Housing industry poised for busy spring buying season
Despite concerns over an uptick in mortgage rates, the housing industry is bracing for a busy spring homebuying season, according to HousingWire, citing a new report from the First American Financial Corporation.
First American’s Real Estate Sentiment Index, which is based on a survey of title agents and other real estate professionals, showed that confidence in improved sales volumes edged up 0.4% in the first quarter of 2017 compared to the prior quarter and increased 0.63% year-over-year.
- The market also remains bullish on demand from millennials despite rising mortgage rates, noting that rates would need to reach 5.4% to significantly deter buyers entering the market.
Forecasts of bullish market conditions this year come amid concern over the impact of mortgage rate increases. These concerns were supported by the Federal Reserve’s decision this week to raise its benchmark interest rate to a range of 0.75% to 1% from a range of 0.50% to 0.75% previously.
Expectations of the rate hike were reflected in the 30-year fixed mortgage rate reaching its highest point so far this year last week at 4.21%.
Still, mortgage rates are near historical lows and other industry surveys suggest that a noticeable slowdown in market activity is unlikely until rates reach 5.5%.
Other indicators show optimism in the market, with private residential construction spending increasing 0.5% in January, while Commerce Department figures show sales of new single-family homes up 3.7% in January to a seasonally adjusted annual rate of 555,000.
Although rising mortgage rates stand to make purchasing a home harder for many younger, first-time buyers, homebuilders remain hopeful that robust demand, along with an infusion of inventory in the lower tier of the market, could offset that effect somewhat.
- First American Financial Corporation Improved Real Estate Outlook Suggests Strong Spring Market, According to First American Real Estate Sentiment Index
- HousingWire First American: Real estate industry prepping for strong Spring homebuying season