Housing market is in 'adjustment phase': Economist

Recent housing data reveals a decline in construction activity, with housing starts dropping 5.5% and building permits decreasing 3.8% month-over-month. Danielle Hale, Chief Economist at Realtor.com, joined Wealth! to provide insights on these trends.

Hale explains that "the housing market is in an adjustment phase." Initially, multi-family construction grew while single-family buyers faced challenges due to high mortgage rates. However, she now observes a rebound in single-family homes, with much of the decline in the recent report "driven by the multi-family sector." Hale considers this shift "good news" for the housing market.

"Existing homeowners are sitting on a record amount of equity, and that creates this bifurcation," Hale notes. This dynamic is causing existing homeowners to retain their properties, largely due to the low mortgage rates associated with their current homes. This trend is impacting both supply and new home construction within the housing market.

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This post was written by Angel Smith