The rush in refinances in the last weeks gave a spark to the housing market due to low rates, which is almost a no brainer due to the potential savings in monthly payments. But mortgage demand flattens with reports of economic uncertainty.
Mortgage application volume lowers again according to the Mortgage Bankers Association.
Demand fell as the recent sharp declines in mortgage interest rates flattened.
The Pending Home Sales Index, home sales declined in July by 2.5%. According to the National Association of Realtors, “A forward-looking indicator based on contract signings, decreased 2.5% to 105.6 in July, down from 108.3 in June. Year-over-year contract signings fell 0.3%, doing an about-face of the prior month’s increase.”
Uncertainty in the current trade wars and the constant report of a recession could be the contributing factor for the slow down.
These economic uncertainties are holding back potential demand in the housing market, said Lawrence Yun, chief economist of the National Association of Realtors. And will see a continuance of mortgage demand flattens if the news of trade wars and recession keeps scaring would-be home buyers.
Mortgage rates are at multi-year lows-3.94% on an average for a 30-year fixed-rate loan. But that hasn’t inspired a run in the housing market.
The anticipation of a recession in itself could make housing shortage even worse. Would-be sellers might postpone selling their home until they get top dollar for their property.
And, buyers are reluctant to take the risk of buying a home with the fear of lay-offs in the midst.
Low rates flushed the market with mortgage refinances and it became the major share of mortgage applications, almost 63%.
Mortgages are not the only piece of the puzzle. Construction for new homes has been at a slow pace since builders are confronted by the high cost of land, raw materials are on the rise and decreasing skilled labor force.
Commercial Real Estate
Another indicator of slowing down are overseas investors for commercial buildings. According to rcanalytics. More investors sold than bought commercial real estate in the country. Notably, Chinese investors slid to no. 9 in ranking for commercial real estate investors.
The market is in the “wait and see” climate. Indicators for a confident market will dampen because of the following uncertainties. The supply of moderately to lower-priced homes is one of the key factors that buyers will engage in and look in the future.