April 18, 2019

A Quick Q1 Housing Market Checkup

by Guest Blogger

It’s hard to believe, but we’re already a quarter of the way through 2019. How is the year shaping up for the housing market so far?

Let’s take a quick look at some of the notable news so far this year:

A dip in housing starts. Earlier this year, we predicted that 2019 might be a healthier year for renovation rather than new home construction. While we could be proven wrong by year’s end, that prediction has panned out so far: Housing starts dipped to their lowest in a year and a half in February, decreasing 8.7 percent from January.

It’s not all doom and gloom for homebuilders, though …

Falling mortgage rates and signs of stabilization. A recent report in from Bloomberg indicates that homebuilders could see a nice boost in time for the spring selling season. That’s good news after some softening in late 2018 caused by expensive lumber prices, land and labor shortages and more. But falling mortgage rates from lenders, and a temporary halt in new rate increases from the Federal Reserve amid some economic headwinds, could indicate some reason for more optimism later this year. CNBC reports that the 30-year fixed mortgage rate dropped to an average of 4.28 percent in March, the lowest in more than a year.

More from Bloomberg:
While the housing market has lost momentum after years of rapid growth, there are signs that it’s stabilizing. Mortgage applications for home purchases, for example, jumped 4 percent [in March] from a year earlier, according to data released today by the Mortgage Bankers Association.

And sales of previously owned U.S. homes rebounded in February at the fastest pace in almost a year, snapping a three-month streak of declines, the National Association of Realtors said [in March].

Elsewhere, new home sales showed solid growth in February, rising to a seasonally adjusted rate of 667,000. The National Association of Homebuilders (NAHB) likewise attributes these figures to potential buyers wishing to take advantage of declining mortgage rates. 

Disrupting the lagging availability of starter homes? As we wrote at the end of 2018, and as has been broadly reported on in recent years, first-time homebuyers remain in a bit of a pickle in 2019. Today’s market conditions have favored pricey condos rather than the “starter home” of old, making it increasingly difficult for millennials—who represent the largest portion of first-time buyers—to make the jump from renting to owning.

This recent bit of news out of Chicago caught my eye, though: a design contest to replenish the city’s affordable housing stock.

Per the Chicago Reader:
Housing options have grown scarce for many working families and young people looking to buy their first home. Subsidized housing is helpful but can't be the only option. So how can you attempt to solve this problem and inspire architects to stretch construction dollars and design a new generation of starter homes? Start by giving them an incentive.

The Chicago Housing Policy Task Force, a diverse group of affordable-housing organizations, created the Disruptive Design competition to address these challenges. Architects, designers, students, and urban developers were invited to submit plans for an owner-occupied, single-family home with a purchase price of $250,000. The winning design will be developed by Related Midwest.

This probably won’t be the be-all and end-all solution for affordable housing throughout the U.S., but efforts like these show a need to apply creative problem-solving to an issue that isn’t going away on its own. We could see some more initiatives like this take shape if things remain the way they are.

Questions or comments? Contact me directly at Erin.Johnson@quanex.com.

For more information about Quanex visit www.quanex.com
Posted: April 18, 2019 by Guest Blogger Filed under: housing, market, trends