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Interest Rates Key to Spring Home Sales

High prices and interest rates have frozen millions of prospective homebuyers out of the market, but there are some green shoots as we enter the spring selling season. The National Association of Realtors reported that existing home sales ended a 12-month slump in February, jumping 14.5% from January to 4.6 million at a seasonally adjusted annual rate. Sales were still down 22.6% from February 2022. The Commerce Department reported that new one-family homes were selling at a 670,000 a year pace in January, up 7.2% from December but down 19.4% from 831,000 a year earlier. Meanwhile, a leading indicator for the industry, housing permits, posted a 13.8% month-over-month gain in February -- but the 1.52 million permits in February were down 17.9% from February 2022. Housing prices are finally starting to cool. The S&P/Case-Shiller National Home Price Index for December 2022 notched a sixth straight monthly decline. The average price was still up 5.8% year-over-year. The National Association of Realtors reported that home prices in February ended a 131-month run of year-over-year increases with a 0.2% decline to $363,000. The 30-year fixed-rate mortgage recently eased to 6.6% from a November 2022 peak near 7%, but it is still too high for many. Homebuilder Lennar reported that interest rates and sticker shock continued to constrain sales in December, while lower interest rates energized sales in January and early February. The National Association of Home Builders reported that builder sentiment rose by two points in March, to 44, a third consecutive increase. While it is too early to tell if this is a turning point, it seems clear the housing sector will not boost U.S. economic growth until pricing pressures and mortgage rates ease. ...  January, up 7.2% from December but down 19.4% from 831,000 a year earlier. Meanwhile, a leading indicator for the industry, housing permits, posted a 13.8% month-over-month gain in February -- but the 1.52 million permits in February were down 17.9% from February 2022. Housing prices are finally starting to cool. The S&P/Case-Shiller National Home Price Index for December 2022 notched a sixth straight monthly decline. The average price was still up 5.8% year-over-year. The National Association of Realtors reported that home prices in February ended a 131-month run of year-over-year increases with a 0.2% decline to $363,000. The 30-year fixed-rate mortgage recently eased to 6.6% from a November 2022 peak near 7%, but it is still too high for many. Homebuilder Lennar reported that interest rates and sticker shock continued to constrain sales in December, while lower interest rates energized sales in January and early February. The National Association of Home Builders reported that builder sentiment rose by two points in March, to 44, a third consecutive increase. While it is too early to tell if this is a turning point, it seems clear the housing sector will not boost U.S. economic growth until pricing pressures and mortgage rates ease.   more

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