Good news for home buyers? Fannie Mae chief economist says the U.S. housing market has finally turned a corner. Here’s why.

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Inventory shortages, high prices and rising interest rates have finally taken a bite.

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Single-family home sales fell 16.6% in April to a seasonally adjusted annual rate of 591,000, according to Census Bureau data released Tuesday.

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This was the slowest rate of sales since April 2020 in the early days of the COVID-19 pandemic, giving buyers relief that the market is cooling off.

What’s more, new home sales were down from 763,000 to 709,000 in March, the Census Bureau said.

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“The new home sales report released today by the Census Bureau clearly points to a housing market that has changed,” said Doug Duncan, chief economist at Fannie Mae.

Mortgage rates have risen 200 basis points since the end of 2021, putting pressure on existing home sales, mortgage applications and home builders’ confidence, he said.

,‘A sharp decline in residential investment is now underway, and we will likely revise our near-term home sales forecast downward.’,


– Doug Duncan, Fannie Mae’s Chief Economist

Economists polled by the Wall Street Journal had forecast sales at an annual rate of 750,000, although the report may be volatile and subject to revision.

“While today’s new home sales report is the sharpest indicator yet, sales are falling well below both our own and consensus expectations,” Duncan said.

“The sales momentum in April was similar to the slowdown level that the Federal Reserve last had in 2018 under tighter regulations,” he said.

“A sharp decline in residential investment is now underway,” Fannie Mae, FNMA
-1.10%
The economist said he would revise his own sales projections downwards.

A separate report released Tuesday by Realtor.com suggested that people are willing to buy and sell homes at “more acceptable price points.”

George Ratio, senior economist and manager of economic research at Realtor.com, said the report “offers hope” for seller-buyers.

(Realtor.com is operated by Move Inc., a subsidiary of News Corp., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

Dow Jones Industrial Index DJIA,
+0.15%,
s&p 500 spx,
-0.81%
and Nasdaq Composite Comp,
-2.35%
All were at lower levels on Tuesday as fears of ongoing inflation rattled investors.

Credit: www.marketwatch.com /

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