The state of the housing market is strong; at least, that’s the finding of Nationwide’s Health of Housing Markets Report. The company’s leading index of healthy housing markets shows that most local housing markets are unlikely to see declines in the near term, which is good news for current and potential homeowners.
BE.com spoke with Ben Ayers, Senior Economist at Nationwide, about the housing market and what it means for potential homeowners.
BE: How would you characterize your findings in the Health of Housing Markets Report?
Ayers: The U.S. housing market looks very healthy at a national level and in the vast majority of metropolitan statistical areas (MSAs) across the country. Strong housing demand spurred by job growth and household formations are leading to higher home sales and are helping to push up house prices. The low mortgage rate environment is providing a boost to housing activity, too. MSAs with strong ties to the energy sector are the only local markets that are struggling at the moment.
BE: With the global economy and markets being vulnerable due to Britain’s exit from the EU, uncertainty in the U.S. elections, and the impact social unrest also has the economy, how fragile is the recovery in the housing market?
Ayers: Our findings suggest that the housing recovery is quite robust, led by the steady pace of job growth and burgeoning domestic consumer demand. The Brexit vote will have minimal impact on the U.S. economy, and therefore, does not impact our outlook for housing much. In fact, lower expected interest rates following Brexit should keep mortgage rates near record lows for a while–helping to boost housing activity in the near term.
BE: What are some things people should consider before becoming a homeowner?
Ayers: Economists are not experts like real estate agents on home purchase decisions. That being said, it is always important for a home buyer to buy within their financial means. Mortgage rates play a key role in the financing of a home and should be closely monitored.
BE: Do you expect the strength of the current housing market to continue over the next two years?
Ayers: The findings from the Health of Housing Markets Report suggest that the housing market should see sustainable growth over the next one to two years in most local areas. The fundamentals for housing market growth—job/income gains and demographics—remain strong and should continue to push housing activity higher. Our data suggests that the positive trends in the housing sector will remain for the coming year, with little chance of a housing downturn in nearly all local housing markets.