What forces are driving the housing market?

Eagle Wealth Management |
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Weekly Market Commentary

 

Hello Eagle Wealth Community,

Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide.  If you compare that to the average number of homes for sale during the past 10 years, it's no surprise that many hopeful homebuyers are having issues securing a home.1

Lack of inventory

There are a few major differences between 2007 and now, however, but the biggest difference?  What we’re seeing now isn’t a bubble; it's simply a lack of inventory.

It’s a seller’s market

In many ways, this may be the friendliest market we’ve seen in quite a while for home sellers. Right now, nearly half of homes are selling within roughly a week or less.  At the same time, median prices are rising at a phenomenal rate, and national prices, in general, have increased 17.2 percent over last year.2

Why now?

Listings are skyrocketing for a number of reasons.  Many experts believe the continued low mortgage rates, a pandemic-era construction slowdown, and an increase in money available for a down payment are all factors.3

In this hyper-competitive market, many people are thinking of taking advantage of the situation by listing a property or home. If this sounds like you and you’re feeling overwhelmed with the decision, please give us a call.  We can discuss how a change like this may impact your personal financial plan and the best way to align your goals with your future. 

 

Sincerely,

Your Eagle Wealth Team

 

The Week on Wall Street

The crosscurrents of strong corporate earnings, rising global cases of COVID-19, and the specter of higher capital gains taxes led to a choppy week of trading that left stock prices slightly lower for the week.

The Dow Jones Industrial Average lost 0.46%, while the Standard & Poor’s 500 slipped 0.13%. The Nasdaq Composite index fell 0.25% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 0.47%.1,2,3

 

A Directionless Week

Despite continued better-than-expected corporate earnings, stocks retreated as concerns over rising global COVID-19 infections weighed on investor sentiment. A mid-week rally erased much of these losses, with reopening stocks and small cap companies leading the market.

The stock market resumed its decline in reaction to reports that President Biden supported a capital gains tax increase on wealthy Americans. The Biden news prompted worries that stocks could come under pressure this year if such an increase were to go into effect next year.

Solid economic reports, along with a reassessment of the capital gains news, helped stocks to bounce back and close out the week on a positive note.

Housing Shows Strength

Two housing market reports last week reflected strong consumer demand for homes.

Sales of new homes in March jumped by 20.7% from February and by more than 66% from last March, reaching levels not seen since 2006. All regions recorded double-digit gains, except for the West, which experienced a decline of 30%.4

Though existing home sales fell 3.7%, it wasn’t for lack of consumer interest, as evidenced by the 18-day average to sell a home. The decline was largely an issue of tight inventories. This demand/supply imbalance drove median home prices higher by 17.2% from March 2020 to $329,100.5

THE WEEK AHEAD:

KEY ECONOMIC DATA

Monday: Durable Goods Orders.
Tuesday: Consumer Confidence.
Wednesday: Federal Open Market Committee (FOMC) Announcement.
Thursday: Jobless Claims. Gross Domestic Product (GDP).

 

Source: Econoday, April 23, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
 

 

THE WEEK AHEAD:

COMPANIES REPORTING EARNINGS


Monday: Tesla, Inc. (TSLA).
Tuesday: Microsoft (MSFT), Advanced Micro Devices, Inc. (AMD), Visa (V), Alphabet, Inc. (GOOGL), Starbucks (SBUX), Amgen, Inc. (AMGN), Eli Lilly and Company (LLY), 3M Company (MMM), Texas Instruments (TXN), United Parcel Service (UPS), Mondelez International (MDLZ).
Wednesday: Apple, Inc. (AAPL), Facebook (FB), Boeing (BA), Ford Motor Company (F), Qualcomm (QCOM), Shopify, Inc. (SHOP), Servicenow, Inc. (NOW), Teladoc Health, Inc. (TDOC), Ebay (EBAY).
Thursday:  Amazon.com (AMZN), Twitter, Inc. (TWTR), Mastercard (MA), Bristol Myers Squibb (BMY), Caterpillar, Inc. (CAT), Merck & Company (MRK), McDonald's Corporation (MCD), Comcast Corporation (CMCSA), American Tower Corporation (AMT).
Friday: Abbvie, Inc (ABBV), Chevron (CVX), Charter Communications (CHTR).

Source: Zacks, April 16, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

1. NAR.realtor.com, March 22, 2021

2. Axios.com, April 11, 2021

3. Axios.com, April 11, 2021