Home builder confidence declines

WASHINGTON – According to the National Association of Home Builder’s (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence for newly-built single-family homes fell two points to 72 in March. Sentiment levels have held in a firm range in the low- to mid-70s for the past six months.
“Builder confidence remains solid, although sales expectations for the next six months dropped four points on economic uncertainty stemming from the coronavirus,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J.

Global uncertainty and fewer first-time buyers could impact housing

November 2015's housing data was positive with the exception of existing house sales (-3.8% Y/Y). The volatile multi family sector remains strong (+21.3% Y/Y; ≈35% of all starts) with rents rising.Housing prices are increasing steadily as inventories are low (4.6 months supply for SF, 4.8 months for existing homes). Yet, fewer houses are bought by first time buyers (≈32% now vs. ≈40% historically) due to a variety of reasons. Without the return of these first time buyers, it's hard to envision a return of the housing market to "normal."

How will Fed rate hike affect housing?

The Federal Reserve’s increase in its benchmark short-term interest rate and future rate increases in the next few years will affect the U.S. economy in several ways. But if the increases are gradual, the affect on the U.S. housing market will not be large. Rates will increase on mortgages, but the Fed has emphasized that they will move gradually and in small increments, according to a report in USA Today.