Lower Mortgage Costs Boost Housing Outlook For 2019
AUSTIN — Lower mortgage rates are a shot in the arm to the U.S. and Texas housing markets.
But affordability issues and a lack of low-priced homes for sale are still big hurdles for homebuyers in the Dallas area and across the country, top housing sector analysts say. "Essentially home sales have been moving sideways," Lawrence Yun, chief economist with the National Association of Realtors, said last week at a meeting of the National Association of Real Estate Editors in Austin. "Consumer confidence about homebuying has been weakening. "Nationally, housing has been underperforming compared with the overall growth of the economy," Yun. "A key reason is lack of inventory." The recent flattening of home purchases comes at a time when demand is very strong. "We are short in my estimate by 5 million or 6 million housing units today," Yun said. "We are looking for housing shortage conditions lasting possibly another four years." Homebuilders have not produced enough new housing during the last few years. And much of the construction has been at the upper end, he said. "We need a substantially larger inventory boost if we want to have a better-performing housing market," Yun said.
The current outlook for nationwide single-family home construction in 2019 is for flat or slightly lower starts. A tight market has driven a huge run-up in home prices in many U.S. markets since the recession.
"Home prices have risen 50% from the low point while people's wages have grown 20%," Yun said. With home loan rates falling in recent months from a high of almost 5% at the end of 2018, property purchases have inched higher in North Texas and other metro areas. "I think the second half of this year will be surprisingly positive on home sales given the lower mortgage rates," Yun said.
Long-term home mortgage rates have fallen below 4%, which has spurred homebuyer traffic. Sales of homes by real estate agents in North Texas rose 6% in May compared with a year earlier.
"That is shot in the arm for the homebuyer and the home sales market," said Frank Nothaft, chief economist with CoreLogic. "I think we see a pretty good summer in terms of home sales. "If we have mortgage rates sitting where they are now, I think we will see home sales up compared to 2018," he said. "I'm not saying homebuying is affordable. But it is better than it was a year ago."
While Nothaft doesn't see a housing bubble, he said some major markets are overvalued, including Dallas-Fort Worth...