Cooling Rates Spark “Cautious Optimism” In Housing Pros

Cooling interest rates have opened a path for potential buyers heading into 2024, sparking “cautious optimism” for housing professionals. First American’s Potential Home Sales Model for November 2023 saw its biggest monthly increase since December 2022, up 1.3%. That translates to 5.30 million potential existing home sales at a seasonally adjusted annualized rate. The Potential Home Sales Model measures what the healthy level of home sales should be based on economic, demographic, and housing market fundamentals. First American Chief Economist Mark Fleming says mortgage rate declines in November fueled the data. Mortgage rates dipped below 7% for the first time since August last week after the Federal Reserve set the stage for rate cuts in the coming year. That decline,…

Housing Market “Rhymes” Wild 1980s Market

Today’s housing market proves that history does, in fact, recycle its best hits. But it’s not 2008 getting a re-do. That’s according to First American Financial’s Chief Economist Mark Fleming, who notes that the market of today is closer to that of the 1980s– not an exact comparison, but close enough to glean insights. “Today’s housing market isn’t anything like the housing market of the mid-2000s – the housing market today is not overbuilt, nor is it driven by loose lending standards, sub-prime mortgages, or homeowners who are highly leveraged,” he said. “However, the current housing market is similar to the market of the 1980s. History doesn’t repeat itself, but it often rhymes.” First American’s Potential Home Sales Model slipped…

Tightening Credit A New Concern For The Mortgage Market

Recent bank failures have created another problem for the housing market: lack of credit. First American’s Potential Home Sales Model– a measure of what a healthy level of home sales should be based on market fundamentals– fell by 2.5% month-over-month in March. Year-over-year, it is down 10.7%, a loss of more than 640,000 sales. The biggest contributor to the decline was tightening credit standards, First American says. At the beginning of the pandemic, lenders reduced credit due to the increased likelihood of forbearance and delinquency, but it slowly began to ease. Now, credit is tightening again thanks to banking uncertainty. “There are fears that the recent bank failures will prompt lenders to be much more conservative with their lending,” said…