Housing market data suggests sector’s downturn ‘nearing its end’

Housing market data in recent weeks has provided some signs of stabilization as the spring selling season begins to pick up.

Mortgage rates are falling, with the average 30-year fixed rate mortgage declining to 6.28% from 6.32% in the previous week, according to Freddie Mac. It was the fourth straight weekly decline as the banking crisis that began four weeks ago put pressure on Treasury bond prices.

The drop in interest rates also comes as the Federal Reserve raised interest rates by a quarter point in March as it continues its aggressive campaign to cool rapid inflation.

The yield on the 10-year Treasury note, which is closely tracked by the average 30-year mortgage rate, was 3.41% at the end of the week, down from 4% at the start of March.

“While commercial mortgages may become more difficult to obtain, residential mortgages are expected to become more readily available,” National Association of Realtors chief economist Lawrence Yoon said in a press release.

Mortgage applications fell 4.1% during the week ended March 31, according to the latest data from the Mortgage Bankers Association. from last week.

Prior to this decline, mortgage applications had risen for four consecutive weeks.

“Mortgage rates are no longer rising, but they are likely to remain high for some time,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a recent note to clients. “to leave [home] Prices to do the heavy lifting if affordability will improve; Prices have fallen about 5% since the summer, but we look forward to a further 15% decline over the next year, restoring the pre-Covid price-to-income ratio.”

Here’s a roundup of where key housing data has been for the first few months of 2023.

Pending home sales

Contracts signed for existing US homes rose in February, the third consecutive monthly increase, According to data released on March 29 by the National Association of Realtors.

Contract signing has increased in all regions of the country except the West. Pending sales jumped 6.5% from the month ago in the Northeast, posted a 0.4% gain in the Midwest, and a 0.7% increase in the South. Pending home sales in the West fell 2.4%.

Story continues

“The more affordable US regions — the Midwest and South — are leading the recovery,” Yoon said.

Home builder feeling

Confidence among US homebuilders rose slightly in March, the third consecutive month increasing their optimism about the US housing market.

Figures released on March 15 showed that the National Association of Home Builders/Wells Fargo index of construction sentiment rose 2 points, to 44. Analysts had expected this index to come in at a reading of 40.

“Even as builders continue to grapple with sternly rising construction costs and material supply chain disruptions, they continue to report strong pent-up demand as buyers wait for lower interest rates and shift more into the new-home market due to a lack of existing inventory,” wrote Alicia Huey, president of The Board of Directors of NAHB, a custom home builder and developer from Birmingham, Ala., in a press release.

housing beginnings

Housing starts rose 9.8% in February to an annual rate of 1.45 million homes, the strongest pace of starts since last September. said the Commerce Department on March 16.

Single-family housing starts rose 1.1% to an annual rate of 830,000, while multi-family housing starts rose 24%, to 608,000. Beginnings are grown in all regions except the Northeast in February.

Existing Home Sales

Existing home sales in February jumped 14.5% to an annual rate of 4.58 million, the largest monthly percentage increase since July 2020. Data from the National Association of Realtors showed on March 21. This increase marked the end of the 12-month tranche.

The annual rate of existing homes sold has surpassed the 4.2 million expected by economists, according to Bloomberg data. NAR data showed that the median sales price of an existing home fell 0.2% to $363,000 compared to a year ago.

“We are seeing stronger gains in sales in areas where home prices are falling and local economies are adding jobs,” Yoon said.

About 57% of homes sold in February have been on the market for less than a month.

New home sales

Single-family new home sales rose 1.1% in February to an annual pace of 640K, up from January’s rate of 633K according to A report from the Census Bureau was released on March 23. This figure was 19% lower than the rate recorded a year earlier.

The median sale price of a new home in February was $438,200, while the average sale price was $498,700.

At the end of the month, there was a seasonally adjusted estimate of 436,000 new homes for sale on the market, which is about 8 months of supply at the current sales rate.

Orphe Divounguy, chief economist at Zillow, wrote in a statement that the low inventory indicates that “builders continue to face challenges completing units while buyer demand has also picked up.”

Case schiller house prices

The S&P CoreLogic Case-Shiller index of U.S. home prices fell 0.5% in January from the previous month, according to data released March 28. On an annual basis, the index rose 3.8% in January, down from 5.6% in the previous month. Month.

The report’s 20 Cities Composite Index, which tracks prices in the 20 largest metro areas, showed that prices were down 0.6% month-over-month in January and up just 2.5% from a year ago. The report stated that all 20 cities recorded lower prices in the year ending in January 2023 compared to the year ending in December 2022.

Danny Romero, Yahoo Finance correspondent. Follow her on Twitter @employee

Click here for the latest economic news and economic indicators to help you in your investment decisions

Read the latest financial and business news from Yahoo Finance