It’s a cooldown. It’s a meltdown.
It’s grim. It’s correcting.
What everyone can generally agree on is that there’s something going on right now that’s changing the once steadily hot housing market in the United States.
What goes up inevitably goes down, but is it actually a meltdown? LeSean McCoy and girlfriend discuss the market data in the following article.
New data from the National Association of Home Builders and the Wells Fargo Housing Market Index shows that home builder confidence in the U.S. dropped to 55 in July, down 12 points. Builder confidence has now dropped seven months in a row.
The new rating is the lowest level since May 2020. Other factors in falling housing market confidence include rising interest rates and high inflation. Interest rates had been at record lows for years during the COVID-19 pandemic leading to record-high home costs and mortgage payments.
The National Association of Home Builders says that the housing market in the United States is now displaying dramatically slower sales and falling buyer traffic and competition.
The group’s chairman says that about 14% of builders who participated in the survey said they’ve had to lower the prices of homes in the past month just to tempt buyers.
How bad it is going to get? Ian Shepherdson of Pantheon Macroeconomics says that anyone who purchased a home in the past few months is likely going to sit on a big loss.
New Mortgages, New Home Builds Both Fall
More evidence of just how hot the housing market has been over the past two years: mortgage originations were a healthy $2.3 trillion in 2019 and then jumped to over $4 trillion in both 2020 and 2021.
Mortgage demand has now crumbled; it’s reportedly at its lowest level in over 20 years. On top of that, Redfin is reporting that the total inventory of homes for sale across the country recently notched its first yearly increase since July 2019.
In addition, the U.S. Census Bureau reported Tuesday that the number of new houses under construction fell 2% last month to around 1.6 million.
That may seem like a low drop, but not when most projections from economics were for a 1.4% increase. Demand clearly is changing quickly.
Drops in Home Costs, Construction Employment
While many sectors of the United States economy struggled during the two-year COVID-19 pandemic, housing had remained not just steady but constantly growing.
According to U.S. News ; World Report, since the start of the pandemic, the median cost of a single-family home rose 30%, and mortgage rates were just 2.68% in 20202.
Construction industry employment surged as well. It was 6.5 million in April 220 and just last month it had hit 7.7 million.
Now that is changing — and quickly. Economic reports related to the housing market will continue to be released through the summer. The consensus seems to be that while the housing market was once red-hot it’s not really approaching meltdown territory yet.
Instead, call it lukewarm and cooling.
Final Word
But let’s end on a good note. There are many places in the United States still experiencing the benefits of a robust housing market, including this list of the top 10 states ranked by market stability. At the top: Florida (No. 3), Washington (No. 2), and Utah (No.1).
