Zillow’s Economic Research Director, Zkylar Olsen, appeared on a recent episode of The Exchange on CNBC, and discussed the housing market, and what could be down to cure a cooling market.
“Home value appreciation is slowing down fairly significantly in those expensive markets. The percentage of listings that have price cuts have shot up as the housing market starts to transition.” Olsen said.
Recent data, however, shows home prices are beginning to tick higher, as the latest Home Price Index (HPI) from CoreLogic found national home prices rose 3.6% year-over-year in May 2019.
The HPI forecasts prices to increase 5.6% from May 2019 to May 2020. May 2019’s gains, though, were lower than the 6.4% increase of May 2018.
Lower-priced homes saw the largest annual increase, with prices rising 5.4%. The HPI found higher-priced homes increased just 3%.
Olsen added the recent fall of mortgage rates gives many “reason to believe” that the recent slow down won’t last long.
Freddie Mac’s latest mortgage rate survey revealed the average rate for a 30-year fixed rate mortgage is 3.75%, which is a slight increase from the 3.73% rate of last week. The average rate a year ago was 4.52%.
“We’re seeing a tug of war happen as the fixed income market flashes warning signs while the equities market continues to march higher with optimism,” Sam Khater, Freddie Mac’s Chief Economist, said. “The data suggests the economy is weakening but is still on very solid ground with high consumer confidence and a strong labor market. Closer to home, the housing market continues to slowly improve and gain momentum as we head into the second half of the year, which is good news and should keep the economy growing.”
Another area of concern for Olsen is the rate that homes are being built, adding “builders aren't really building at the same pace they have been historically.”
The U.S Census Bureau’s Residential Housing Report for May 2019 revealed there has been very little change in housing starts over the past month, with single-family housing experiencing both ups and downs.
The report found that May saw 1.27 million housing starts, which is just a 0.9% decline from April’s estimate 1.28 million. Single-family housing starts in May, though, were 820,000, which is 6.4% below the revised April estimate of 820,000.