US Housing Market Projections
Source：CNN
From：Taiwan Trade Center, Chicago
Update Time：2022/11/03
Homebuyers are disappointed with the current real estate market. The current market shows that prices for homes are extremely high and are continuing to increase. When looking at mortgage rates, they have also increased faster than predicted. Buyers have split into 3 groups: buyers that are still looking, buyers that have put a pause on their search and buyers that have stopped looking because the costs of a house are too high right now. New construction homes are not selling as much as in 2019 and there is far less construction. Mortgage rates are above 5% currently and it has decreased the number of applications for mortgage loans to their lowest level in 22 years. Economists project that some prices and mortgage rates are likely to remain high for the rest of the year making it difficult for home buyers. Even though the rate at which home prices are increasing is slowing down, year-over-year prices are still at double-digit increases. The Federal Reserve also raised interest rates again to ease inflation, which will keep mortgage rates unstable.
Mortgage rates are estimated to be stabilizing near the end of the year at 6% and home sales will increase as mortgage rates stabilize. Lawrence Yun, chief economist for the National Association of Realtors says, “We may be topping out on mortgage rates”. Yun says that mortgage rates might go slightly higher or lower in the next few months, but biggest increases in mortgage rates have happened already. Buyers that are still looking have less competition and more homes to choose from compared to the past 2 years. However, Yun says, “Someone buying the same house today that they wanted to buy last year will see a 50% increase in their monthly payment. People’s incomes do not rise by 50% in a year”. Redfin noted that almost 15% of people who signed a contract to purchase a home in June cancelled. That is the highest amount of canceled home sales since April 2020 when the pandemic hit. With higher mortgage rates, the number of houses will rise and sales will decrease. This might lead to homes sitting on the market longer leading to price reductions or a better price negotiation. Given the high home prices and turbulent mortgage rates, housing affordability will still remain an issue.
Source: https://www.cnn.com/2022/08/01/homes/housing-market-outlook-second-half-of-2022/index.html