The US housing market has been through a tough time over the last few years. Interest rates have been high, causing residential investment to contract for seven straight quarters. This has been the longest such streak since the collapse of the housing bubble caused by the 2007-2009 Great Recession.
However, there is some good news on the horizon. Pending home sales in the US have risen for the third consecutive month in February, according to the National Association of Realtors. The Pending Home Sales Index, which is based on signed contracts, increased by 0.8% last month, reaching the highest level since August.
This is a great indication that the housing market slump could be bottoming out. Despite economists predicting a 2.3% drop in contracts, they actually rose. This was surprising, given that mortgage rates had been increasing from early February to early March. However, the surprise increase occurred due to a collapse in two regional banks, leading to lower US Treasury yields.
The demand for loans to purchase homes also increased by 2% last week, marking the fourth consecutive week of growth, according to the Mortgage Bankers Association. This is a great indication that the housing market is starting to recover. The average contract rate for a 30-year fixed-rate mortgage also dropped to a six-week low of 6.45%.
All of this is fantastic news for the housing market. It suggests that the market may be stabilizing at lower levels, which is good for those looking to buy or sell a home. Additionally, housing affordability is improving, with annual house price growth slowing significantly in recent months.
However, it’s important to remember that the housing market outlook is uncertain. The financial market stress has caused banks to tighten lending standards, which could make it harder for prospective homebuyers to borrow. Additionally, supply remains tight, which could prevent an outright decline in house prices.
Despite this uncertainty, there is a sense of cautious optimism that the US housing market is starting to recover. With pending home sales increasing for the third consecutive month, the demand for loans to purchase homes rising, and the average contract rate for a 30-year fixed-rate mortgage dropping to a six-week low, the signs are positive.
If you’re thinking about buying or selling a home, now could be a great time to do so. The housing market may be stabilizing, and with housing affordability improving, it could be a great time to make a move. Keep an eye on the market over the coming months, and make sure to work with a trusted real estate agent to help guide you through the process.