According to analysts at Wells Fargo, lower mortgage rates have brought buyers back and boosted homebuilding in the United States. They see that homebuilding appears set to improve substantially in 2020.
Key Quotes:
“Home sales and new home construction are poised to end 2019 on a strong note. Sales of new homes have risen in two of the past three months and have averaged a 726,000-unit pace over that period, marking the strongest pace since August 2007. Sales of existing homes have also improved, averaging a 5.44 million-unit pace the past three months—up from a 5.36 million-unit pace during the previous three months, with single-family homes accounting for practically all of the increase.”
“The improvement in home sales has bolstered homebuilder confidence and led to a steady increase in single-family starts, which have risen for five months in a row. Single-family starts have averaged a 921,000-unit pace the past three months, marking the strongest pace since October 2007.”
“Another factor restraining home buying is the declining movement between regions of the country this past decade. Recent data from the Census Bureau show migration within the United States has fallen to its slowest pace in the past 50 years.”
“Even with lower migration, homebuilding appears set to improve substantially in 2020. A rising share of Millennials are reaching a point in their lives where they are marrying, having children and looking to purchase their first home. The leading edge of the Millennial cohort will turn 39 in 2020 and a rising number will reach their late thirties every year well into the middle of the next decade. The improving demographics coincide with improving affordability, which stems both from lower mortgage rates and stronger income growth.”
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