Home builder sentiment sees biggest monthly improvement in over 10 years
The National Association of Home Builders showed positive sentiment in their February 2023 report released on Wednesday. The report details current sales, buyer traffic, and the outlook for new construction. Compared to January 2023 numbers, all three metrics increased for the second straight month. The most recent numbers were the strongest reading since September 2022 and showed the largest monthly increase since June 2013.
Builders cited construction costs and building material supply chain logjams as potential areas of concern, but the overall sentiment of the report was very positive about the housing market for the Spring.
How about the recent mortgage demand metrics?
The Mortgage Bankers Association also provided data on Wednesday, and theirs mirrored the recent increase in the national average for mortgage rates. After seeing mortgage rates decline for five straight weeks, they increased after the recent inflation and jobs data was released. This triggered a slowdown in mortgage applications by 7.7% comparing week-over-week data.
However, real estate agents across the country saw an increase in buyer demand despite the recent challenges. Dana Rice, a real estate agent from Compass, stated, “We went from no showings and nobody coming to open houses, that every single thing that I’ve launched in the last couple of weeks has had multiple offers.”
Is the current housing market pushing investors out?
The number of homes purchased by investors fell last quarter amid higher mortgage rates and increased housing costs. Could this actually benefit homebuyers that are looking for a residence? According to Redfin economist, Sheharyar Bokhari, it could. When asked about investors buying at a slower pace, Bokhari said, “That’s good news for individual buyers,” and acknowledged that buyers are “no longer losing bidding war after bidding war to investors.
Last quarter’s drop in investor purchases surpassed the biggest decline in history. The subprime mortgage crisis in 2008 saw investor purchases dip 45.1% as the housing market struggled. The new record is 45.8% which was set in Q4 2022.
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