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Economic Center Blog

What's The Outlook For Housing Market Potential Amid Rising Mortgage Rates?

By Mark Fleming on June 18, 2018

With the Federal Reserve Open Market Committee (FOMC) decision to increase the Federal Funds Rate last week, the prospect of higher mortgage rates remains top of mind among real estate professionals and continues to generate headlines. Yet, changes to the short-term rate matter little to the housing market.

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Topics: Interest Rates, Homeownership, Potential Home Sales, Federal Reserve, insider, mortgage rates

The Surprising Impact Of Rising Rates On Market Potential

By Mark Fleming on May 23, 2018

In April, the housing market continued to underperform its potential. Existing-home sales were 6.5 percent below the market’s potential for existing-home sales, according to our Potential Home Sales Model. Lack of supply remains the primary culprit. The inventory of homes for sale in most markets remains historically low, yet demand continues to rise as millennials further age into homeownership.

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Topics: Interest Rates, Homeownership, Potential Home Sales, insider, mortgage rates

The Market Dynamics Fueling The Great Housing Shortage

By Mark Fleming on April 20, 2018

In March, the housing market continued to underperform its potential. Actual existing home sales are 4.5 percent below the market potential for home sales, according to our Potential Home Sales model. The lack of supply is the primary culprit. The inventory of homes for sale in most markets remains historically tight, yet demand continues to rise as millennials further age into homeownership. Limited supply and rising demand means house prices are surging, so why aren’t more existing homeowners selling their homes? Two market dynamics are at play.

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Topics: Interest Rates, Homeownership Progress Index, Potential Home Sales, insider, mortgage rates

Will Rising Mortgage Rates Hurt House Prices?

By Mark Fleming on March 26, 2018

As expected, the Federal Open Market Committee increased the Federal Funds rate last week, and signaled they expect to increase rates further later this year. It’s clear we have entered the rising interest rate environment that many have been predicting for years. With rising rates the new reality for the housing market, earlier this month we examined the possible impact of a dramatic increase in 30-year, fixed-rate mortgage rates on the market potential for sales. We found that even doubling the mortgage interest rate may only reduce the market potential for home sales by about 5 percent.

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Topics: Interest Rates, Potential Home Sales, Real House Price Index, insider, mortgage rates

How High Is Too High For Mortgage Rates?

By Mark Fleming on March 20, 2018

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.

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Topics: Interest Rates, Homeownership, Potential Home Sales, insider, mortgage rates

How Will Rising Rates Impact Home Sales?

By Mark Fleming on February 20, 2018

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.

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Topics: Interest Rates, Homeownership, Potential Home Sales, mortgage rates

Housing Market Potential Little Changed, But Will The Supply Shortage Continue In 2018?

By Mark Fleming on January 23, 2018

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.

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Topics: Interest Rates, Homeownership, Potential Home Sales, mortgage rates

Tightening Supply Squeezes Market Potential

By Mark Fleming on December 19, 2017

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.

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Topics: Interest Rates, Homeownership, Potential Home Sales, mortgage rates

What's Keeping The Market Below Potential?

By Mark Fleming on November 20, 2017

First American’s proprietary Potential Home Sales model examines October 2017 data and includes analysis from First American Chief Economist Mark Fleming on how the real estate market is performing versus its potential.

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Topics: Interest Rates, Homeownership, Potential Home Sales, mortgage rates

Hesitant Homeowners And Hurricanes Hit Housing Market

By Mark Fleming on October 20, 2017

First American’s proprietary Potential Home Sales model examines September 2017 data and includes analysis from First American Chief Economist Mark Fleming on how the real estate market is performing versus its potential.

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Topics: Interest Rates, Homeownership, Potential Home Sales, mortgage rates