By: Yoel Minkoff, Seeking Alpha News Editor
Investors will be eyeing several housing market indicators this week, with the real estate sector seeing some of the fastest price growth in more than a decade. The National Association of Homebuilders' monthly index will be published on Monday and is expected to hold steady at April's robust figure of 83. Building permits and housing starts figures released Tuesday are also forecast to stay strong, given a significant lift from buyer traffic, vaccinations, stimulus checks and the spring season.
Bigger picture: The numbers are expected to show resilient homebuilder confidence and buyer demand despite a near doubling of lumber prices and logistical supply issues. A lack of residential construction over the past decade, as well as pent-up demand from COVID-19 shutdowns, has unleashed a seller's market nationwide. According to the National Association of Realtors, the median price for a single-family home rose about 18% in March to a record high of nearly $335,000.
It's not only in the U.S. Among the 37 OECD countries, real house prices climbed almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020, marking the the fastest year-on-year growth in the past two decades. "If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes," said Richard Donnell, research director at U.K. property platform Zoopla. It also didn't take long for a "race for space" to take hold as people were forced to transform their houses into offices and classrooms.
Outlook: "Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers," noted Kate Everett-Allen, head of international residential research at real estate consultancy Knight Frank. Economists also say it will take some time for construction to catch up to demand, especially for entry-level homes.
30-year fixed-rate mortgage averages inched down to 2.94% for the week ending May 13, marginally lower than the 2.96% rate recorded in the prior seven days.