(TNS)—The American housing market has flourished during the ongoing COVID-19 pandemic.
High coronavirus infection rates in places like Florida haven’t really hurt residential real estate. In fact, changing lifestyles such as many white-collar professionals working remotely have contributed to a blazing housing sector in Miami-Dade County, as thousands of people from other parts of the country have relocated there the past couple years.
This week will come the first test for the housing juggernaut to see how it’s withstanding rising interest rates, high inflation and persistent recession worries.
There are several housing-related economic indicators due out. On Tuesday, the U.S. existing home sales report will give investors a reading of how springtime homebuyers are dealing with higher borrowing costs. This May data will be examined for the resilience of demand in the face of higher mortgage rates. It will also reflect how sellers are responding to the jump in interest rates.
The June and July home sales reports will reveal more about how the housing market holds up. The Federal Reserve jacked rates again last week—this time by a mighty three-quarters of 1%, the biggest bump since 1994.
The average 30-year mortgage rate has now hit 5.3%, according to Freddie Mac. The rate was close to 3% at the beginning of the year. That increase adds more than $400 a month to the mortgage payment on a $350,000 home.
On Wednesday, big homebuilder KB Home is expected to report its second quarter financial results. Homebuilders have been waylaid by inflation in two ways. First, there’s been higher costs of doing business thanks to more expensive building materials and labor. Second, the Fed’s battle against inflation, with interest-rate hikes its prime tool.
On Thursday, new U.S. home sales in May will give investors a broader sense of consumers’ appetite and ability to build new homes.
Even if you’re not in the market to buy or sell a home, these reports will provide investors an update on a big chunk of the U.S. economy. Housing and housing services make up nearly 17% of the American gross domestic product.
With the stock market in desperate need of repair, a healthy housing market could help rebuild investors’ confidence.
©2022 Miami Herald.
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