In today’s US construction news, learn about the fact that in the second week of August, the national average 30-year fixed mortgage rate approached 7%, rising to 6.96% in the week ending August 10. Lastly, on Monday night in Midtown, an accident involving a bus and a work lift resulted in eight injuries.
When Will House Prices Fall
Original Source: Housing Market Predictions For 2023: When Will Home Prices Be Affordable Again?
Despite blazing summer heat, the housing market is slow.
The national average 30-year fixed mortgage rate reached 6.96% the week ending August 10.
According to the National Association of Realtors (NAR), the median existing-home sales price reached $410,200 in 2023, the second-highest price ever recorded, and is currently poised to surpass the June 2022 all-time high of $413,800.
Existing monthly home sales fell 3.3% year-over-year in all four major U.S. regions.
Strong demand and constrained inventory supply due to individuals who bought houses at record-low interest rates remaining put keep the market competitive despite increased mortgage rates. These and other variables create a perfect affordability crisis storm that keeps many potential homeowners out.
August 2023 Housing Forecast
High mortgage rates, high home prices, and low housing inventory keep the housing affordability problem going. High inflation and additional rate hikes remain.
As expected, Federal Reserve policymakers raised the federal funds rate by 25 basis points during the July meeting, raising mortgage rates to 6.96% by mid-month. Basis points are one-hundredth of percentage points. Banks lend overnight at the federal funds rate.
A Fed rate hike indirectly affects 30-year, fixed-rate mortgages. In March 2022, the Fed raised rates from near zero. Rates are 5.25%–5.5%.
Probably not. At the post-meeting press conference, Federal Reserve Chair Jerome Powell told reporters that the Fed’s measures have yet to fully influence the economy and that the committee’s efforts to control inflation to 2% still had “a long way to go.”
In June, the Fed projected a 5.6% terminal rate by 2023, meaning at least one more rate increase in 2023. Thus, many experts expect mortgage rates to stay above 6% this year.
Experts Expect Slow Housing Market Recovery
Although weekly averages for 30-year mortgage rates are down from their fall 2022 peak, if the ongoing oscillation between 6.5% and 7% continues—or rates break through 7% again—it’s hard to imagine housing market conditions improving anytime soon, especially if the Fed continues rate hikes.
Freddie Mac reported that first-quarter 2023 mortgage originations were $344 billion, the lowest since 2014. Housing analysts estimate 2023 originations to stay low. According to NAR, existing-home sales dropped 18.9%.
“I expect the number of homes for sale to decline this year and continue to dampen home sales,” said Realtor.com chief economist Danielle Hale in an email. “Despite three years of declining housing affordability, limited inventory is keeping prices high.”
However, some experts are focusing on market indicators of change.
“The housing recession is over,” declared NAR head economist Lawrence Yun.
Yun is hopeful, but he understands that property prices will stay high owing to demand surpassing supply and that additional inventory will help potential homebuyers.
August 2023 Housing Inventory Forecast
Since 2008, low housing inventory has been a problem. It won’t rebound in 2023.
Housing supply—especially entry-level supply—remains near historic lows, supporting demand and higher housing prices.
Despite the low resale availability, new single-family homes have been attracting keen buyers. In recent months, the price difference between the median existing-home sales price and new house sales price has narrowed, attracting homebuyers.
Mortgage rates rose above 6.5% in May and June, lowering new house sales. Compared to May, June sales fell 2.5% to 697,000 new single-family houses. According to the U.S. The U.S. The HUD.
“With low existing home inventory, new home inventory is becoming competitive, and new homes are now competitive on price,” said Navy Federal Credit Union corporate economist Robert Frick in an email. “A median-priced new house costs $5,000 more than an existing one.
New homes sold for $496,800 in October 2022, while existing homes sold for $378,800. This difference has narrowed 96%.
Existing home inventory was constant between May and June, limiting it to a 3.1-month supply at current sales pace. Inventory has stagnated at historic lows for months. Experts estimate a balanced housing market has four to six months of inventory.
Palisades Group chief investment officer and co-founder Jack Macdowell estimates inventory is 46% below the historical average since 1999. Macdowell predicts the inventory problem won’t be fixed in 2023.
