{"id":2015210,"date":"2023-08-29T09:39:04","date_gmt":"2023-08-29T13:39:04","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-housing-market-facing-many-challenges-from-high-mortgage-rates-to-lack-of-supply\/"},"modified":"2023-08-29T09:42:00","modified_gmt":"2023-08-29T13:42:00","slug":"analysis-us-housing-market-facing-many-challenges-from-high-mortgage-rates-to-lack-of-supply","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-housing-market-facing-many-challenges-from-high-mortgage-rates-to-lack-of-supply\/","title":{"rendered":"US housing market struggles with high mortgage rates and limited supply."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-us-housing-market-facing-many-challenges-from-high-mortgage-rates-to-lack-of-supply%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2015210&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<h2>The U.S. Housing\u200d Market Rebounds, Gaining $3 Trillion in Value<\/h2>\n<p>The U.S. \u2062housing market has \u2062regained close to \u2062$3 trillion in value following the industry slowdown over the past year, providing a snapshot of a real \u2064estate sector \u200bthat is a boon for sellers and a challenge for buyers.<\/p>\n<p>The total value of U.S. homes reached an all-time high of $47 trillion in\u2062 June, rising \u200d0.4 percent year-over-year and 19.1 percent from the same time two years \u200dago, according to <a href=\"https:\/\/www.businesswire.com\/news\/home\/20230811215385\/en\/U.S.-Housing-Market-Recovers-the-Nearly-3-Trillion-It-Lost-Hitting-Record-47-Trillion-in-Total-Value\" target=\"_blank\" rel=\"noopener\">new data<\/a> from brokerage firm Redfin Corp. This confirms that the housing industry has erased the $2.9\u2062 trillion that\u2064 was lost from June 2022 to February 2023 amid the Federal Reserve&#8217;s (Fed) soaring interest rates.<\/p>\n<p>Homeowners are refraining \u2063from erecting for-sale signs on\u200d their front \u2062lawns because they &#8220;scored an incredible deal during the pandemic: a 3% mortgage rate for the remainder of their 30-year loan,&#8221; \u2062says Redfin Economics Research Lead Chen Zhao.<\/p>\n<blockquote>\n<h3>Related Stories<\/h3>\n<ul>\n<li><a href=\"http:\/\/www.theepochtimes.com\/us\/ny-gov-hochul-urges-biden-to-help-fund-housing-grant-work-authorization-to-illegal-immigrants-5480568\">NY Gov. Hochul Urges\u200c Biden to Help Fund Housing, Grant Work Authorization to Illegal Immigrants<\/a> (8\/25\/2023)<\/li>\n<li><a href=\"http:\/\/www.theepochtimes.com\/real-estate\/30-year-mortgage-rates-surge-closer-to-8-percent-as-existing-home-sales-plunge-5479363\">30-Year\u2063 Mortgage \u2064Rates Surge \u200bCloser\u2064 to 8 Percent \u2063as Existing Home\u200d Sales\u2063 Plunge<\/a> (8\/24\/2023)<\/li>\n<\/ul>\n<\/blockquote>\n<p>&#8220;Now\u200b they\u2019re\u200b staying put because moving \u200cwould\u2064 mean taking on \u200ba rate that\u2019s twice as high,&#8221; Mr. Zhao said in \u200ba statement. &#8220;This means buyers \u200cwho are in \u2062the market now are duking it out for a very small \u200cpool of\u2062 homes, preventing home values from plunging.&#8221;<\/p>\n<p>In the first half of 2023, just 1 percent of all U.S. homes exchanged hands, the lowest percentage\u2062 total in a decade.<\/p>\n<p>Indeed,\u2064 there has \u2064been a divergence in \u2064the \u2062housing activity\u200d data. Existing home sales tumbled 2.2 percent in July, while new \u200chome sales surged 4.4 percent. Some \u2064housing economists believe this trend in the resale market will persist in the coming months.<\/p>\n<p>&#8220;With \u200can ongoing tight supply of existing homes for sale and the recent\u200d rise in \u2064<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-us-housing-market-facing-many-challenges-from-high-mortgage-rates-to-lack-of-supply\/\" title=\"US housing market struggles with high mortgage rates and limited supply.\">30-year \u2062fixed-rate \u200cmortgage rate<\/a> to around 7%, we expect home sales in 2023 to remain near the lowest annual level since 2009,&#8221; Fannie Mae economists said in a report. &#8220;Regardless \u2062of whether \u2062a soft landing is achieved over the coming year, \u200bwe expect existing home sales to stay subdued \u200cand within a tight range.&#8221;<\/p>\n<p>Daniel Del Pozo, a local real estate agent in Las Vegas, thinks &#8220;two overlapping patterns&#8221; are prevalent in the current real\u2062 estate landscape.<\/p>\n<p>&#8220;The first being that \u200bmany are finally getting \u200bover\u200b the &#8216;Real Estate\u200d Headlines&#8217; fatigue and accepting the new\u2062 normal of mortgage rates and supply challenges,&#8221; Mr. Del Pozo told The Epoch Times. \u200c&#8221;The second being the &#8216;calm before the storm&#8217; of buyers that are accepting current\u200c rates and willing to refinance down the road, but also include buyers \u200bthat are frothing at the mouths for rates to drop even a half percent.&#8221;<\/p>\n<p>Freddie Mac reported that the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/10-year-treasury-yields-top-3-for-first-time-since-2018\/\" title=\"10-Year Treasury Yields Top 3% for First Time Since 2018\">average 30-year fixed-rate mortgage rate<\/a> is <a href=\"https:\/\/www.freddiemac.com\/pmms\" target=\"_blank\" rel=\"noopener\">7.23 percent<\/a> for the\u2064 week \u200cending Aug. 24, up from 6.54 percent\u2063 a year ago \u200band 2.8 percent\u200d in August 2021. The Mortgage Bankers of Association (MBA) pegged this number at 7.31\u2062 percent.