US Real Estate Market Outlook in June
Just released HMI (Home Builders/Wells Fargo Housing Market Index) declined one point to 15 in June from 16 in May.
NAHB Chairman Joe Robson noted “the outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability”. “However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November, a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans.”
Rates on 30-year mortgages touched record lows (4.78%) in April, they have climbed since then on hints of the U.S. recession, now in its highest level (5.59%) since November.
Although the swollen stock of new homes has been shrinking; in April the inventory of homes available for sell fell 4.2 percent to 297,000, the lowest level since May 2001; Home builders remain cautious about the outlook for the next six months for most potential buyers are uncertain about the economy and their income security while the others are still unable to sell their existing homes.
In the meantime, Home Builders remain hopeful that potential homeowners with solid credit history would been nudge off the fence by the possible end of discounted mortgage rates and tax credit.