« In the very near term, we think we could see a brief period of stronger housing data. »
There’s no doubt that housing in the US has come under significant pressure over the past year. A lethal combination of rising interest rates and home prices — at a late phase in the economic cycle — has given way to weak mortgage-lending, climbing inventory, and a bear market in housing stocks.
Still, a handful of market strategists and economists taking the sector’s pulse are throwing cold water on fears of a severe downturn.
« Don’t believe the narratives of a housing collapse, » Bank of America Merrill Lynch economists led by Michelle Meyer told clients last week. « The sector is challenged but should only be a slight drag on growth.
Read more: Americans stopped buying homes in 2018, mortgage lenders are getting crushed, and an economic storm could be brewing
« In the very near term, we think we could see a brief period of stronger housing data. The decline in mortgage rates is very well timed ahead of the spring selling season. We suspect that potential homebuyers who may have been scared from the market during the period of rising rates in the fall could see it as an opportunity to jump back in. »
Slowing demand has been the main driver of excess inventory in new homes, Meyer wrote. She pointed specifically to the monthly supply of houses in the United States — a gauge of how many months it would take to clear inventory given the current pace of sales — rising above the historical average.
