6% higher than the previous year in November. Thus, the November slowdown in house prices is probably not good news for investors, who have been watching the housing market pull back from its pandemic highs.

The end of 2022 marked the zenith of the rises in mortgage rates for the year, which reached maximums of over 7% in October and November, reducing the borrowing capacity of buyers and slowing down demand. The indices, while lagging behind other measures of house prices, differ from the most current ones in notable ways.

The S&P Case-Shiller indices use repeat sales to calculate price changes and produce seasonally adjusted and unadjusted indices, making prior-month comparisons less influenced by seasonal patterns.

Despite their differences, the most current data can give investors an idea of ​​what is likely to happen in the future. The median sales price of a single-family home slowed through the end of 2022, according to existing home sales data from the National Association of Realtors.

In December, the most recent month for which existing home sales data is available, median single-family homes sold for $372,700, up 2% from December 2021. This rate YoY is well below the peak rate of appreciation of 26% recorded at the start of the pandemic and is the slowest since May 2020.

Sales prices may be an early sign that the house price slowdown has continued into 2023 a house.

The magnifying glass on inventories

Low housing inventory has been a challenge since the 2008 housing crisis, when new home construction plummeted. It has not yet fully recovered and will not in 2023 Altos.

According to Robert Frick, economist at Navy Federal Credit Union, “The December Existing Home Sales report found the losing match of: lower sales, lower inventory, and higher prices.” At the current rate of sales, inventory is 2.9 months, according to the NAR This is down from 3.3 months in November, though up from 1.7 months in 2021. Based on this and other data, industry insiders have a bleak outlook on when home inventories will finally normalize .

“I think we are likely to see low inventory continue to plague the housing market throughout 2023,” says Rick Sharga, executive vice president of ATTOM Data. And with 70% of homeowners with a mortgage rate of 4% or below, Sharga says it’s unlikely we’ll see an increase in home supply anytime soon.

At the same time, there are mixed signals in the new home arena, with single-family home construction starts up 11.3% in December, while building permit applications were down 6.5% month-on-month. above, according to preliminary data from the US Census Bureau and the Department of Housing and Urban Development. “More importantly, December 2022 housing starts for single-family homes were much, much lower than December 2021: 909,000 this year versus 1.338 million last year,” Sharga says.

Even so, the latest data on builder sentiment reflected some cautious optimism, with builder confidence rising for the first time after 12 consecutive months of declines. That was only a modest increase, though, from 31 to 35, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report.

Builder confidence remains low (50 or above means more builders are seeing good conditions ahead), so there will need to be more back-to-back rallies before we see a significant increase in new construction. “The bottom line is that there really isn’t a likely scenario that will lead to inventory levels approaching historically normal numbers in 2023, which means potential homebuyers are still going to have to work hard to find something to buy.” , ends Sharga.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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