Key Real Estate Market Highlights from Feb 14-21, 23
- Housing starts are lower, mortgage rates are high, yet builder sentiment is strong: the real estate industry trudges along
- New listings see a decline of 17% year over year
- Housing starts fall 4.5% in January, which is the lowest they’ve been since 2020
- Existing home sales decline 0.7% in January, which makes them down for the 12th consecutive month
- despite all this, the National Association of Home Builders (NAHB) Housing Market Index (HMI) saw gains for the second month in a row, to 42 points
Real Estate Market Highlights: A Closer Look
HMI provides a measure of confidence that home builders have in the health of their market. Despite the struggling performance of other market indicators and the challenges with supply chain issues and sky-high construction costs, this 11 point climb over the past couple of month suggests that builders are anticipating a turn for the better. In fact, this month we’ve seen the largest single-month jump in the HMI since June of 2013. That said, we are still 8 points behind the breakeven level of 50, so it’s prudent to remain cautious about any optimism.
“Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle. And while we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024.” –Robert Dietz, Chief Economist, NAHB
Two months of increase for home builder sentiment: https://t.co/A4FhwVP52O— Robert Dietz (@dietz_econ) February 15, 2023
What This Means for Homebuyers, Sellers & Real Estate Professionals
In February, 57% of builders offered some kind of buyer incentives to attract market movement. This number is down from 59% in November and 62% in December. Moreover, 31% of builders reduced the price of their homes in February, compared to 35% in December. As mortgage rates stabilize, this suggests that they are anticipating buyer interest to pick back up. The slight gains that we are seeing in housing affordability coupled with efforts to create more housing availability both point to buyers being priced back in to the market.
As a real estate agent, the road ahead will remain tenuous for a little while longer. This means you may need to rethink your business strategy, reevaluate your spending, and take a closer look at your client acquisition models. Check out our article on Marketing vs. Prospecting to get a better sense of strategies that work during a market shift.
When you’re ready to take action, book a free demo with Parkbench to learn more about their Prospecting Program. They guarantee you at least six deals in your first year alone…because their program actually works. In fact, the National Association of REALTORS® selected Parkbench to be part of REACH, their Technology Accelerator program for this reason. Find out for yourself and schedule a meeting below.
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