It’s no secret that the limited supply of homes for sale is the biggest issue facing the housing market today. From a short-term perspective, this month’s overall pace of housing starts, 1.32 million units, may modestly alleviate the supply shortage. Housing starts increased 1.9 percent month over month and are 10.9 percent higher compared with March 2017. Housing completions, the number of net new homes added to the housing stock, increased by 1.9 percent compared with a year ago, which provides some immediate relief for the supply shortage.
It’s a popular myth – the millennial generation is destined to be a generation of renters – avocado toast, anyone? With student loan debt burdens, the scars of the Great Recession, and limited housing supply, the myth is rooted in some real challenges for millennials. However, despite these challenges, millennials are not only interested in homeownership, they are the primary reason that the homeownership rate increased over the past year.
The Federal Open Market Committee (FOMC) meeting is just around the corner, and experts agree that an increase in the Federal Funds Rate is almost certain. In fact, the expectation of future Fed rate hikes is already putting upward pressure on mortgage rates. The benchmark 30-year, fixed-rate mortgage rate jumped three basis points to 4.4 percent this past week. Since the start of the year, the benchmark rate has climbed almost half a percentage point and has increased for eight consecutive weeks. Concern is growing about the impact of the rising mortgage rates on the housing market, but it is important to keep today’s mortgage-rate environment in perspective.
This month, the market potential for existing-home sales increased to a 6.1 million seasonally adjusted annualized rate (SAAR), a 0.4 percent month-over-month increase, and a gain of 210,000 (SAAR) sales from January 2017. The gap between actual market performance (existing-home sales) and market potential (potential home sales) has significantly narrowed as actual existing-home sales have surged in recent months. Nonetheless, the housing market is still underperforming its potential.
First American’s proprietary Potential Home Sales model examines December 2017 data and includes analysis from First American Chief Economist Mark Fleming on how the real estate market is performing versus its potential.
The end of 2017 brought mixed news for housing starts, according to Thursday’s release of December 2017 housing starts data, which marked the first report on national housing data this year.
First American’s proprietary Real House Price Index (RHPI) looks at October 2017 data and includes analysis from First American Chief Economist Mark Fleming on the market forces that are keeping a lid on affordability.
First American’s proprietary Potential Home Sales model examines November 2017 data and includes analysis from First American Chief Economist Mark Fleming on how the real estate market is performing versus its potential.
We invite you to browse the fourth quarter 2017 First American Real Estate Sentiment Index, which is based on a quarterly survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.
First American’s proprietary Real House Price Index (RHPI) looks at September 2017 data and includes analysis from First American Chief Economist Mark Fleming on the market forces that sparked a surprising increase in affordability in September.