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Yahoo
4 days ago
- Business
- Yahoo
US home prices to rise 3.5% this year but tariffs will hinder new construction :Reuters poll
By Sarupya Ganguly BENGALURU (Reuters) - U.S. home prices will rise steadily over coming years on an expected further decline in mortgage rates, according to property experts in a Reuters survey who expressed a near-unanimous view President Donald Trump's tariffs would hinder affordable home construction. The same analysts had said three months ago that affordability and turnover in the market would improve, an upbeat outlook hinging on expectations the Federal Reserve will resume cutting interest rates after staying on the sidelines all year. That optimism has since been tempered with Congress passing a sweeping tax-cut and spending bill estimated to add roughly $3.3 trillion by 2034 to an already-enormous $36.2 trillion debt pile, according to nonpartisan think tank the Committee for a Responsible Federal Budget. Long-term bond yields have spiked higher, limiting scope for a decline in mortgage rates. "Looking ahead through the rest of this year and into 2026, we don't expect mortgage rates to come down much — at least not through the third quarter of 2025 — so affordability will remain pressured," said James Egan, housing strategist at Morgan Stanley. U.S. home prices based on the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas are forecast to rise 3.5% each year through 2027, according to a May 19-June 3 Reuters survey of 27 property analysts. If realised, that would be the slowest pace of home price rises since 2011. Average home prices are more than 50% above where they were in 2019, before the COVID-19 pandemic. "The housing market remains in a cooler phase as sellers continue to adjust to looser conditions after the red-hot pandemic years," said Thomas Ryan, an economist at Capital Economics. Even with two more Fed interest rate cuts expected later this year according to rate futures, 30-year mortgage rates are only set to ease to an average 6.73% this year from 6.98% currently. They are forecast to fall to average 6.33% next year and 6.29% in 2027, survey medians showed, still over double some of the lowest rates of around 3% buyers took out during pandemic years that few are willing to relinquish. "If mortgage rates were to drop meaningfully — say by 50 to 100 basis points — we could see a surge in buying activity. But rates really need to come down first,' said Lawrence Yun, chief economist at the National Association of Realtors. TARIFFS TO LIMIT CONSTRUCTION OF AFFORDABLE HOMES Construction spending fell unexpectedly in April and has been constrained by a decline in outlays on single-family housing projects and a rising inventory of unsold homes. It faces additional challenges from Trump's tariffs, most respondents said. "While there's still a lot of uncertainty about what level of tariffs are ultimately going to be implemented, they're going to make it more expensive to build. You'll see either fewer homes built, smaller homes built, or a combination of both," said Morgan Stanley's Egan. Asked how U.S. tariffs on major trading partners announced earlier this year would affect affordable home construction, a near-90% majority, 21 of 24, said fewer homes would be built, including two who said far fewer. Three said there would be no impact. "President Trump's inflationary trade and immigration policies leave no clear path to the lower borrowing costs the housing market desperately needs," said Capital Economics' Ryan, who expects no more Fed rate cuts this year and mortgage rates near 7%. Only half of respondents, 12 of 24, said purchasing affordability for first-time homebuyers would improve over the coming year, down from 62% in a February poll. Existing home sales, which make up over 90% of total sales, were expected to remain around the current level of an annualized 4 million units next quarter and rise slightly to an average 4.1 million by year-end, well below a near-15 year high of 6.6 million in early 2021. (Other stories from the Q2 global Reuters housing poll) Sign in to access your portfolio
Reuters
4 days ago
- Business
- Reuters
US home prices to rise 3.5% this year but tariffs will hinder new construction: Reuters poll
