American Optimism Highest Since Start of Pandemic – According to the Consumer Sentiment Index produced by the University of Michigan, Americans are now feeling the most upbeat about the economy than at any other point since the start of the pandemic. The housing market also likely will continue to surge, economists predict. Pandemic-era housing protections also are giving consumers a reason to look favorably on housing, as the Centers for Disease Control and Prevention announced recently that it is extending its national eviction moratorium through June 30th. The index has increased to 84.9 points, from 83 earlier in the month. Economists note that seldom does an index show such a big improvement in the same month, MarketWatch reports. More stimulus checks, job growth, and vaccine doses are helping to boost optimism. However, the consumer sentiment index still remains about 16 points below its pre-pandemic peak.
Source and link to the full article: “Americans Are the Most Upbeat Since the Pandemic, Consumer Sentiment Survey Shows,” MarketWatch (March 26, 2021) and “Jobless Claims Dropped to the Lowest Level Since the Pandemic Started,” National Association of REALTORS® Economists’ Outlook blog (March 26, 2021)
Aspiring First-Time Buyers Persevere in Hot Market – Based on a recent survey by realtor.com®, with rising home prices, shortages of homes for sale, and with those trying to buy for the first time are particularly feeling the effects. A don’t-give-up mindset may be key for first-time home buyers. Forty-three percent of more than 800 prospective home buyers say they’ve been searching for a home for more than a year. One-third of respondents say they’ve been in the market searching for a home between 6 and 12 months. “Americans, even millennials who many thought would never buy, have a strong preference for homeownership for the same reasons many generations before them have, to invest in a place of their own and in their communities, and to build a solid financial foundation for themselves and their families,” says George Ratiu, realtor.com® senior economist. “However, today’s first-time home buyers face unprecedented challenges brought on by a lack of available homes for sale and double-digit price growth. They are resilient, though, with many in the market searching for their home for more than a year.”
Source and link to the full article: realtor.com®
Buyers Feeling Rate Pressures – According to Sam Khater, Freddie Mac’s chief economist, home buyers may feel even more of a rush to lock in mortgage rates trying to get ahead of any further increases. Over the last month, the 30-year fixed-rate mortgage has moved above its sub-3% ultra-low averages to jumping recently to a 3.17% average. “During the course of the pandemic, ‘home’ has become more important than ever,” says Sam Khater. “As a result, strong purchase demand continues, but buyers also outnumber the sellers. Since January, mortgage rates have increased half a percentage point from historic lows and home prices have risen, leaving potential homebuyers with less purchasing power. Unfortunately, this has disproportionately affected the low end of the market, where supply is the slimmest.” Despite interest rate increases, rates still remain lower than a year earlier, when the pandemic had first hit the country.
Builders Slow Production to Catch Up With Demand – Based on the real estate analytics firm Zonda’s latest New-Home Pending Sales Index, builders are slowing down production to catch up with a backlog of projects while trying to keep construction prices in check. In February, pending new-home sales fell month over month but are still up 35% annually across the country. Government data also showed a 10.3% decrease in February new-home construction. Builders are reporting that increases in material costs, notably on lumber are continuing to challenge growth in new-home construction. “Seventy percent of builders are intentionally slowing or pausing sales to better align contracts with production capacity, which makes drawing market conclusions more difficult,” says Ali Wolf, chief economist of Zonda. “The underlying demand in the housing market is still there, though, even as prices and mortgage rates rise.”
Source and link to the full article: “New Home PSI: Sales Grew 35% YoY in February as Consumers Pushed Past Rising Home Prices and Mortgage Rates,” Zonda (March 19, 2021)