It was quite a surprise to wake up this morning and see the home sales figures for June 2013. According to the Commerce Department, home sales surged 35% YOY for the month of June, despite rising interests rates. To read the full story, check it out here.
As I had mentioned in my previous post, I do see underlying demand for home to be strong due to a shortage of housing starts since 2008. Interestingly enough, according to articles I have read, interests rates only have a slight impact on the overall demand for real estate, with the strength of the economy being a bigger determinant in the demand and price of real estate. Of course, it will be interesting to see housing demand for July and August, and to see if a full 1% jump in mortgage rates, which is unprecedented, will affect housing demand and prices like never before.
[Edit] 7/27/2013 As an add on to my thoughts above, Fannie Mae has just released a report showing that based on historical trends, interests rates have limited impact on housing prices. See the report here.
[Edit] 9/2/2013 Rising interests rates have created a higher demand for smaller homes as a result of the higher monthly payments. Check out the link here.
[Edit] 9/2/2013 Rising rates coupled with rising prices have caused housing affordability to plunge according to a recent article by CNN. See the link here.
