Buyer Surge Coming
Happy Friday! Brian Manning here with the weekly update. Let’s get right to it.
Monday this week was President’s Day, so there was nothing to report there. Let’s skip Tuesday, as it was a quiet news day, and go right to Wednesday.
Wednesday was all about new construction. We received information on housing starts and permits, looking at what builders are doing across the country based on the demand we’re seeing. Housing starts were down 7.3 percent. Builders do this because they are monitoring household formations; they want to keep their finger on the pulse and don’t want to push too much inventory into the marketplace. I’d say this is a smart decision—seeing builders across the country slow down on starts helps manage inventory levels.
Then, on Thursday of this week, we got pending home sales for the month of January. Pending home sales are always very weather-dependent, and the challenge in January was that the Northeast had horrible weather. Some places got snow they haven’t seen in many, many years. Because of the weather on the East Coast, numbers were definitely impacted: pending home sales were down 8/10ths of a percent when it was expected they would be up 2 percent. I’m not surprised to see the weather impacting those numbers. However, if you look at the Midwest, pending home sales were up 5 percent. It was good to see that when you compartmentalize different areas of the country.
Then we had Lawrence Yun, the Chief Economist for the National Association of Realtors, come out. He discussed interest rates moving lower. Based on this recent move, he estimates that an additional 5.5 million people will now qualify to purchase a home. They expect that out of those 5.5 million people, 10 percent—or 550,000 additional homebuyers—will actually enter the marketplace this year.
Speaking of rates, we just locked in a VA rate—get this—at 4.95 percent. I’m telling anyone out there who has been waiting for rates to move lower or waiting for the housing market to crash: as rates continue to move lower (and we’ve seen them move nicely lower the last couple of weeks), this is going to be fuel on the fire for buyers. Locking in VA rates in the fours right now is going to have a positive impact on housing.
Finally, today we received new home sales data for November and December. This covers signed contracts during those months. These were really strong reports, though the data was delayed because of the government shutdown. In the month of November, signed contracts were up—get this—15 percent. In the month of December, they were down 1.7 percent, but these are still the strongest numbers we have seen since February of 2022. I can tell you from experience and what we are seeing in the marketplace that buyer demand is up. These new home sales and signed contracts being up substantially is right in line with what we are seeing as well.
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Happy Friday! I hope everybody has a great day.
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