Capstone:U.S. housing market "soaring" economic recovery is still difficult!


2020-09-29 15:35      from:Capstone    author:Jeff

Capstone:Affected by the new epidemic, the U.S. economic recovery is difficult. However, it is found that the U.S. real estate market is ahead of the overall economy. According to the data released by the U.S. Department of Commerce on September 24, 2020, new home sales in the United States rose by 4.8% on a quarter on quarter basis in August 2020, significantly better than the expected decline of 1.2%, to 1.011 million households, a 14 year high since September 2006.

At the same time, CNBC is also concerned that in 90% of the U.S. housing market, housing prices have risen more than wages. Some analysts believe that although strong demand and low mortgage interest rates temporarily support housing sales, factors such as high unemployment in the United States and weak income growth of ordinary people have constituted the risk of market downturn.

Since June, the previously depressed real estate market has burst out suddenly. According to data released by the National Association of real estate brokers (NAR), the total number of existing home sales in the United States after the quarterly adjustment was 6 million, a new record since December 2006.

Why is the U.S. real estate market so abnormal in the context of economic recession? According to an analysis by Reuters, on the one hand, the pandemic has triggered the migration of population to low-density areas, and the housing market is in short supply; on the other hand, the willingness of American people to buy houses has been significantly increased under the stimulation of record low mortgage rate.

For the past two months, US mortgage rates have remained below 3%. The average interest rate on 30-year fixed mortgage loans in the US was 2.87% last week, the second lowest level in history, according to Freddie Mac, the US residential mortgage agency. The 15-year mortgage rate also fell below 2.5%.

Under the policy stimulus, many middle-class Americans have increased their willingness to invest in real estate. Bankrate, an American research institution, surveyed thousands of American adults' investment preferences. According to the data, 26% of respondents chose real estate as their preferred investment target, second only to stocks accounting for 28%. 54% of respondents said that the epidemic situation was the most important factor affecting their current long-term investment preference.

Todd TetA, chief product officer of attom data solutions, a US real estate data company, said: "for single people in the United States, fewer and fewer people with average wages can afford to buy a house." Despite the high unemployment rate and weak economy in the United States, under the influence of low mortgage rates and other factors, many home buyers have joined the housing market in short supply. "As a result, the rise in house prices has exceeded the impact of wages on people."

Analysts generally believe that the economic impact of the new outbreak and the signs of a second wave of the outbreak in the United States have caused panic in the market. Compared with the stock market, the middle class is more inclined to the more conservative asset allocation of real estate.

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