It was a week of highs This Week in Real Estate. As expected, the Federal Reserve on Wednesday raised the benchmark interest rate 25 basis points, for the 11th time since March of last year, to their highest level in more than 22 years. The Conference Board reported the July Consumer Confidence Index of 117 is the highest mark in two years as U.S. consumers assessment of both current economic conditions and outlook over the next six months improved. Per Attom’s 2023 U.S. Home Equity and Underwater Report, 49 percent of mortgaged residential properties in the U.S. were considered equity-rich in the second quarter, reaching its highest point in at least four years. According to the National Association of Realtors, the median existing-home sales prices in June soared to their second highest on record in the last two decades. Below are a few newsworthy events from the fourth week of July that influence our business:
Equity Improves for U.S. Homeowners as Housing Market Boom Shows Signs of Revival. 49 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. The portion of mortgaged homes that were equity-rich in the second quarter of 2023 increased from 47 percent in the first quarter of 2023, to the highest point in at least four years. With home prices rebounding across the U.S., the report found that the level of equity-rich mortgage-payers went up from the first quarter of 2023 to the second quarter of 2023 in 45 of the nation’s 50 states. The second-quarter upturn marked another sign of how the market shift has helped homeowners, as home-seller profits also spiked. “The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put. Equity levels were high even during the recent downturn, and now they are going back up and better than ever,” said Rob Barber, CEO for ATTOM. “It is well worth nothing that the market remains in flux and the recent improvement could easily be temporary. Lots of changing forces are at work affecting whether boom times are really back, especially amid a recent increase in mortgage rates. But with the 2023 peak buying season still underway, it seems that homeowners can reasonably expect their household balance sheets to grow a bit more in the near future.” Read the full story here.
NAR Economist: Housing Recession is Over. Pending home sales rose slightly in June, and the latest indicators are showing a housing market on the mend. Median existing-home sales prices in June soared to their second highest on record in the last two decades, and more buyers are facing multiple offer situations once again, the latest reports from the National Association of REALTORS shows. “The recovery has not taken place, but the housing recession is over,” says Lawrence Yun, NAR’s chief economist. “The presence of multiple offers implies that housing demand is not being satisfied due to a lack of supply. Homebuilders are ramping up production and hiring workers.” Housing inventories remain at historical lows, down 13.6% from even last year’s low levels. “There are simply not enough homes for sale,” Yun said in a recent report. Seventy-six percent of existing homes sold in June were on the market for less than a month, NAR’s data shows. NAR forecasts that the 30-year fixed-rate mortgage could reach 6.4% by the end of the year, followed by 6% in 2024. NAR predicts existing-home sales to fall 12.9% in 2023 compared to 2022, and then climb by 15.5% in 2024. “It is critical to expand supply as much as possible to widen access to home buying for more Americans,” Yun says. “Home prices will be influenced by how much inventory is brought to market. Increased homebuilding will tame price growth, while limited construction will lead to home price appreciation outpacing income growth.” Read the full story here.
U.S. Consumer Confidence Jumps to a Two-Year High as Inflation Eases. U.S. consumer confidence shot to the highest level in two years this month as inflationary pressures eased, and the American economy continued to show resilience in the face of dramatically higher interest rates. The Conference Board, a business research group, said its consumer confidence index rose to 117 in July from a revised 110.1 in June. The gauge beat the 110.5 that economists had expected and was the highest since July 2021. The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months. Both improved in July. The future expectations index rose to 88.3 in July, clearing the recession threshold of 80 recorded in June. The U.S. economy – the world’s largest – has proved surprisingly resilient in the face of sharply higher borrowing costs. Employers are adding a strong 278,000 jobs a month so far this year; and at 3.6% in June, the unemployment rate is not far off a half-century low. Tumbling inflation and sturdy hiring have raised hopes the Fed just might pull off a so-called soft landing – slowing the economy just enough to tame inflation without tipping the United States into recession. Read the full story here.
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