<\/p>\n<p>Interest rates have exacerbated the housing \u200ccrunch\u2062 over \u200bthe\u2064 last couple of years, as \u2063the\u200b Fed slashed the benchmark fed \u200bfunds rate to nearly 0 percent in the early days of the COVID-19 pandemic. This resulted \u200bin families engaging in a buying \u200cfrenzy or homeowners refinancing their mortgages. Today, buyers might be a little more cautious; <a href=\"https:\/\/tradingeconomics.com\/united-states\/mortgage-applications\" target=\"_blank\" rel=\"noopener\">mortgage applications have declined<\/a> for \u200dfive straight weeks, the \u2064MBA reports.<\/p>\n<h2>Housing Shortages Ahead<\/h2>\n<p>In recent months, industry experts have warned that the country is facing a dire housing shortage,\u2064 weighing on affordability for middle-income families \u200ctrying to get their feet in \u2064the door. Assuming a 20 percent down payment, monthly mortgage payments have climbed about 40 percent from a year ago for a median-priced new and existing home. In addition, the typical \u200chome sells for about 40 percent more than before the pandemic, while the median home price is between four and five times the average buyer&#8217;s gross income.<\/p>\n<p>The upward \u2063trajectory in \u2063prices has resulted\u200b from \u200dtwo factors: mortgage rates and supply.<\/p>\n<p>Compared to July 2019, housing inventory was down 36 percent, and existing \u2063home\u2062 sales were down 40 percent last month.<\/p>\n<p>According to the <a href=\"https:\/\/www.nar.realtor\/magazine\/real-estate-news\/sales-marketing\/bold-action-needed#:~:text=Estimates%20of%20the%20housing%20supply,income%20of%20%2475%2C000%20or%20lower.\" target=\"_blank\" rel=\"noopener\">National Association of Realtors (NAR)<\/a>, the \u200cnationwide housing supply shortage ranges between 4 million and 6 \u2063million units.\u2062 Because of this, the NAR estimates that housing\u2062 affordability has cratered to historic lows, with only 23 percent of listings being affordable for households earning a \u200dmedian income of $75,000 or lower.<\/p>\n<p>Over the last 12 months, new housing construction levels have been sluggish, with housing starts tumbling eight of the last 12 months. The\u2064 paucity of new builds, which has not kept up with the pace of population growth and matched property demand volumes, has \u200bcontributed to the housing shortage.<\/p>\n<p>But why are fewer residential properties being constructed?<\/p>\n<p>The cost of construction materials, from concrete\u200b to lumber, has played a role in the market by raising\u200d the price of a new home or postponing\u2062 residential projects. Labor costs and skilled shortages have also added to the challenges faced by \u200cthe industry, says Robert Dietz, the chief economist at the National Association of Home Builders.<\/p>\n<p>&#8220;For example, the construction industry\u200b faces a persistent skilled labor shortage with currently more than 400,000 Open construction sector jobs needing to be filled. This will require the industry to recruit, train, and retain workers\u200c in the trades,&#8221; Mr. Dietz told a Senate Committee on Banking, Housing, and Urban Affairs <a href=\"https:\/\/www.theepochtimes.com\/us\/affordability-is-greatest-challenge-in-us-housing-market-experts-tell-senate-committee-5046727\" target=\"_blank\" rel=\"noopener\">hearing in February<\/a>.<\/p>\n<p>State and local regulations, such as zoning laws and building codes, have limited the supply of affordable housing and \u2062drove up \u2063the cost of new construction. It is estimated that regulatory costs add about one-quarter of the purchase price of the \u200b<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/mortgage-rates-at-two-decade-high-could-rise-further-and-stay-there-for-months\/\" title=\"Mortgage rates reach 20-year peak, may climb higher and persist for months.\">typical single-family home<\/a>.<\/p>\n<p>&#8220;The supply of the real estate market is relatively inelastic, especially with rising\u200b construction costs\u200d and higher mortgage rates,&#8221; Tenpao \u2063Lee, professor emeritus of economics at Niagara University, told The Epoch Times. &#8220;Lower mortgage rates and construction\u200c costs\u200d will facilitate more housing supply. Demographical movements since\u2062 the pandemic will also expand many local markets geographically.&#8221;<\/p>\n<p>The \u2064banking turmoil earlier this year, which resulted in tightening in the financial sector, has also made it harder for construction and development\u200c loans to be approved, <a href=\"https:\/\/rsmus.com\/insights\/industries\/construction\/interest-rates-pose-challenges-for-builders-but-opportunities-on-horizon.html\" target=\"_blank\" rel=\"noopener\">RSM notes<\/a>.<\/p>\n<h2>Price Forecasts<\/h2>\n<p>Last week,\u200c Fed Chair Jerome Powell warned in his keynote address \u200dat the Jackson\u200c Hole \u200beconomy symposium that the central \u200bbank could keep raising interest \u2063rates because inf<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. housing market has rebounded, adding nearly $3 trillion in value after a slowdown. This reflects a thriving real estate sector, favoring sellers but posing difficulties for buyers. In June, the total worth of U.S. homes hit a record high of $47 trillion, increasing by 0.4%.<\/p>\n","protected":false},"author":278,"featured_media":2015211,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2015210","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2015210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/278"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2015210"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2015210\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2015211"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2015210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2015210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2015210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}