Housing Market Outlook After The Feds Cut Interest Rates
Housing Market Outlook After The Feds Cut Interest Rates
This ARTICLE On Housing Market Outlook After The Feds Cut Interest Rates Was PUBLISHED On August 7th, 2019
Housing prices have been increasing for the past three years due to inventory shortage.
- Despite record-high mortgage rates since the 2008 Great Recession in 2018, home pricing keeps rising
- The housing inventory shortage with added competition by home buyers resulted in gains in home prices throughout 2018 and into the first half of 2019
- In June 2019, housing inventory hit a new low
- New home listings in June increased to 2.8% annually
- This figure was lower than the 2.9% increase for May 2019
- Housing inventory gains decreased in 2019 to 6.4% growth in January 2019 to 5.8% growth level in February 2019
- Housing inventory gains are continuing to slow month after month
- Industry experts predict it is going to reach its first decline in the coming months in 2019
- Competition for homes still remain strong and was expected to decrease until the Feds announced last week they cut interest rates by 25 basis points
- However, mortgage industry experts are predicting a strong home purchase and refinance markets for the remaining 2019 going strong into 2020
In this article, we will cover and discuss the housing market outlook after the Feds cut interest rates.
Competition On Housing Market Outlook
Competition in the housing market was expected to slow down this year until the news of the Fed interest rate cuts.
- In April 2019, listings on the national MLS increased substantially and home prices stabilized
- Home bidding wars on purchases seemed to cool down a bit and not too many buyers offered higher than listing price on homes
- Then mortgage rates have started sliding downwards
- Mortgage Rates have been sliding since the start of 2019
- Federal Reserve Board Chairman Jerome Powell announced the Feds will not increase interest rates this year
- Then the Feds decided to cut interest rates
- Interest rates have not been cut by the Feds in almost a decade
- The Fed Chairman Jerome Powell hinted that the Feds may be cutting rates in the coming months and into 2020
- This news drove mortgage rates below 4.0%
- All signs signal mortgage rates will be heading lower
- Both the home purchase and refinance markets are exploding to record levels
Most mortgage lenders are behind in turnaround times. Average closing dates are now averaging 40 days versus 29 days 60 days ago.
Housing Inventory Shortage Is Reaching Historic Levels
Homebuilders nationwide are thriving. They are getting homes sold out prior to even breaking ground. Home prices are increasing in most parts of the country. Supply is scarce and many industry experts are expecting housing inventory to hit a new record low.
According to Alex Carlucci, a senior vice president at Gustan Cho Associates and housing market analyst, he said the following:
Demand For Homes And Housing Market Outlook
Many millennials are buying their first homes. Housing Market Outlook looks promising for first time home buyers. Many are seeking to purchase homes in the suburbs. The suburban markets cannot keep up with demand. Many elderly homeowners are selling their homes and downsizing. The economy is doing great. The lowest numbers of unemployment data have been registered in the history of the United States. Many have accumulated wealth with the increase of their 401k due to the record high stock markets. Many folks are buying second and/or vacation homes. Many lenders like Gustan Cho Associates have launched Non-QM and Alternative Financing Loan Programs. Bank Statement Loans for self-employed borrowers are making self-employed borrowers qualify for home loans.
Alex Carlucci adds the following statement about the 2019/2020 Housing Market Outlook:
All real estate is local of course, and inventory is leanest in some of the nation’s most affordable markets. In the 46 major markets tracked by Redfin, a real estate brokerage and analytics company, inventory fell in June annually for the first time since last September. Cities like Memphis, Tennessee, Pittsburgh, and Oklahoma City saw double-digit declines in the supply of homes for sale, while much pricier markets like San Jose, California, Seattle and Boston were still seeing inventory gains. Lower interest rates are bringing buyers back, but without enough homes for sale to meet demand, we expect to see more bidding wars, which will push prices up this summer. We expect small, inland markets where a typical home is still affordable for a middle-class family to heat up the most.
For more information about the content of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.