BENGALURU, June 3 (Reuters) - U.S. home prices will rise steadily over coming years on an expected further decline in mortgage rates, according to property experts in a Reuters survey who expressed a near-unanimous view President Donald Trump's tariffs would hinder affordable home construction. The same analysts had said three months ago that affordability and turnover in the market would improve, an upbeat outlook hinging on expectations the Federal Reserve will resume cutting interest rates after staying on the sidelines all year. That optimism has since been tempered with Congress passing a sweeping tax-cut and spending bill estimated to add roughly $3.3 trillion by 2034 to an already-enormous $36.2 trillion debt pile, according to nonpartisan think tank the Committee for a Responsible Federal Budget. Long-term bond yields have spiked higher, limiting scope for a decline in mortgage rates. "Looking ahead through the rest of this year and into 2026, we don't expect mortgage rates to come down much — at least not through the third quarter of 2025 — so affordability will remain pressured," said James Egan, housing strategist at Morgan Stanley. U.S. home prices based on the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas (USSHPQ=ECI), opens new tab are forecast to rise 3.5% each year through 2027, according to a May 19-June 3 Reuters survey of 27 property analysts. If realised, that would be the slowest pace of home price rises since 2011. Average home prices are more than 50% above where they were in 2019, before the COVID-19 pandemic. "The housing market remains in a cooler phase as sellers continue to adjust to looser conditions after the red-hot pandemic years," said Thomas Ryan, an economist at Capital Economics. Even with two more Fed interest rate cuts expected later this year according to rate futures, 30-year mortgage rates (USMG=ECI), opens new tab are only set to ease to an average 6.73% this year from 6.98% currently. They are forecast to fall to average 6.33% next year and 6.29% in 2027, survey medians showed, still over double some of the lowest rates of around 3% buyers took out during pandemic years that few are willing to relinquish. "If mortgage rates were to drop meaningfully — say by 50 to 100 basis points — we could see a surge in buying activity. But rates really need to come down first,' said Lawrence Yun, chief economist at the National Association of Realtors. Construction spending fell unexpectedly in April and has been constrained by a decline in outlays on single-family housing projects and a rising inventory of unsold homes. It faces additional challenges from Trump's tariffs, most respondents said. "While there's still a lot of uncertainty about what level of tariffs are ultimately going to be implemented, they're going to make it more expensive to build. You'll see either fewer homes built, smaller homes built, or a combination of both," said Morgan Stanley's Egan. Asked how U.S. tariffs on major trading partners announced earlier this year would affect affordable home construction, a near-90% majority, 21 of 24, said fewer homes would be built, including two who said far fewer. Three said there would be no impact. "President Trump's inflationary trade and immigration policies leave no clear path to the lower borrowing costs the housing market desperately needs," said Capital Economics' Ryan, who expects no more Fed rate cuts this year and mortgage rates near 7%. Only half of respondents, 12 of 24, said purchasing affordability for first-time homebuyers would improve over the coming year, down from 62% in a February poll. Existing home sales (USEHS=ECI), opens new tab, which make up over 90% of total sales, were expected to remain around the current level of an annualized 4 million units next quarter and rise slightly to an average 4.1 million by year-end, well below a near-15 year high of 6.6 million in early 2021. (Other stories from the Q2 global Reuters housing poll)
Yahoo
5 days ago
- Business
- Yahoo
America's housing market is cracking
A version of this article originally appeared in Quartz's members-only Weekend Brief newsletter. Quartz members get access to exclusive newsletters and more. Sign up here. The American housing market, a post-pandemic juggernaut that seemed unstoppable, is finally showing signs of fatigue. After more than two years of relentless price increases, the fundamentals are shifting. Home prices are starting to fall, unsold inventory is piling up to levels not seen since the 2008 financial crisis, and buyers — from first-time purchasers to luxury shoppers — are walking away from deals or demanding steep discounts. The combination of mortgage rates hovering around 7% and mounting economic uncertainty around tariffs has created a host of reasons for a buyer to hesitate. What's emerging is a market where sellers are making