How should investors and potential home buyers and sellers view the housing market when the news recently has been so mixed? The National Association of Realtors reported Monday that existing home sales for June fell 1.2% but were more than 15% higher than a year ago. And the national median home price was 13.5% above the level of last June, at $214,000.
Last week the organization for homebuilders reported growing confidence in the market while the government said housing starts fell.
David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, tells The Daily Ticker that the month-to-month decline in existing home sales is a “respite” from recent gains due to a “full percentage point jump in mortgage rates in June.”
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“It’s a very rare event to have mortgage rates jump that far that fast” says Rosenberg, and he expects the jump will be temporary.
“The trend is still up but you can’t ignore the fact that mortgage rates shot up very quickly,” says Rosenberg who also writes a daily newsletter. “The good news is that rates have come back down about 40 basis points from a few weeks ago.”
(Click here to check mortgage rates in your area).
Job creation may be even more important for housing than interest rates, according to Rosenberg. He says, “An improving employment and income picture will act as a very strong antidote to any increase in interest rates.”
Related: Big Drop in Housing Starts Suggests a More Shaky Recovery: BNP Economist
Rosenberg expects the housing recovery will continue but at a slower pace so long as we “don’t see continuation of the rapid increase in interest rates as we’ve seen in the past 4-6 weeks.”
Whether you’re a potential buyer or seller in the housing market, watch the video above to see what this veteran economist and strategist has to say about the market.
Bernice Napach at Daily Ticker