Sharp Recovery in US Housing Market Sentiment

[Asia Economy Reporter Koh Hyung-kwang] The National Association of Home Builders (NAHB) housing market index, which reflects the future market outlook of U.S. homebuilders, showed a sharp recovery this month with a significant increase.

Hana Financial Investment analyzed on the 19th, "The NAHB housing market index for July recorded 72, significantly surpassing Bloomberg's forecast of 60," adding, "Since hitting a low of 30 in April, the sentiment among suppliers has shown a steep recovery."

Jang Hyuk Na, a researcher at Hana Financial Investment, explained, "This appears to be a synergy effect emerging from abundant liquidity due to unprecedented market stabilization measures by the U.S. central bank, the Federal Reserve (Fed), and historically low loan interest rates."

In particular, Na noted, "Last week, the 30-year fixed mortgage rate (Freddie Mac, 2.98%), which forms the basis of home loans, fell below 3% for the first time in history, creating an environment where active refinancing can be expected to reduce loan burdens."

He continued, "Although the current market lags by about one to two months, existing home sales in June, which account for over 90% of the housing market, are expected to easily meet Bloomberg consensus (4.8 million units, a 22.8% month-on-month increase). While inventory burdens remain, the pending home sales in May, which lead existing home sales, surged 44.3% month-on-month, suggesting that price and mortgage rate advantages likely drove significant supply-demand improvements this time as well."

Furthermore, Na emphasized, "Considering the coincident characteristics with the current market, new home sales can be expected to surprise positively. Although the price increases due to the surge in demand in May pose some burden, it is necessary to consider tight inventory, low mortgage rates, and above all, the economic optimism that dominated the market in June, as confirmed by the July housing market index."

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