Markets with Megan

The housing market is in flux right now. Our Chief Investment Officer, Megan Horneman, as she breaks down the unexpected tumble in home builder sentiment and how a stall in potential buyer traffic and a fall in housing starts are reshaping the market landscape. 

What are the reasons behind these shifts?  Megan focuses on the impact of high interest rates. Mortgage rates are now a remarkable 7.3% - the highest since 2000, and a sluggish recovery in existing homes is weighing on both potential and current homeowners. There are a complex blend of factors currently testing the housing market, and what this could signify for our economy in the long haul.  Don't hesitate to connect with us at podcast @ verdence dot com with any questions or feedback.

Hello, this is Megan Horneman, the Chief Investment Officer at Verdence Capital Advisors, coming to you today with our Markets With Megan, we're going to talk about the housing market and we've got a lot of information this week about the health of the housing market. First of all, home builder sentiment. That dropped pretty sharply in the month of August. It's now at a five-month low. When you look at prospective buyer traffic, that's basically a standstill. If you look at sentiment on both the present condition of the housing market as well as future expectations from home builders, that both fell to the lowest level we've seen this year. We also got building permits and housing starts. Building permits did rise, which that's a good leading indicator, but starts fell to the lowest level that we've seen since the pandemic.

When you look at existing home sales, they're dangerously close to falling below that psychological four million pace. That's an annual pace. They're right above that right now, but you are looking at a pretty big decline there in existing home sales as well. So why are we seeing this? It's no surprise. Interest rates are higher. The mortgage rate is now back above a 7.3%. That's the highest level we've seen since 2000. Recovery remains low in existing homes as people don't want to give up the low mortgage rates they've had before. So you right now have this kind of combination of events here that is working against the housing market. It's people not wanting to move and interest rates high for new home buyers. We'll keep an eye on the housing market and what that means for the economy. That's all we have today. If you have any questions or comments, please feel free to reach out to podcasts at verde nce dot com. Thank you.