Could Brexit change housing market trajectory?
Existing home sales are predicted to increase in June, but at a slower pace than normal, according to the Residential Real Estate Nowcast report from Ten-X, an online real estate transaction marketplace.
Existing home sales will fall between seasonally adjusted rates of 5.38 and 5.74 million, with a targeted number of 5.56 million, according to the Nowcast report. This is an increase of 0.5% from May and an annual increase of 1.4%.
“Despite facing broader economic headwinds following a disappointing May jobs report, slowing U.S. GDP growth, and uncertainty in global markets, the U.S. housing market remains on solid footing,” Ten-X Chief Economist Peter Muoio said.
“We continue to hold a positive outlook for housing supported by accelerating wage growth, an accommodative labor market and low interest rates, though persistent issues with declining affordability and low inventory will likely limit stronger gains in sales,” Muoio said.
Home sales recently increased by 4.5% annually to 5.53 million units in May, according to the National Association of Realtors. It also increased monthly from April’s rate of 5.43 million.
Last month’s Nowcast report predicted rates to fall between 5.47 and 5.83 million units with a target of 5.65 million.
On the other hand, home sales went up consistently for the past three months, however in May they declined monthly, and for the first time in about two years, they declined yearly, according to the National Association of Realtors.
NAR reported a 4.7% annual increase in median existing home prices to $239,700 for May, the 51st consecutive month of annual gains. Ten-X predicted home prices of $238,418 in last month’s Nowcast.
In fact, home prices continue to increase nationwide, even hittingnew highs in several large housing markets in April, according to S&P Dow Jones Indices Case-Shiller Home Prices Indices released today.
For June, Ten-X predicts prices for existing homes will fall between $231,642 and $256,025 with a targeted price of $243,833. This is an increase of 1.7% from May and 3.1% increase from last year.
“It will be interesting to see if the recent Brexit vote will have a measurable near-term impact on the U.S. housing market,” Ten-X Executive Vice President Rick Sharga said.
“We could see interest rates reach a new low, possibly stimulating buying activity by improving affordability,” Sharga said. “Or we could see an influx of foreign capital, as investors look towards U.S. real estate in a flight to safety. Either of these could significantly change the current market trajectory.”
Other experts agree. Some experts say that the Brexit vote could result in U.S. interest rates falling even lower. Previously, the Federal Reserve predicted that it would be raising rates possibly even as soon as July, however that may not be likely anymore.