concessions and buyers hold the cards — a dramatic reversal from the bidding wars and cash offers that defined the market. Home prices in the 20 biggest U.S. metropolitan areas fell 0.12% in March from the previous month, according to the S&P CoreLogic Case-Shiller index. It's a small dip, sure, but it marks the end of a relentless upward march that has defined the housing market since January 2023. The bigger shift is happening in supply. Unsold completed new single-family homes hit 117,000 in April — the highest level since July 2009, according to Census Bureau data analyzed by housing researcher Lance Lambert. That's a 31% jump from the previous year, and it's happening at a time when homebuilders are getting increasingly nervous about demand. Even luxury buyers are backing away. Luxury home sales fell 10% in April from a year earlier, marking the steepest decline since 2023, according to Redfin data. This isn't just about mortgage rates — these are cash buyers and jumbo loan borrowers who theoretically have more financial flexibility. But the retreat among wealthy buyers reflects a broader pattern of anxiety spreading even among the top 5% of U.S. households, with some $7 trillion sitting in money-market funds rather than being deployed into assets like real estate and stocks. For buyers, the landscape is becoming more half of sellers are already offering concessions, according to Redfin, and inventory levels are at the highest point since September 2020. Real estate agents are witnessing the shift in real time. Oregon agent Meme Loggins recently worked with a buyer who successfully negotiated $50,000 off a home's asking price, only to walk away entirely, citing economic uncertainty. 'Everybody wants a deal,' Loggins told Marketplace. 'Everybody's asking for a concession of some sort, either for closing costs, or a fair-sized price reduction, or both.' The geographic picture tells its own story. Texas is leading the correction, with listings hitting 123,000 in April 2025 — 53% higher than normal — making it the fourth most oversupplied housing market in the U.S., according to real estate analyst Nick Gerli. Austin alone has seen a 20.4% fall in home values from pandemic highs, according to Gerli, representing the biggest metro-level correction in America. Florida markets are similarly strained, with metro areas such as Tampa and Jacksonville showing up repeatedly on lists of markets with the most price cuts. Even the Bay Area in California, long considered recession-proof, is showing cracks. In March, about 1,300 new homes hit the market in the San Francisco metropolitan area, but only 780 homes changed status to 'pending' — the largest March gap since at least 2012, according to Redfin. What makes this moment particularly interesting is that it's not just about affordability, though 7% mortgage rates certainly aren't helping. There's a confidence problem brewing, and it's affecting buyers across income levels. Analysts at Citi Research warned that housing activity looks set to contract, potentially signaling a recession ahead, noting that residential investment is 'the most interest rate sensitive sector in the economy.' Federal Housing Finance Agency Director William Pulte has taken notice, urging Federal Reserve Chair Jerome Powell to cut interest rates. 'The housing market would be in much better shape' if rates were lowered, Pulte posted on social media. Most analysts expect the trends to continue. Redfin estimates that home prices will fall 1% in the fourth quarter — which would mark the first annual price decrease since 2012. Zillow also expects home values to fall by 1.4% this year. But don't expect a flood of bargains just yet. Many buyers remain priced out by mortgage rates, while homeowners locked into low-rate mortgages from the pandemic era are reluctant to sell and give up their favorable financing. The result is a market caught between hesitant buyers and reluctant sellers — creating the kind of standoff that could keep transaction volumes depressed even as prices moderate only slightly. What's emerging looks less like the frenzied seller's market of recent years and more like a traditional housing market where buyers can negotiate and sellers have to compete. The question now is whether this represents a return to normal — or the early stages of something more severe. For the latest news, Facebook, Twitter and Instagram.
Yahoo
28-05-2025
- Business
- Yahoo
Home prices in the biggest 20 markets decline for the first time in over two years. Here's where they're expected to fall the most.
