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Houston Expected to Lead Nation in New Home Sales in 2018

ORLANDO – (Realty News Report) – Houston is expected to have the highest new home sales this year, followed by Dallas in the second spot with Austin and San Antonio also in the Top 7, according to CoreLogic’s 2018 outlook presented at the NAHB International Builders Show in Orlando Tuesday.

Frank Nothaft, chief economist at CoreLogic — an Irvine, Ca.-based corporation providing financial, property and consumer information, analytics and business intelligence — also said Houston continues to see an increase in early stage delinquency transition rates, primarily from the effects of Hurricane Harvey. Measuring early stage delinquency rates is important or analyzing the health of the mortgage market.

“Houston’s delinquencies almost doubled year-over-year and that is due almost entirely to Hurricane Harvey,” added Nothaft. CoreLogic reported 10.9 percent of Houston area mortgages were 30 days or more delinquent in October, up from 5.8 percent in October of 2016.

Experts attending the three-day International Builders Show agreed mortgage rates are expected to average about 4.5% by later this year and further rise next year.  Multifamily starts are expected to continue a downward trend.

NAHB Chief Economist Robert Dietz noted that as the economy continues to strengthen, NAHB expects 30-year fixed-rate mortgages will average 4.31 percent in 2018 and 4.82 percent in 2019.

“NAHB is projecting 1.21 million total housing starts in 2017 and expects overall production to grow an additional 2.7 percent this year to 1.25 million units,” he added. “Single-family starts are expected to rise 5 percent in 2018 to 893,000 units and increase an additional 5 percent to 940,000 next year.”

However, the multifamily continues to trend downward with the NAHB predicting multifamily starts edging 1.6 percent lower this year to 354,000 units from a projected 360,000 total in 2017. The reason, he added, is supply and demand.

David Berson, senior vice president and chief economist at Nationwide Insurance, told those assembled in Orlando that while he expects a slightly more rapid rise in mortgage interest rates this year, the rise should not stifle housing activity.

“Mortgage rates are expected to rise from 4 percent to 4.5 percent by the end of year,” said Berson, “and offset strong housing demand and solid wage growth.”

CoreLogic’s Nothaft said he was concerned that even slightly higher interest rates could affect housing affordability and probably convince current homeowners with lower mortgage rates to remain in the homes rather than trade up.

“Higher rates impact owner mobility,” said Nothaft. “This affects the overall inventory for sale. Supply has been tight and for-sale inventory will continue to remain tight.”

At the same time, Nothaft noted the national mortgage delinquency rate as of the end of October stood at about 5.1%, an increase of 0.1 percentage points compared with October 2016 when it was 5.2%. Most of the 0.1% increase was due to the impact of hurricanes Harvey, Irma and Maria.

“Texas markets such as Houston, Beaumont, Victoria and Corpus Christi peaked at over seven percent in September, but are on the mend and improving in October,” he added.

Nationwide’s Berson, added that inflation is rising.  “Core inflation is projected to edge higher in coming years as the economy grow above trend – tightening labor and product markets,’ he added.  “We expect that inflation will move above the Fed.’s 2.0 percent goal in the next year.”

Frank Nothaft, chief economist of CoreLogic said Houston will have a great year for new home sales, although delinquent mortgage tick up due to Hurricane Harvey.

Jan. 9, 2018 Realty News Report Copyright 2018

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