Time for the Housing Market to Spring Forward
March 17, 2019
Home sales dipped in January, leading to concerns about the health of the broader economy.
But with the Federal Reserve likely to keep interest rates on hold for the foreseeable future, there are hopes that the housing market will start to rebound.
On Monday, the National Association of Home Builders will release its latest monthly survey of builders. Confidence rose in February thanks to a dip in mortgage rates, which have dropped along with long-term bond yields this year.
Mortgage rates have fallen even further lately thanks to the Fed, as well as concerns about China’s economy and the latest Brexit drama. The 30-year fixed rate mortgage hit 4.31% last week, the lowest level in more than a year.
“The housing market is benefiting from stock market volatility,” said Odeta Kushi, deputy chief economist with First American. “We have a ton of pent-up demand from older Millennials sitting on the sidelines waiting to be homeowners. Lower rates should push up home sales.”
Kushi said the latest jobs report bodes well for housing, too. Even though the number of jobs added was disappointing, wages continued to rise. And that could help people trying to save money, so they can go from living at home or renting to buying a house.
She pointed to a recent increase in home construction and housing completions as another good sign. Supply is ampler than it had been.
“The housing market remains poised for a strong spring,” said Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association, writing in its most recent report on mortgage applications. Loan application volume rose 2.3% earlier this month.
“We are starting to see signs of more new residential construction and inventory, which increases buying opportunities for the many home shoppers who have been hampered by the ongoing lack of supply,” Kan added.
The latest MBA figures on mortgage applications will be released Wednesday.
All this could lead to a turnaround in existing home sales figures for February, which will be released by the National Association of Realtors on Friday. Sales fell 1.2% from December to January. But Kushi thinks they rebounded last month.
That should be good news for housing-related stocks too, which have already enjoyed a solid start to 2019 on hopes that the market is poised for a big comeback.
The SPDR S&P Homebuilders ETF (XHB) — which includes big builders like Lennar and Toll Brothers, as well as housing-related companies such as Roomba vacuum maker iRobot (IRBT) and appliance giant Whirlpool (WHR) — is up 17% this year.
Retailer Williams-Sonoma (WSM), which is also a member of the builder ETF, will report earnings Wednesday. Wall Street expects sales to rise 7% and profits to jump 17%.
See original at https://www.cnn.com/2019/03/17/investing/stocks-week-ahead-housing/index.html