Home prices in the 20 biggest U.S. metropolitan areas fell for the first time in over two years as historic unaffordability continued to weigh on the housing market — and prices could fall further in the months ahead. The S&P CoreLogic Case-Shiller 20-city home-price index fell 0.12% in March from the previous month, marking the index's first monthly decline since January 2023. The data was seasonally adjusted. 'You never know what might happen': How do I make sure my son-in-law doesn't get his hands on my daughter's inheritance? The best scenario for 2025 is stocks go nowhere, says this strategist. Here's where he says to camp out instead. It's my dream to travel to Africa. Can I pay for my husband's trip without commingling our finances? Why Obama's former budget director is now sounding alarms about debt My husband and I earn $115K and owe $220K on our home. We're inheriting $300K. Should we buy real estate or stock? The Case-Shiller index measures repeat-sales data. It generally has a two-month lag and reflects a three-month moving average. Home prices are still up on an annual basis. Compared with the same month a year earlier, the 20-city index is up 4.1%. Even that figure is a step down; the previous month saw a 4.5% year-over-year increase in home prices. But the broader trend is that the housing market is slowing down. Home-price growth has been decelerating over the last few months. The explosive rate of home-price growth seen during the pandemic has slowed due to persistent unaffordability, and home prices have been falling for the past few months in places such as Tampa, Fla., where housing supply has exceeded demand. A broader measure of home prices, the national index, also showed signs of deceleration. Nationally, home prices rose 3.4% in March from the same month a year earlier, a slowdown from 4% the previous month. The median price of a resale single-family home in March was $407,300. For a condo or a co-op, it was $363,000, and for a newly built single-family home, it was $403,700. The housing market is likely to lose more steam over the next few months, as economic uncertainty pushes home buyers to wait. Faced with significantly weaker demand, home sellers are resorting to price cuts to encourage buyers. The anxiety felt by both buyers and sellers is weighing on home sales: In April, existing-home sales fell to the slowest pace for that month since 2009, the National Association of Realtors said. Read more: Buyers are gaining the upper hand in a shifting housing market. 'Everybody wants a deal.' 'The market is softer than usual this spring due to a multitude of demand-side factors, including economic uncertainty, continued higher interest rates, and declining consumer sentiment,' Jake Krimmel, a senior economist at told MarketWatch. 'Nowhere is the softening clearer than the growing inventory of homes for sale, which rose over 30% [year over year] in April,' he added. In metro areas where home listings are piling up with homes sitting for weeks on the market without selling, expect price declines, he added. Inventories and the amount of time listings are spending on the market are growing the fastest in the South, by 33%, and the West, by 42%, Krimmel said, so 'these are markets where we can expect lower or potentially negative price growth in the coming months.' Nearly one in five sellers are cutting prices on their listings, the highest share for that month since 2016, when the company began tracking the data. The metro areas with the most listings with slashed prices in April included Phoenix, Tampa and Jacksonville, said in a recent report. 'Most markets in the Northeast and Midwest, however, are still quite tight and even look like they did during the pandemic — inventory remains low, and price growth is more robust,' Krimmel added. 'Regional data suggest a bifurcated housing market, an important story obscured by the national numbers.' is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp. The real-estate platform Zillow Z also expects home values to fall by 1.4% this year, according to a recent report. Redfin RDFN, a real-estate brokerage, expects home prices to fall 1% by the fourth quarter of 2025 compared with the same period a year earlier. 'Is this a good tax strategy or a sham transaction?' My mother wants to give me her home. I have a plan to avoid taxes. 'The situation is extreme': I'm 65 and leaving my estate to only one grandchild. Can the others contest my will? My ex-wife said she should have been compensated for working part time during our marriage. Do I owe her? After 25 years, I finally asked for separate checks — and my friends iced me out. Did I do something terrible? My brother's 'good daughter' siphoned $70,000 from her father's accounts. Should she still get an inheritance? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
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The Rise in US Home Prices Slowed in March as Buyers Pulled Back
(Bloomberg) -- Home-price gains in the US slowed in March as listings climbed without a corresponding uptick in buyer demand. UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Pacific Coast Highway to Reopen Near Malibu After January Fires A national gauge of prices was up 3.4% from a year earlier, according to data from S&P CoreLogic Case-Shiller. That was smaller than the 4% annual increase in February. The run-up in prices since the pandemic, and mortgage rates hovering near 7%, have squeezed affordability for house hunters, pushing many to the sidelines. At the same time, inventory is rising in many parts of the country. And with fewer eager buyers in the market, sellers are more willing to offer concessions. In areas where supplies remain tight, buyers are still getting dragged into bidding wars. Among 20 major cities, New York had the biggest annual price gain in March, at 8%. Prices were up 6.5% in Chicago and 5.9% in Cleveland. In places where prices fell, Tampa, Florida, had the largest decline, at 2.2%. While annual price growth continued to decelerate nationally, 'the market experienced its strongest monthly gains so far in 2025,' Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices, said in a statement. Eighteen of the 20 cities in the index had monthly increases before seasonal adjustment, signaling that price increases were widespread across the country. 'This divergence between slowing year-over-year appreciation and renewed spring momentum highlighted how the housing market shifted from mere resilience to a broader seasonal recovery,' Godec said. Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center How Coach Handbags Became a Gen Z Status Symbol AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
