Adam Constantine on MLK Jr.’s impact on housing equality

During the interview, Constantine explains why the industry needs to focus on evoking intentional change rather than launching lackluster initiatives.

Managing Credit Risk in 2021 and Beyond

Join a panel of industry experts as they provide an economic outlook for 2021 and a discussion with regional bankers on how they are managing credit risk over the next several years.

Amid record-high origination volumes, mortgage fraud risk is down

CoreLogic's recently released Mortgage Fraud Report is the industry standard for nationwide fraud monitoring and analysis. Read the findings here.

Empowering women to be financially great with Dava Davin

Women of Influence winner Dava Davin joins Girlfunds to discuss everything from her best financial tip to her advice on starting the home-buying process.

Real Estate

Experts: Don’t read too deep into February’s existing home sales drop

Buyer demand will keep sales up in coming months

Existing home sales came in lower in February, but experts warn against reading too deep into the drop, saying one month hardly sets a new trend.

Experts predicted the combination of pent-up housing demand and historically high consumer confidence will increase existing home sales in the months ahead.

“Strong consumer confidence in the housing market should keep existing home sales from sliding in the coming months, with homebuyers also seeing some relief in low inventory from the new construction end,” Trulia Senior Economist Cheryl Young said. “But gridlock at the lower end of the housing market will keep existing home sales well below pre-recession levels.”

This chart shows the steady increasing trend of existing home sales each year. Since 2010, home sales showed a steady increase each year.

Click to Enlarge

existing sales

(Source: Trulia)

And this increase won’t be letting up anytime soon, housing experts say.

“It’s important not to read too deeply into the one-month dip in existing home sales in February; the housing market is still running quite hot, and the next few months look to be as competitive and fast-moving as ever,” Zillow Chief Economist Svenja Gudell said.

Other experts agree, pointing out that Millennials are just reaching their prime home-buying years.

“Despite a monthly drop, existing sales remain above last year’s levels, due to a continually strengthening labor market and pent-up demand from both entry-level and trade-up buyers,” Quicken Loans Vice President Bill Banfield said. “Consumer confidence in the economy is also very high, which is a critical psychological element to consider as Millennials continue to enter their prime home-buying years.”

However, not everyone agrees that existing home sales will continue to rise.

“With little chance of a sustained rise in the number of existing homes for sale over the next year, sales are set to tread water even as the demand for homes rises steadily on the back of a strong labor market,” Capital Economics Property Economist Matthew Pointon said.

However, the root cause for the decrease in home sales is inventory, which continues to plague the market.

“There are plenty of buyers in the market, but they are unable to find the homes they want at the prices they can afford,” realtor.com Senior Economist Joseph Kirchner said. “These affordability challenges are the result of inventory shortages, which leads to bidding wars, and rising mortgage rates, resulting in higher monthly payments.”

“We see the largest inventory shortages among the most affordable homes, which also saw the greatest decline in sales with homes under $100K down 15% from a year ago,” Kirchner said.

But housing inventory isn’t just a problem for homebuyers – it remains a problem for buyers and sellers alike. Sellers are hesitant to put their home on the market as they are unsure they will be able to find a new home once they sell theirs.

“Homebuyers are still plagued by low levels of resale homes on the market, and rising mortgage rates compound concerns for first-time and trade-up homebuyers gearing up for spring home buying season,” McLaughlin said.

Most Popular Articles

Prepare for the rise in mortgage rates

Economists offer their takes on how high mortgage rates will climb, how lenders will respond and what impact this will have on the housing market. HW+ Premium Content

Jan 18, 2021 By

Latest Articles

CFPB clarifies role of supervisory guidance

The Consumer Financial Protection Bureau issued a final rule Tuesday clarifying that supervisory guidance is not backed by the same force as law or regulation.

Jan 19, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please