A new Health of Housing Markets Report (HoHM Report) from Nationwide reveals a strong U.S. housing market with continuing positive momentum, indicating that the strength of the market is a result of low and falling unemployment rates which has increased demand among buyers. Experts forecast that the market has little chance of a downturn in the next year, and that most local markets may see sustainable expansion over the next year.
The report also found that the most sustainable markets, with steady job gains, accelerating household formations, and home price appreciation, tend to be in the Midwest. But, national home price appreciation is reducing affordability, which could pose a risk to housing market sustainability.
“In most regional markets we’re seeing that housing fundamentals are close to the strongest they’ve been in almost a decade,” said David Berson, Nationwide’s senior vice president and chief economist. “This is thanks to a strong labor market, low mortgage rates and an uptick in the pace of new household formation, which tends to rise as employment conditions improve.”
“While some may view rising interest rates in 2016 as a negative for housing, it’s unlikely to have an immediate impact on the housing market,” Berson continued. “Given the current low level of mortgage rates, as well as solid job growth, it could take a substantial rise in interest rates to dramatically impact the outlook for the housing market.”