As Americans are becoming increasingly concerned with the threat of an economic slump, there is hope on the horizon: the housing market doesn’t seem to be affected by this at all. Recent reports show that reduced mortgage rates are sustaining buyer demand into the cooler months.
What the Experts Say
Sam Khater, chief economist of Freddie Mac, commented that the housing market continues to be a beacon of light in a slowing economy. Khater said, “While mortgage rates have ticked up in recent weeks, they remain lower than they were a year ago, which will help boost sales.” Khater’s projections were made after several housing reports suggested a solid and stable housing market.
In the latest report by the National Association of REALTORS®, it was clearly depicted that existing homes increased to the highest level experienced in over 17 months during August. It was also clear that there has been an influx of new homes entering the market. A report issued by the US Commerce Department showed that building permits and housing starts rocketed to higher levels than what has been experienced in over 12 years. It was also found that new-home sales increased to over 700,000 for the second time in only three months. This was credited to more and more homeowners investing in newly constructed homes.
Stability and Increased Sales
One of Freddie Mac’s predictions is that the fixed-rate 30-year mortgage will linger at under 4% for the remainder of 2019. This could be a sign of good things to come in the housing market and may ease concerns some potential buyers have about affordability. As mortgage rates drop, economists are positive that house prices will also stabilize. It is widely anticipated that prices will appreciate at around 3.4% during the year which is consistent with long-term growth. As the demand for housing increases, and there is a slight escalation in inventory. Economy experts project that home sales will be marginally higher in 2019 at 5.98 million and that the following year may well rise to over 6 million, which would be close to the levels reached in the 2017 boom.
Millennials are the Driving Force
The increased demand in the housing market recently has been largely contributed to young adults. President and CEO of CoreLogic, Frank Martell, recently made a statement about the moderation in prices in the latest housing index. According to Martell, millennials have now entered the market in force and over half of them aged 30 and over have purchased a house in the last three years, driving significant change in buying and selling patterns. Since close to 80% of all millennials are confident that they will purchase homes in the future, the numbers are likely to increase further. Martell suggests that millennials are mostly interested in buying homes in the suburbs instead of remaining in urban centres because they are interested in a greener location with more privacy.
