Builder confidence faltered in August after rising for seven straight months. According to Barron’s, it’s a bad omen for new-home construction, a bright spot in a housing market hampered by rising mortgage rates, low supply, and strengthening prices.
Indeed, the housing market outlook in August 2023 is expected to be similar to that of July, with continued price growth but at a slower pace. According to the National Association of Realtors (NAR), home prices are expected to increase by 1.8% in August, down from 2.4% in July. Mortgage rates are also expected to continue to rise, reaching an average of 7.2% in August.
The combination of rising interest rates and slowing price growth is expected to cool demand in the housing market. However, the supply of homes for sale is still limited, which could keep prices from falling significantly.
Home prices are expected to continue to grow in August, but at a slower pace than in recent months. The NAR is forecasting a 1.8% increase in home prices, down from 2.4% in July. Moreover, mortgage rates are expected to continue to rise in August, reaching an average of 7.2%. This will make it more expensive to buy a home, which could slow demand.
Demand for homes is expected to cool in August, but it is still expected to be strong. The limited supply of homes for sale will likely keep prices from falling significantly.
The supply of homes for sale is still limited, which is a major factor keeping prices high. The NAR is forecasting that the number of homes for sale will increase slightly in August, but it will still be below the level of demand.
Home building in August 2023 is expected to be up slightly from July, but still below the level of a year ago. According to the Commerce Department, housing starts are expected to reach a seasonally adjusted annual rate of 1.58 million in August, up from 1.4 million in July. However, this is still below the 1.69 million starts that were recorded in August 2022.
It is important to reiterate that there is still strong demand for new homes, even with high-interest rates. However, the supply of homes for sale is still very low, which is driving up the prices and making it more difficult for buyers to find a home. The U.S. government has been offering a number of incentives to homebuyers, such as tax credits and down payment assistance to boost demand.
Supply chain disruptions have made it more difficult for builders to get the materials they need to build homes. This has led to delays in construction and an increase in the cost of building homes.
Overall, the housing market outlook in August 2023 is expected to be similar to that of July, with continued price growth but at a slower pace. Rising interest rates and slowing demand are expected to cool the market, but the limited supply of homes for sale will likely keep prices from falling significantly.