15.2 C
New York
Friday, September 29, 2023

Buy now


Will the Housing Market Crash -Check the Latest Updates About It

Home builder confidence plunged for a tenth straight month in October as rising interest rates continued to weaken housing demand—prompting economists to warn an unexpected rise in new home sales last month may be short-lived and prices may be on the brink of collapse, the National Association of Home Builders reported Tuesday.

Main Debate

The association’s index of builder confidence fell four points to 58 in October, indicating that builders are still pessimistic about the market. The index has been declining since January when it hit a 12-year high of 72.

Rising interest rates have been a major drag on the housing market this year, making it more expensive for potential buyers to take out loans. The average 30-year fixed mortgage rate has climbed nearly a full percentage point since the beginning of the year, to 4.86% last week, according to mortgage giant Freddie Mac.

The rate increases have caused sales of both new and existing homes to slow sharply this year. Sales of new homes fell 3.4% in September, after surging 12.8% in August, according to the Commerce Department. And sales of existing homes are on track to total just 5 million this year, down from a peak of 7 million in 2005.

The drop in builder confidence comes as economists are growing increasingly worried about the health of the housing market. Many had been expecting a rebound in home sales and prices this year after years of declines, but that has not materialized so far.

Major Facts:

-The NAHB/Wells Fargo Housing Market Index for February 2021 plunged 8 points to 38—the lowest level since 2012 (excluding the historic plunge at the start of the pandemic in 2020).

-The index had been on a general upward trend since April 2020 but has flattened out over the past few months.

-A reading below 50 indicates that more builders view conditions as poor than favorable.

What This Means: The sharp drop in builder confidence is likely due to a combination of factors, including concerns about lumber prices (which have more than doubled since last spring), supply chain disruptions, and ongoing challenges with obtaining building permits. While new home sales have been strong lately— boosted by low mortgage rates and a desire for more space among buyers—the pace of construction has not been able to keep up. This could lead to further price increases and make it even harder for would-be buyers to find a home.

Statements of the Association’s Chair

Jerry Konter has noted an unhealthy and unsustainable situation with the current mortgage rates. It is expected that there will be a decline in the number of housing starts this year. This would be the first time since 2011 that this has occurred. The high mortgage rates have made it difficult for potential home-buyers to enter the market. The Association is concerned about the potential long-term effects of this on the economy and housing market. They are urging the government to take action in order to help stabilize the situation.

The Association’s statement comes as no surprise given the recent trend in mortgage rates. Rates have been on the rise since last year, and they reached a seven-year high just last month. This has caused many potential home-buyers to reconsider their plans and has led to a slowdown in the housing market. The Association is worried that this trend will continue and that it could have a detrimental effect on the economy.

The government has taken some steps to help stabilize the housing market, but more needs to be done. The Association is calling on the government to take further action in order to help ease the burden on potential home-buyers. In particular, they are urging the government to provide more support for those who are looking to enter the housing market.

The current situation is not sustainable in the long term, and something needs to be done in order to ensure that the housing market remains healthy. The Association is calling on the government to take action and to provide more support for potential home-buyers. This is essential in order to ensure that the housing market remains stable and that the economy does not suffer as a result of the current situation.

Pantheon Macro chief economist Ian Shepherdson stated that the figures make it evident that the reported increase in new home sales last month was more likely due to statistical noise than an indicator of a turnaround. This is especially true given the recent surge in mortgage rates (now nearly 7%), which is threatening to further decrease demand.

This is bad news for the economy, as construction and new home sales are major drivers of growth. Shepherdson predicts that the housing market will continue to decline until early next year, with prices falling by 15-20%. This is already having an effect on the economy, as the median price of a home has fallen to $436,800 from a record $466,300 this summer. This downturn in the housing market is likely to have ripple effects throughout the economy, so it is important to monitor this closely.

Things Expected in Future Home Builder Releases

This is just the start of a very busy week for new data on the housing market. On Wednesday, the Census Department is slated to release its monthly report on housing starts, and the National Association of Realtors on Thursday will report existing home sales for last month. All of this data is expected to give us a better idea of where the housing market is headed in the near future. 

For More Amazing Updates, Keep Visiting Trendy News magazine.

Related Articles

Stay Connected

- Advertisement -spot_img

Latest Articles