The housing market is going through some serious changes as the recession continues to be a factor. Homebuilding has been slow to rebound from the recession, while unaffordability has been growing. Fortunately, prices are rising in most parts of the country, but the mortgage volume has dropped considerably.
- 1 Prices are rising in most parts of the country
- 2 Homebuilding has been slow to recover from the 2008 recession
- 3 Homebuilder sentiment has fallen in the face of rising unaffordability
- 4 Mortgage volume is down significantly compared to where it was last summer
- 5 Reverse commuters are not specific to one generation
Prices are rising in most parts of the country
Across the United States, prices are rising at an increasingly rapid pace. Prices for the items Americans need every day are getting more expensive, making life more difficult for families. It’s no wonder families are feeling the pinch.
According to the Bureau of Labor Statistics, the cost of living in the United States increased at its fastest rate in 40 years. The metric used to measure this is the Consumer Price Index, or CPI, which measures changes in the price of goods and services. In the month of October, consumer prices increased 6.6 percent, the highest monthly rate since 2007.
There are plenty of reasons why rising prices are bad for American families. They increase borrowing costs, erode paycheck value and make it harder for people to build wealth. But the rising costs of everyday goods and services also impact the poor, who are the biggest losers.
Homebuilding has been slow to recover from the 2008 recession
In the decade since the 2008 financial crisis, US homebuilding has been slow to recover. However, the sector has reasons to be bullish. And second-quarter earnings season could be a turning point.
Homebuilders had a strong first half of the year. Revenues rose 4% and orders grew 6%. Those positive trends boosted builder sentiment. It is important to note that the housing industry is extremely fragmented. That means different risks and returns for each type of building.
The supply side has remained a key issue for the home building industry. A large supply gap has left homes unaffordable for many renters. This has been a real problem for the US housing industry, as it has ripple effects on all sectors of the economy.
Low unemployment has also made hiring difficult. But the long economic expansion has lifted builder confidence.
Homebuilder sentiment has fallen in the face of rising unaffordability
Inflation and rising interest rates are taking a toll on the housing market. Amid a growing unaffordability crisis, homebuilder sentiment has declined.
According to the National Association of Home Builders (NAHB), rising interest rates and supply-chain issues are taking a toll on the nation’s housing market. The NAHB/Wells Fargo Housing Market Index fell 2 points to 77 in March. This is the lowest reading since May 2020.
The index also reveals that the housing market is experiencing its slowest growth in nearly two years. Despite the slowdown, the NAHB expects that the housing market will start to recover by 2024.
However, affordability remains an important factor for would-be buyers. Rising mortgage rates are stifling demand and pushing prices upward. Since the start of the year, the 30-year fixed mortgage rate has risen sharply.
Mortgage volume is down significantly compared to where it was last summer
One of the biggest factors that influences the mortgage market is the Federal Reserve bond-buying policy. The Fed has been buying billions of dollars of bonds in response to the economy’s pandemic.
Mortgage rates are rising and refinancing has been declining. This has created a downward cycle in the mortgage industry. It has also made it harder for homeowners to make the payment on their home. Home sales are down considerably compared to last summer. Although the housing market seems to be turning around in certain parts of the country, in other cities, prices are still on the rise.
The Federal Reserve has begun tapering its bond-buying policy. This policy is one of the major forces behind the rising mortgage rate. Since June, the Fed has been purchasing billions of dollars in bonds. As a result, banks have lost a huge amount of their portfolio mortgage holdings. They could be unable to sell all of the mortgages they hold, which would put additional pressure on buyers.
Reverse commuters are not specific to one generation
Many metros have seen an explosion in reverse commuters, but not all of them have seen a similar increase. In fact, in the United States more than 70 percent of urban residents are not in their work location. Although there are many benefits to reverse commuting, it can also pose a number of problems. One of the most significant is the negative impact on sustainability and congestion. There are also complex social and technological issues associated with reverse commuting.
The modern era of technology has enabled new types of mobility options. For instance, a new generation of employees has been shown to be much more receptive to shared transportation options. They also tend to eschew personal cars, favoring ridesharing and other forms of mass transit.