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Could the Housing Market Slump be Coming to an End? Let’s Look at the Signs!  Feature Image
Posted on April 12, 2023 4 minute read

Could the Housing Market Slump be Coming to an End? Let’s Look at the Signs! 

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Millennial homeowners now outpace renters for the first time

As spring approaches, indications of steadying in the housing market have been observed in recent weeks.

The average 30-year fixed mortgage rate has dropped to 6.28%, according to Freddie Mac, a decrease from the 6.32% that it was the week before. 

This trend marks the fourth consecutive weekly decline—largely attributed to the bank crisis that transpired four weeks ago, which has caused Treasury rates to decrease.

This decline is also noteworthy since the Federal Reserve increased interest rates by a quarter point in March as part of their attempt to moderate the rapid inflation. 

At the end of the week, the 10-year Treasury note had a yield of 3.41%. This mark was lower than the 4% yield seen at the start of March—good news since the average 30-year mortgage rate frequently mirrors this rate.

New mortgage applications are still low…

The Mortgage Bankers Association reported that mortgage applications declined 4.1% in the week ending March 31. However, four weeks prior to this decline, there had been an increase in requests for new mortgages.

… but pending U.S. home sales are up

Home offer signings had an upswing in every area of the country apart from the West. 

In the Northeast, existing sales shot up 6.5% from the past month, had a 0.4% increase in the Midwest, and a 0.7% rise in the South; however, the West experienced a 2.4% dip in pending home sales.

Other positive indicators of a housing market thaw

The National Association of Home Builders and Wells Fargo’s sentiment index for builders rose 2 points to 44, higher than Analysts’ predictions of 40.

In February, the rate of existing home sales saw a tremendous boost of 14.5%, rising to an annualized rate of 4.58 million. This rise marked the highest monthly percentage increase since July 2020 and put an end to a 12-month decline.

Single-family home sales increased by 1.1% in February, reaching an annual rate of 640,000, compared to the 633,000 recorded in January. This rate is 19% lower than in the same period last year.

Millennial homeowners now outpace renters for the first time

For the first time, millennial ownership of homes outnumbered those of the same generation who are renting—even though rising interest rates and a tough real estate market persist.

The first generation to mature during the Internet era, namely those born between 1981 and 1996, experienced the greatest increase in homeownership of any generation in the past five years, with 52% being homeowners in 2022.

These young homeowners saw a 64% jump in numbers, from 7.1 million to 18.2 million, between 2017 and 2022. However, there are still 17.2 million millennials renting, which also makes them the largest rental generation.

Millennials purchase their homes later in life, compared to other generations

The average millennial purchased their first home at 34 years old, which is slightly older than previous generations. 

Boomers bought their first homes at 33 and Gen X at 32. Furthermore, those preceding generations own more of the overall number of homes compared to millennials.

  • Baby boomers (born between the post-war years of 1946 to 1964) own approximately 32.1 million homes as of 2022, despite losing 354,000 homeowners in the last five years.
  • On the other hand, generation X (born from 1965 to 1980) possesses 24.4 million homes, an increase of 1.9 million.

Not surprisingly, Gen Z (born between 1997 and 2013) has the least amount of homeownership with a total of two million, an increase of 1.6 million in the last five years. Since the youngest person in this age group would only be ten years old, many aren’t even teenagers yet.

Over the last five years, Gen Z renter numbers have risen by 4.5 million.This information was based on data from IPUMS, which is a part of the Institute for Social Research and Data Innovation—University of Minnesota—as well as census data.

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