Housing prices have soared for the past two years, fueled in part by extraordinarily low interest rates. That time has ended. The work from home movement also drove home prices as people relocated to where they wanted to live and not where they had to for their jobs.
[in-text-ad]
In each month of the past year, home prices have risen 20% year over year, according to the S&P Case Shiller home prices indexes. Tampa and Phoenix have posted numbers closer to 30%.
[nativounit]
One measure of home price direction is price. Another is the number of days homes are on the market, from when they go on sale to when the deals to sell them are closed. Yet another is the pace at which builders build new houses.
The builder yardstick just took a huge hit. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index dropped below 50 for the first time since the start of the COVID-19 pandemic. Builder confidence, at 49 last month, has turned negative.
NAHB Chair Jerry Konter said of this change in builder confidence, “Ongoing growth in construction costs and high mortgage rates continue to weaken market sentiment for single-family home builders.” August buyer traffic to homes dropped to the lowest level since April 2014. Single-family home starts this year will drop to the lowest level since 2011.
Interest rates were given as the source of most of the home builder problems. As the Federal Reserve continues to boost rates, this will not end this year or probably next.
[recirclink id=1159452]
The home market recovery from the Great Recession has been steady most years. The home equity lost in 2007 to 2009 has reappeared. Consumer confidence has been buoyed by this upward march, which has helped American gross domestic product growth.
[wallst_email_signup]
As a recession looms, or already has begun, the housing market has become another drag on solving economic problems.
Top Gaining Stocks
Top Losing Stocks