Dive Brief:
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The results of the U.S. general election did not fundamentally impact demand in the housing sector, with 79% of buyers reporting their plans were unchanged while 10% said they were more likely to buy and 5% said they were less likely, according to a new Realtor.com survey of visitors to the real-estate listing website who identified themselves as buyers.
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Overall demand dipped slightly ahead of the election but has since rebounded. Listing views, an indicator of future demand, on the website fell from a year-over-year rate of 15% this summer to 13% in October and down to 6% during election week but increased to 15% a week later.
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The recent moves in mortgage interest rates could stifle future growth in the market. Realtor.com said the rate shift has cut buying power by 7% since Election Day, reflecting concern over higher inflation.
Dive Insight:
Although many of the housing market fundamentals remain largely unchanged, the latest survey by Realtor.com adds further weight to suggestions that the housing market received a short-term, psychological shot in the arm immediately following the election as some of the pre-election uncertainty dissipated.
Fannie Mae Chief Economist Doug Duncan reported this week that consumer optimism was buoyed immediately following the election.
Despite forecasts of robust demand levels and prices heading into the new year, concerns are mounting that the market could be heading for choppy waters if mortgage rates continue to rise.
Black Knight Financial Services reported this week that U.S. homes are now less affordable than they were before the election because of the roughly 50-basis-point rate rise.
Fears are also mounting that growth in the sector could be curbed if the Federal Reserve increases its benchmark rates after Fed Chair Janet Yellen hinted in November that a hike is likely before the end of the year. The Fed last raised its benchmark rate in December 2015 and it currently sits between 0.25% and 0.5%.
Any increase by the Fed could see mortgage rates rise further and put a dent in demand as buying a home becomes more expensive, while higher interest rates could also impact homebuilders’ borrowing costs.
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