On the other hand, investment home sales are likely to decline this year, in part because of higher interest rates. There are fewer incentives to speculate in the market with price appreciation cooling in much of the country. |
Our definition of second homes has changed with the buyer shift toward investment property, ... In examining Census data to determine the number of investment units, we see that second homes are a much larger share than the conventional mind-set of them being mostly vacation homes. |
Our in-house tracking of major brokers across the country shows sales activity making some recovery, ... which demonstrates that the underlying demand and fundamentals of the market remain strong. |
Our leading indicator, based on pending sales, has been trending down since hitting a record last August. In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they'll maintain a historically high pace. |
Part of what we're seeing now is 'fence-jumping' from people wanting to buy a home before interest rates move higher. Even with an additional rise in recent weeks, the good news is that mortgage interest rates now appear to be leveling out in the 6.3 percent range. |
People can get overexcited. That should go away. |
Right now, home sales are a little lower than projected, but they can be sustained around current levels. |
Since 1971 there have been only five months when mortgage interest rates were lower, and all of those have been during the last year and a half. |
Since April we've experienced three out of the four strongest months on record for existing-home sales, and August was the sixth highest. We're at a more sustainable level now, but long-term there should be some additional easing toward the end of the year. In fact, the August sales pace is close to what we project for total sales this year. |
So far this year, we've already recorded the four highest monthly sales rates on record for existing-home sales, but the pace can't stay at unprecedented levels indefinitely, |
So, 2005, when we look back, was the best year in housing in recent memory, probably of all time. |
Some of the cooling is coming from non-boom markets such as Detroit, where there are job problems. I do worry about those markets if the economy continues to slow, though we do expect the economy to pick up in the first quarter. |
still pretty good in historic terms. |
The (housing) boom is obviously winding down. But it's important to note that it's winding down, but still to healthy levels of activity. |
The (Pending Home Sales) index has been fluctuating in a fairly narrow range over the last six months -- a very high range -- so the overall market is moving forward with a lot of momentum. |