Growing headwinds continue to rock the housing and home improvement sectors, with analysts predicting a slowdown in the coming months, although demand remains robust. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
STARTING AND SALES OF NEW HOUSES
The housing market is expected to see stable conditions for the remainder of 2022 and a decline in 2023 as growing challenges in the form of higher mortgage rates, supply chain delays and sharp increases in building materials continue worsen accessibility conditions, according to the chief economist. for the National Association of Home Builders. Citing a recent year-over-year decline in single-family housing permits, NAHB chief economist Robert Dietz said rising mortgage rates and continued supply chain disruptions “continue increase housing costs and weigh on the housing market”. Recent builder surveys also reveal significantly lower confidence in the single-family home market, the NAHB said.
SALES OF EXISTING HOUSES
Existing home prices have surged for nearly two years, including in the first quarter of 2022, but given the extremely low inventory of homes for sale, “appreciation is likely to slow in the coming months,” according to the latest forecast from the market. National Association of Realtors. Lawrence Yun, chief economist at the Washington, DC-based NAR, said his prediction was based on an expectation of additional supply over the next few quarters, noting that the start of the first quarter had seen a record level of inventory. Yun said he also expects housing demand to decline, with mortgage rates weighing more on affordability. “Rising home prices and sharply rising mortgage rates have reduced buyer activity,” Yun observed, noting that pending home sales have declined in recent months and are at the slowest pace in nearly 10 months. ‘a decade. “It looks like more declines are imminent in the coming months,” said Yun, who forecast existing home sales to decline 9% in 2022.
According to estimates by the National Association of Home Builders, buyers of new and existing homes spend thousands more on renovations and furnishings in the first year after a purchase compared to homeowners who don’t move. The latest NAHB estimates, based on pre-pandemic data from the Bureau of Labor Statistics, reveal that in the first year after purchase, a typical buyer of a newly built single-family home spends an average of $9,250 more than a similar owner who does not move. . Similarly, a buyer of an existing single-family home tends to spend about $5,240 more on renovations, furnishings and appliances than a similar owner who is not moving.
CABINETS AND VANITIES SALE
Sales of kitchen cabinets and bathroom vanities increased significantly in April, continuing a growth trajectory that began last year and continued through the first quarter of 2022, the Kitchen reported. Cabinet Manufacturers Association. According to the latest KCMA Monthly Business Trends Survey, participating cabinet makers reported an 11.9% increase in overall cabinet sales in April compared to April 2021. Custom cabinet sales increased increased by 11.7% compared to the same month last year, while sales of semi-custom cabinets gained 13.7% and sales of stock cabinets increased by 10.7%, said KCMA, based in Reston, Va.
“Important questions” about housing in the coming months
NATIONAL HARBOUR, MD – Two years after suffering the financial impact of COVID-19, and despite a recent robust housing market, “there are significant questions” regarding the direction of the market over the next few months, according to the Chief Economist of the National Association of Realtors.
Speaking to real estate experts at recent NAR legislative meetings, NAR Chief Economist Lawrence Yun said that while “housing has kept the economy afloat as property prices homes increased and buyer demand intensified, this year has already thrown a few curve balls, including record inventory and unyielding inflation.”
As housing supply appears to be on the rise, Yun said inflation will persist and “cause stress” for potential buyers. Other external factors will negatively impact the market, he noted.
“The Russian-Ukrainian war and escalating fuel prices have made housing even more unaffordable for buyers,” Yun said, noting that buying a home is currently 55% more expensive than it is. a year ago, when mortgage rates rose sharply and inflation increased. at 8.5%.
Yun said inflation will remain “high” in the coming months and the market will see further monetary policy tightening through a series of rate hikes. Citing a five-month decline in pending home sales, as well as a decline in sales of newly built single-family homes, he predicted that rising mortgage rates will slow the housing market.