February 5, 2023

The U.S. housing market is under pressure.
Data this week on new home sales and pending home sales reflected sharp drops from last year and showed the impact higher interest rates continue to have on prospective buyers.
On Wednesday, the latest report on pending home sales from the National Association of Realtors showed contracts to buy previously owned homes fell 1% from June to July and 19.9% from July 2021 to July 2022.
The Pending Home Sales Index — a measure of signed contracts on existing homes — dropped to 89.8 last month, the lowest since the start of the pandemic. Contracts declined for the eighth time in the last nine months, the report said.
On Tuesday, data on new home sales in July showed sales fell 12.6% from the prior month and 29.6% from last year, signaling demand for housing continues to wane as the Federal Reserve continues raising interest rates to slow inflation.
“The housing market is in much worse shape than the Fed has been willing to admit,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note following Tuesday’s data. “But policymakers have made it clear that inflation is their primary objective, and housing is collateral damage.”
Mortgage rates have leveled out in recent weeks, but the average 30-year fixed mortgage rate is 5.13%, according to Freddie Mac. Earlier this month, rates had dropped below 5% for the first time since April. At the start of 2022, the average 30-year fixed mortgage rate stood at 3.22%.
“The sharp drop in new home sales is another clear indicator that housing is in a recession,” Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, said in a release on Tuesday. “The combination of higher prices and increased interest rates are generating a notable slowing of the housing market.”
Still, affordability remains challenged, even as higher rates slow activity in the market.
Tuesday’s data showed the median price for a new house stood at $439,400 in July, up from $402,400 in June. Data from the National Association of Realtors’ showed the home affordability index, a measure to gauge whether a typical family qualifies for a mortgage, fell to a 33-year low in June.
Homebuyer Affordability Fixed Mortgage Index from ⁦@nardotrealtor⁩ has collapsed to its lowest since 1989 pic.twitter.com/LYbIbPYvbO
— Liz Ann Sonders (@LizAnnSonders) August 22, 2022
“In terms of the current housing cycle, we may be at or close to the bottom in contract signings,” said NAR Chief Economist Lawrence Yun in a press release on Wednesday. “This month’s very modest decline reflects the recent retreat in mortgage rates. Inventories are growing for homes in the upper price ranges, but limited supply at lower price points is hindering transaction activity.”
Pricing pressure, however, does look set to be alleviated in the coming months.
“The inverse relationship between new home supply and prices broke down at the start of 2021, as a lack of existing homes pushed buyers into the new home market and sent prices soaring,” Shepherdson wrote. “But now existing home supply is rocketing too as homeowners scramble to sell before prices fall too far. This in turn will pressure homebuilders to cut new home prices. We expect sharp month-to-month declines in new home prices for the foreseeable future.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
Click here for the latest economic news and economic indicators to help you in your investing decisions
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
A source told the Times of London's Valentine Low that Harry was "freaking out" about the situation.
Speaking at the Texas Tribune Festival, Wyoming Rep. Liz Cheney said she will do "everything I can to make sure he's not the nominee."
New York Times Correspondent Maggie Haberman said Trump may have deviated from the narrative that classified documents ended up at Mar-a-Lago accidentally.
Former top Pence aide Marc Short on Friday rejected a recent claim from former President Trump that presidents can declassify documents by thinking about it, calling the notion “absurd.” “That’s absurd, obviously,” Short told CBS News. “I think it would make it very difficult for the intelligence community to have a classification system if that was…
According to Katie Nicholl's book "The New Royals," the Fab Four's relationship transitioned after Meghan Markle's first royal engagement in 2018.
After making several stunning appearances at New York Fashion Week, Amelia Gray Hamlin is now turning heads on the runways in Milan. The Real Housewives of Beverly Hills daughter recently walked in Giuliano Calza’s GCDS show, where she bared her backside in an unexpected look. “My butt had her first cameo,” Amelia captioned a September 22 Instagram Story video of herself on the runway. While it initially appeared Amelia was modeling a white tank top and jeans, it turns out the pants only had fro
Vanity Fair's royal correspondent Katie Nicholl alleged that the Prince of Wales was hoping that his younger brother, the Duke of Sussex, would be "his wingman."
Tropical Storm Ian grew overnight in the Caribbean still with a path that could bring it to Florida next week as a hurricane prompting Gov. Ron DeSantis to declare a state of emergency across the Sunshine State. The National Hurricane Center’s 5 p.m. update puts Tropical Storm Ian’s center about 230 miles south of Kingston, Jamaica and about 430 miles southeast of Grand Cayman with maximum …
It appears that Prince George, 9, Princess Charlotte, 7, and Prince Louis, 4, are the Cambridge kids no longer. Recently, the trio's parents, Kate Middleton and Prince William, received new titles following the passing of Queen Elizabeth II on September 8. While at first the pair were named as the Duke and Duchess of Cambridge and Cornwall, the new King Charles III then bestowed upon them the title of Prince and Princess of Wales. Chris Jackson/Getty Images In his first address as monarch, King
Denver Riggleman, a former adviser to the Jan. 6 committee told "60 Minutes" the White House switchboard called a rioter during breach.
Former NY AG prosecutors predict a slow-motion legal brawl where Trump will cry foul, claim ignorance, and delay, delay, delay.
Ye, formerly known as Kanye West, said that he counseled his daughter on being the steward of his and Kim Kardashian's businesses.
Duchess of Sussex Meghan Markle is facing criticism for the way she treated royal staff when living at the palace, in comparison to Princess Diana — who was described as "kind."
Local law enforcement is warning about the possibility of violence at the Saturday funeral of Hells Angels founder Sonny Barger at the 99 Speedway in California.
Prince William had a strong bond with his grandmother, who died on 8 September, and now he's shared the sweet moment that happened after her passing.
The wife of a Donetsk puppet authority fighter told her husband that dissatisfaction with the actions of dictator Vladimir Putin is growing in Russia, according to an intercept of their conversation published on Facebook by Ukraine’s military intelligence agency HUR on Sept. 24.
Ralph "Sonny" Barger funeral was held at Stockton 99 Speedway on Saturday, Sept. 24.
Serena Williams may have recently announced that she was stepping away from professional tennis, but that doesn't mean she's giving up on sports entirely. In fact, according to a new Instagram video, she appears to be dabbling in a new physical activity: soccer. The Grand Slam champ just revealed that she inadvertently became an assistant soccer coach for her daughter, Alexis Olympia Ohanian Jr., 5, and her daughter's team. She recounted the story in her caption, where she said, “True story: I s
Favre allegedly continued to push for a Southern Miss volleyball stadium and indoor football facility.
New York Attorney General Letitia James filed a massive fraud lawsuit against Trump, his business, and his three eldest children.

source

Leave a Reply