Why Expert Theorizes Housing Market May Be On An Upswing
The U.S. housing market continues to be unpredictable. A limited housing supply and rising interest rates are just some of the things that make the market challenging to enter and participate in. Still, expert predictions are all over the place on the future of the market, and there seems to be some room for optimism as the year continues.
Some positive trends reported by the U.S. Census Bureau, the U.S. Department of Housing and Urban Development (HUD), and the National Association of Realtors (NAR) this year include a 0.2% decrease in the median existing-home sales price this February compared to last year, a 9.8% increase in housing starts in February; and a 14.5% increase in existing-home sales from January to February. Here's the expert opinion of Alan Ratner, Managing Director at Zelman & Associates, who shared his thoughts on CNBC's Closing Bell: Overtime. He spoke on signs of stabilization and why he expects an upward trend in the market.
An expert opinion
KB Home, one the biggest homebuilding companies in the U.S., announced in their first quarter report that their "net orders of 2,142 and net order value of $1.00 billion decreased 49% and 53%, respectively, as the combination of higher mortgage interest rates, elevated inflation, and other macroeconomic and geopolitical concerns continued to temper demand" (via KB Home). This drop, however, isn't as bad compared to last quarter, according to Ratner.
"On the surface, an order drop of 50%, or close to it, definitely raises some eyebrows and I think it's representative of how challenging the market remains. Relative to expectations, it's a bit better," he said on CNBC. "KB Home is a builder that focuses on the entry-level price point, they're overly exposed to some of the Western markets that have been hit harder such as California and Phoenix, and I think the expectations coming into the quarter were pretty conservative." Ratner also says we're seeing signs of stabilization due to the incentives builders have been giving in the new year and the tightness of the resale market. However, there is still uncertainty due to what's happening with the banks and the economy as a whole.