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Concerns about rising rates, unabated inflation and a potential near-term recession continue to manifest in more areas of the housing industry. A market shift with softening demand for housing has become more evident this past week, as mortgage volume applications reached their lowest level in 22 years, housing starts plunged to a 2-year low, and home builders’ sentiment continued to deteriorate with the decline in buyer traffic. The sharp rise in borrowing costs is leading home builders to scale back production plans, with single-family permits recently taking a downward trajectory. A cooled-off job market is likely to take even more wind out of the housing market as job growth continues to shrink, while jobless claims remain on an upward trend since April.
Home builder sentiment plunges in July as buyers pull back: Builder sentiment dropped 12 points to 55, according to the monthly survey from the National Association of Home Builders (NAHB). The dip marks the largest single-month drop in the survey’s 37-year history, except for April 2020 at the onset of the pandemic. Home builders’ concerns about inflation and recession were among the top factors putting a toll on the sentiment of the current sales conditions, expectations in the next six months, and their views on buyer traffic.
Single-family starts fall to two-year low on higher construction costs and interest rates: For the first time since June 2020, both single-family starts and permits fell below the one-million annual pace as high interest rates and elevated construction costs continued to put a damper on the single-family housing market. Overall housing starts fell 2.0% to a seasonally adjusted annual rate of 1.56 million units in June from an upwardly revised reading recorded in the previous month. Reduced housing demand will continue to have a weakening impact on single-family home building in the months ahead.
Mortgage applications declined for the third week in a row, reaching the lowest level since 2000: Mortgage loan application volume decreased 6.3% on a seasonally adjusted basis from one week earlier and the seasonally adjusted Purchase Index decreased 7% for the same time period. The pullback in housing demand is becoming more evident in the lending sector, as weakening economic outlook, high inflation, and persistent affordability challenges remain obstacles for buyers, resulting in mortgage loan application volume sinking to its 22-year low. The decline in recent purchase applications is consistent with slower homebuilding activity due to reduced buyer traffic, ongoing building material shortages, and higher construction costs.
California payroll growth moderates in June: Employers added 19,900 jobs across California during June, the smallest gain of the year and fell well short of the 71,000 jobs added per month on average during the first five months of this year. Growth in the number of employed Californians still outpaced the growth in the labor force, which helped cut California’s unemployment rate in June by another 0.1% to 4.2%, even as the rebound from the pandemic appeared to be losing steam.
Jobless claims rise again, providing another sign that the labor market is cooling: Initial jobless claims totaled 251,000 for the week ending July 16, inching up 7,000 from the week prior to the highest weekly level since mid-November 2021.While jobless claims are volatile on a week-to-week basis, the four-week moving average has steadily trended higher since April. Claims were still relatively low, especially compared to recessionary periods when they tend to rise well above 300,000. The recent increase, however, is a signal that the tight labor market is starting to loosen up and is likely to take even more wind out of the housing market's sails.
If you're ready to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.
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700 E Ocean Blvd. #607
Long Beach 90802
1 Bed | 2 Bath | 880 SqFt | $625,000
Amazing ocean views from every room in this spacious, bright, beautifully updated modern open floor plan high-rise condo.
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3595 Santa Fe Ave. #21
Long Beach 90810
2 Beds | 2 Bath | 1,506 SqFt | $450,000
Why rent when you can own! Great opportunity to own this 2 bedroom 2 bath home in a gated community! Coming Soon!
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853 E. Helmick St
Carson 90746
4 Beds | 2 Bath | 1,612 SqFt | $820,000
Welcome home to this beautiful 4 bedroom home in a highly sought after neighborhood in Carson.
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819 Atlantic Ave. #1
Long Beach 90813
2 Beds | 2 Bath | 1,219 SqFt | $565,000
Absolutely beautiful 2-story condo located in prime Long Beach just blocks away from downtown and the beach.
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942 N. Loma Vista Dr.
Long Beach 90813
2 Beds | 1 Bath | 1,158 SqFt | $785,000
Beautifully updated Craftsman home located in the Historic Willmore District overlooking Drake Park on a huge 8,536 sf lot.
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4271 Petaluma Ave.
Lakewood 90713
2 Beds | 1 Bath | 949 SqFt | $840,000
Looking for a home that is in pristine condition, immaculately clean, open, bright & cozy, in a premier location, on a tree lined street and with "wow factor" curb appeal and reasonably priced? Look no further.
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1210 E 11th St.
Long Beach 90813
2 Beds | 1 Baths | 702 SqFt | $550,000
Must see remodeled two-bedroom one bath home in Long Beach! Close to schools, shopping, restaurants, and freeways this home is conveniently located to all.
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421 N. Bellflower Blvd #221
Long Beach 90814
2 Beds | 2 Baths | 1,271 SqFt | $610,000
Live the beach life at this lovely resort style condo!!! Large 1,271sf, 2 bedroom, 2 bath end unit condo with a bonus room/den located near CSULB.
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1329 E 1st St. #16
Long Beach 90802
2 Beds | 2 Baths | 959 SqFt | $476,000
Great location just 2 blocks from the beach in Long Beach. This condo is on the first floor, faces towards the ocean, and the floor to ceiling windows fill the home with wonderful natural sunlight.
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1187 E 3rd St #111
Long Beach 90802
2 Beds | 2 Baths | 1,039 SqFt | $477,000
Close to the East Village Arts District, transportation, trendy restaurants, and just 3 blocks away from the beach.
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100 W 5th St #3C
Long Beach 90802
3 Beds | 2 Baths | 2,147 SqFt | $955,000
Amazing loft at the Kress Lofts in Downtown Long Beach. This was the architect's home and features the largest floor plan in the building.
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