Homebuyers accounted for 29% of February’s sales, down by 2% from last year’s sales.
In the past month, we briefly spoke about the housing market and its future outlook, as expected, the market still faces hard challenges. Mortgage interest rates are at their three-year high, and they will continue like that. On Wednesday, the Federal Reserve’s monetary policymakers decided to lift the central bank’s interest rates by 25%.
One of the negative outcomes of interest hikes is that both the cost of materials and mortgage rates will increase. As for mortgage rates, they have already been increasing for the past three years. Homebuilders suffer greatly from the increases in building material costs.
Materials costs and prices are increasing on a global scale as a result of the Ukrainian war. Putin has shifted the focus of the conflict to Lviv, and he is now threatening to use nuclear weapons if the US enters the fray. They first drove up oil and gas prices. Now, as the war continues, the next target will be material prices. Economists forecast that during the next month, the war will tighten the supply chain even harder. This forecast comes against the housing market and home builders’ expectations of a market rebound and recovery.
Digging deeper, February’s NAR data resale the following numbers:
February’s owned home sellers declined to a six-month low. Housing market experts explain that demand declined as a result of the increase in their prices and the limited supply. Buyers are now facing big challenges and there are many issues and errors in the current strategy that must be corrected.
cost of materials, limited supply, high mortgage rates, and lack of inventory. These are the four biggest problems that the market is facing now. Compared to January’s contract closing, the number declined by 7.2% in February. On top of that, home sales numbers remain lower than last year’s U.S home sales by 15.5%.
Worse, the NAR report showed a decline in home sales in all four regions, as buyers are deterred by high prices. Plus, home sellers are taking deep hits due to the limited supplies and the inflationary pressure they face.
As a result of these declines, buyers are increasing and bidding up the prices of their available homes. It’s almost like they have no clue how to deal with this catastrophic performance. Homebuyers declined from 31% to 29%, compared to last year’s sales.
Investors only gained about 19% of the market’s earnings. That’s relatively low compared to prior seasons and years. As for the median price, the NAR report showed that its index was raised by 15% compared to 2021 prices.
It remains unclear whether owned home sales will increase soon. But for now, the market remains hot.
Investors’ sentiments about the market are not at their best. The housing market still needs improvement in its inventory segment. The high prices might decrease due to the FED’s tightening policy, but the mortgage rates might increase to higher records.
Yet, it remains one problem with the limited supplies. The war is threatening the recovery of the housing market.
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