Potential Slowdown In The Housing Market
The long-awaited slowdown in the housing market may finally be upon us, but maybe not. We might just be witnessing a reset in expectations that provides the foundation for continued vibrancy. There are no doubting several important data points which have turned negative in recent months, and these data points primarily relate to the speed of existing home sales and new home sales (home prices continue to move higher, but at a decelerating rate of growth). Any casual observer of the homebuilding industry need to look no further than publicly traded homebuilders’ stock prices to get a sense of the desperation that has enveloped this industry over the past year. Homebuilders at their core are manufacturers and like other manufacturing industries, have suffered in recent quarters from rising input costs (land, materials, labor), supply chain woes and deteriorating margins. The Evercore ISI Homebuilders Survey has fallen nineteen of the last twenty-three weeks after hitting its high for the year in March. The survey notes that aside from mortgage rates, stock market declines and overall economic uncertainty, builders are seeing less urgency on the part of buyers to transact as they await a dip in prices.