Latest news with #LawrenceWerther
Daily Mail
4 days ago
- Business
- Daily Mail
Housing market will continue to crumble this year, experts warn
The housing market is set to get even worse this year, experts have warned in the latest dire forecast. New research from Oxford Economics found that the already‑frozen market is barely holding steady — and conditions are expected to deteriorate further. 'The supply of existing homes for sale is approaching pre-pandemic levels as a combination of high prices, elevated mortgage rates, and concerns over the labor market keep buyers sidelined,' Oxford Economics analyst Mathew Martin said. 'The new-home market is also being challenged, with builders continuing to offer incentives including price cuts in an effort to move unsold inventory,' Martin wrote in the report titled 'Recession Monitor – Real test for economy is just beginning.' Thirty‑year mortgage rates will average 6.7 percent across 2025 and end the year at around 6.4 percent. That is slightly higher than previous forecasts. Median home prices have jumped 52 percent since May 2019, far outpacing wage growth of just 30 percent, NAR data shows. That would mark the lowest level since 1995, according to the National Association of Realtors. Buyers have been scared off by a rocky economy, surging HOA fees, and punishing mortgage and insurance rates, leaving sellers slashing prices to lure offers. 'A longstanding lack of inventory has supported both high prices and sluggish sales in the market for existing homes,' analysts Lawrence Werther and Brendan Stuart from Daiwa Capital Markets wrote in a report published earlier this week. 'Substantial improvement is unlikely to materialize in the near term until mortgage rates (and/or prices) ease, thereby mitigating the current affordability challenges faced by potential buyers,' they explained. Lawrence Yun, chief economist for the National Association of Realtors, agreed, arguing that 'multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth.' 'This is holding back first-time home buyers from entering the market.' Despite the frozen market, economists do not predict a correction in home prices but conversely see them rising 2.5 percent through 2025. This is largely driven by sellers who refuse to drop their asking price and are instead pulling their homes off the market in droves. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. Phoenix, Arizona, is at the epicenter of the delistings trend, seeing more homes pulled from the market than any other area. Economists believe this is because areas in the South and West have seen inventory hit pre-pandemic levels but prices remaining flat or are even falling. Last week, Moody's Chief Economist Mark Zandi issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X.
Yahoo
6 days ago
- Business
- Yahoo
Oxford Economics says the crumbling housing market will continue deteriorating because of two key factors
The housing market continues to struggle with nearly high mortgage rates and home prices, driven by years of undersupply and slow home construction. Builders face higher costs and labor shortages, and home price growth is expected to slow this year as sellers pull homes off the market. If you thought the housing market was bad enough: Buckle up. Mortgage rates are still nearly 7% and home prices are 55% higher than they were at the beginning of 2020, according to the Case-Shiller U.S. National Home Price Index. Housing inventory is slightly rising overall, but it's not doing so by nearly enough, a May report by the National Association of Realtors and shows. And an analyst note published this week by Oxford Economics said the housing market will continue to deteriorate this year. 'The supply of existing homes for sale is approaching pre-pandemic levels as a combination of high prices, elevated mortgage rates, and concerns over the labor market keep buyers sidelined,' Oxford Economics analyst Matthew Martin wrote in a note titled Recession Monitor – Real test for economy is just beginning. 'The new-home market is also being challenged, with builders continuing to offer incentives including price cuts in an effort to move unsold inventory.' Oxford Economics researchers also noted sellers will have less ability to pass along price increases. In other words, sellers will keep pulling their homes off the market if they can't get a sale price they think they deserve. Meanwhile, homebuilders will continue to face higher costs due to tariffs and a reduced labor force because of fewer immigrants and more deportations, according to Oxford Economics. This, in turn, will slow housing starts—a.k.a. new construction—which won't help inventory levels. 'A longstanding lack of inventory has supported both high prices and sluggish sales in the market for existing homes,' Daiwa Capital Markets analysts Lawrence Werther and Brendan Stuart wrote in a note published Wednesday. 'Substantial improvement is unlikely to materialize in the near term until mortgage rates (and/or prices) ease, thereby mitigating the current affordability challenges faced by potential buyers.' Affordability is also hurting builders, who have had to continue offering incentives and price cuts. 'Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth,' Lawrence Yun, chief economist for the National Association of Realtors, said in a statement. 'This is holding back first-time home buyers from entering the market.' 'We still don't have an abundance of homes that are affordable to low- and moderate-income households, and the progress that we've seen is not happening everywhere,' Chief Economist Danielle Hale said in a statement. 'It's been concentrated in the Midwest and the South.' However, that leads to one small silver lining predicted by Oxford Economics. Due to labor-market concerns and weak demand (thanks to currently high home prices and mortgage rates), they predict home price growth will slow and builders will limit new-home construction. 'Slower home price growth may provide a floor beneath sales,' Martin wrote, but 'household appetites for spending will largely hinge on the health of the labor market.' Despite a struggling housing market, Oxford Economics predicts the U.S. will avoid a recession this year and the Federal Reserve will start to 'cut rates aggressively' at the beginning of 2026. This story was originally featured on
Bloomberg
28-04-2025
- Business
- Bloomberg
Bloomberg Daybreak Asia: Cautious Start for APAC Trade
Asian shares gained in a cautious start to the week as investors await progress in US trade negotiations with the region and signs of further stimulus from China. The dollar was steady against major peers and US equity-index futures edged lower in early trading Monday. Contracts in Japan signal a gain when cash markets reopen after the yen weakened on Friday, while those in Australia and Hong Kong were little changed. We talk FX and currencies with Peter McGuire, CEO at Australia. Plus - US stocks notched their longest advance in three months on Friday, while bonds and the dollar climbed amid increasing expectations the Federal Reserve could ease policy again in the first half of this year as the US economy softens. Worries about the economic fallout from tariffs drove US consumer sentiment to one of its lowest readings on record while long-term inflation expectations climbed to the highest since 1991. Investors will focus on key economic data this week - the Bank of Japan's rate decision, and US jobs report and gross domestic product data - to see if the the recent steadiness in markets will continue as tariff tensions tamp down. We preview the week's US eco data with Lawrence Werther, Chief US Economist at Daiwa Capital Markets.
