RATES REMAIN LOW,
WILL HOUSING MARKET REBOUND?
With rates remaining low and stable, housing inventory increasing and home prices growing at their slowest pace in nearly four years, there is potential for 2019 to be a boom for the housing market.
Fed Chair Jerome Powell continues to reiterate his stance of patience with regard to the Fed’s approach on rate hikes. It’s expected that if there is a rate hike this year, it will be singular.
That stability is translating to a spike in mortgage applications as we get into the spring buying season. According to the Mortgage Bankers Association, mortgage applications were up 5.3 percent week-to-week and were 0.4 percent higher than a year ago at this time.
Home prices are still historically high right now but are also continuing their lean toward the favor of the homebuyer. According to the S&P Case-Shiller index, home prices are growing at their slowest rate since August of 2015 (4.7 percent in December 2018 down from 5.1 percent in November 2018).
The interesting part of that is, despite rates going down and home price growth slowing, that was not enough to offset the fact that homes are still not affordable for most Americans. Wage gains simply aren’t on the same level.
December’s housing start numbers were rough, down to their lowest level in two years. According to the Commerce Department’s numbers, new home construction is at its slowest pace since September of 2016. The data shows new home starts were down 11.2 percent from November. Permits to build housing were up slightly, just 0.3 percent in December.
Another thing that might help the spring buying season is a positive with regard to tax returns. Initial reports were showing frustrated people who were getting less in their return or having to pay out instead of getting a rebate. Now, after a four weeks of filing data, people are reporting better tax returns than previous years with the average tax return up 1.3 percent from a year ago according to IRS data.
Liz Pritchard | Loan Officer
2400 N. Croatan Hwy
Unit B & C
Kill Devils Hills, NC 27948