US housing market growth expected to be steady in 2016
Housing market growth in the United States is holding steady with a rise of 0.6% quarter on quarter, according to the latest real estate analysis report.
The annual spring housing boom has been beneficial to most regions across the nation, with most markets outside of the Northeast seeing a small bump in quarter on quarter growth in the last month.
The data from real estate firm Clear Capital also shows that in the West quarterly growth has increased by 0.2% to 1.3%, while quarterly growth in the South and Midwest have increased to a modest 0.8% and 0.3% respectively.
However, growth figures in the Northeast are concerning with the firm’s models showing an average of zero price growth in the region over the last quarter. ‘This is especially alarming when considering that the spring season is a time when markets typically gain momentum leading into the busy summer season,’ said Alex Villacorta, vice president of research and analytics at Clear Capital.
He pointed out that while prices in the region as a whole have appeared to stagnate, there are markets in the region that are performing positively, such as New York and Hartford, where prices have increased by 0.5% and 0.7% respectively over the last quarter.
The regional year end forecasts may also be a cause for concern, with the West and North-eastern regions projected to fall potentially into negative territory over the next six months.
The analysis predicts that by the end of 2016, the nation may see a new leader in terms of regional growth as the South and Midwest are predicted to have the highest price growth over the next six months, around the 0.5% mark.
‘While these six month growth rates are lower than what we have seen in recent years, slower growth does not necessarily spell disaster and instead could be indicative of markets that are finally beginning to moderate and even stabilize in these regions,’ Villacorta explained.
On the MSA level, southern cities are dominating the top spots in our forecast, with six of the top 10 markets located within the region. Home prices in Dallas and Nashville are predicted to see growth throughout the remainder of 2016, increasing to the tune of 3% to 4% by the end of the year.
Major Florida markets are also predicted to continue to rise, with Jacksonville and Orlando growth forecasts around 2.5% by the end of 2016, while homes in Tampa may increase by almost 4% over the next six months.
‘Overall, our forecasting models are predicting the second half of 2016 to be much slower than its start, with all regions forecasted to see very little price change by the end of the year,’ said Villacorta.
‘The Federal Reserve won’t be raising interest rates this summer, and while this will help keep the cost of mortgage lending to a minimum, at least in the short term, there are other key global factors that could spell uncertainty for the American housing industry through the end of the year,’ he explained.
‘Negative interest rates in several global markets may begin to push domestic interest rates down even further, which could have rather ambiguous effect, either increasing demand due to the low cost of borrowing or leading consumers to lose precious confidence in the housing industry,’ he pointed out.
‘It’s still far too early to tell how the recent global economic and financial market shakeups (think Brexit) will affect the US housing market, but our initial forecasts are very cautious about overestimating potential growth, particularly in the Northeast and West,’ he concluded.