Zillow estimates 4.3 million more homes are needed.
“There are simply not enough homes for millions of people,” stated Zillow senior economist Orphe Divounguy in a press release. “Unless we address the shortage of smaller, more affordable, starter-type homes, we risk leaving families without a seat—and it will only get worse.”
Housing Starts Forecast 2023
Despite volatile mortgage rates and other market difficulties, construction figures showed some home builder wariness.
After four months, single-family construction starts fell 7% in June as building permit applications gained 2.2%, according to the Census Bureau and HUD.
Meanwhile, builder confidence rises slowly.
Builder confidence rose from 55 to 56 in the latest NAHB/Wells Fargo Housing Market Index (HMI). Last year, the index reached this high.
Builders are optimistic about new construction if the reading is 50 or higher.
In July, unsatisfied homebuyers turned to new construction despite mortgage rates around 7%. In July, 22% of builders trimmed sales, down from 25% in June and 27% in May.
“The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers,” said NAHB chairman Alicia Huey in a news statement.
Even as builders try to satisfy demand, they face higher costs, shortages of construction workers, lots, and financing due to the Fed’s relentless interest rate hikes.
Builders also consider high mortgage rates, an indirect effect of the Fed’s monetary strategy to lower inflation.
“Although builders continue to remain cautiously optimistic about market conditions, the quarter-point rise in mortgage rates over the past month is a stark reminder of the stop and start process the market will experience as the Federal Reserve nears the end of the ongoing tightening cycle,” said NAHB chief economist Robert Dietz.
Should I Buy a House in 2023?
Any market’s home purchase is personal. Before buying a property, most people should be financially stable.
Use a mortgage calculator to determine your monthly housing expenditures.
Predicting this year’s housing market is risky. Neda Navab, Compass’s U.S. region president, warns that buyers waiting for cheaper prices may be disappointed.
Divounguy says, “The housing market—like so many other markets—is almost impossible to time. “The best time for prospective buyers is when they find a home they like, that meets their family’s current and foreseeable needs, and that they can afford.”
Divounguy recommends “getting on the housing ladder” to develop equity and wealth.
Experts advise buying a property within your budget and wants rather than waiting for decreasing pricing. If a property you love in a location you love fits your budget, it may be appropriate for you. If you make too many compromises to acquire a house, you may develop buyer’s remorse and sell it.
Housing Market Advice
Be flexible, as prices may still be too high in the location you wish to buy a home.
“If you desperately want a house and can work remotely or switch jobs, moving to lower-priced housing markets is a good idea,” adds Frick. “Millions of Americans have.”
Review your finances, gather papers, shop different lenders, and improve your credit score before applying. So you can act quickly in a tight market when you find your dream house.
“Only the best prepared, with their financing lined up, a solid understanding of what they can afford, and constant checking of prices and listings will succeed in today’s highly-competitive market,” adds Frick. “Know your monthly payment—including taxes—and how it fits into your budget.”
In a competitive home market, knowing a local realtor might also help you.
“Discover your options with a reputable, experienced agent,” Divounguy advises. Buyers may expect competition, especially in affordable locations and for affordable residences, due to low availability.
Construction Lift Hits Midtown MTA Bus, Injuring 8
Original Source: 8 injured after construction lift strikes MTA bus in Midtown
A Midtown bus hit a work lift Monday night, injuring eight people. The terrifying crash occurred at 8:30 p.m. on East 48th Street and Madison Avenue. Police said the lift hit the M6 bus’s side as it traveled north on Madison Avenue. Eight people were evaluated for minor injuries. We don’t know what happened.
Summary of today’s construction news
To sum it up, despite rising mortgage rates, the market is nevertheless highly competitive because of high consumer demand and a limited supply of available properties, in part because homeowners who bought houses at historically cheap interest rates in recent years have decided to stay put. These and other elements combine to create the ideal affordability storm that keeps many would-be homeowners at a disadvantage.
Lastly, Eight people were treated after sustaining minor injuries. Unknown at this time are the incident’s circumstances.
