Yahoo Finance Live examines mortgage rate trends in relation to how American homebuyers seem to prioritize and acting on the need for new home purchases.
DAVE BRIGGS: Signs of some recovery in the housing market. Weekly mortgage applications increasing 7% last week, according to the Mortgage Bankers Association. This coincides with three straight weeks decline of mortgage rates. Falling rates could mean Americans who held off on buying may move back into this market. 83% of Americans say buying a home is a priority for them, according to a NerdWallet survey. However, the survey also found only 11% plan on buying in the next 12 months. So clearly, we need to see some more signs of recovery.
Redfin earlier today, Seana, tweeting out that they are seeing what they believe is the beginning of a turnaround. Some think the worst is still to come. But one of their agents, in fact, said more buyers this month than all of Q4. So certainly appears to be, in many parts of the country, the beginning of some relief.
SEANA SMITH: Yes, certainly, and this is something that the housing market has been waiting for, something that the housing market wants to see clearly, even, mortgage rates to fall even further. Despite some of that optimistic tone that we’re hearing from Redfin, Needham did cut its housing market forecast for the year today. They lowered their revenue estimate for Redfin, also for some of its peers, Zillow and Compass. Needham saying that they’re taking a more conservative approach to Redfin’s future market gains, especially not even this year, but also next year, looking out to 2024.
So I think some questions just in terms of what the housing market, what that demand is going to look like. And we saw that reflected in some of those stocks today. Redfin closing off just over 8% today. So when you take a look at the pressure clearly that is placing on the stock recently, we have seen some improvement in the housing market. You talk about that activity, but certainly we do have a ways to go.
DAVE BRIGGS: Yeah, surprising that 2/3 of Americans say a housing market crash is imminent in the next three years, which is a really strange disconnect because not many who cover this sector are predicting that. There was a lot of talk about Armageddon several months ago, but I think most believe that we’re going to be OK, although I do not entirely disagree with the projections from Goldman Sachs in a note earlier this week. They have four markets that they believe are due for a crash, which means 25% decline or more in 2023.
They say those cities are San Jose– and look what’s happening in the tech environment, all those layoffs. That makes sense. Austin, Texas, where you saw prices just go dramatically through the roof over the last year, Phoenix, and San Diego. And I think you could probably add about two or three others to that list, perhaps Tampa Bay, Florida. I think Miami is going to be OK, but both of those markets up about a 30% increase. So there are going to be some select cities that see that 20% fall in housing prices, but the most part, I think low single digits.
SEANA SMITH: Yeah, and we’ll get some more data this week. We have new home sales tomorrow, pending home sales on Friday. So we certainly will keep an eye here on the housing market, as we do await more of a recovery there.