Why We’re Not Heading for a Housing Recession
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“Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases," Yun says.
Essentially, as Yun elaborated, while busy markets like Sarasota could see sales slowdowns, those are the result of low housing supply and not consumer demand. The lack of inventory is increasing home prices because buyer demand remains high. A true recession happens when buyer demand is weak and too much housing inventory lingers on the market.
His assertion is backed by Freddie Mac’s 2018 August housing forecast. The report shows the constrained housing supply and affordability challenges will temper home sales growth, but not buyer demand. According to Freddie Mac, “Total home sales (new and existing) for the year are now forecasted to increase 0.2 percent, and home price growth - which has softened somewhat in recent months - is still anticipated to rise 6.0 percent.”
Sarasota single family home price growth grew 8 percent year-over-year in July 2018 while the time to contract declined three days. New listings declined 7.5 percent. This aligns with the overarching trend reported by leading real estate institutions like the NAR. Demand likely will continue outstripping available supply, even as new housing starts increase.