Between late August and mid September, Hurricanes Harvey and Irma hit the U.S., leaving unprecedented destruction in their wakes. In addition to the thousands of people, homes, and businesses that were devastated by the storms, the housing market also took a hit.
Existing-Home Sales — a report that measure the sales of single-family homes, townhomes, condominiums, and co-ops — decreased 1.7% from July to August. While much of that decline can be attributed to the lack of inventory across the country, Hurricane Harvey was also a contributor. In the South, sales dropped by 5.7% because of Harvey. Lawrence Yun, Chief Economist for the National Association of REALTORS® (NAR), has stated that sales will likely be impacted for the rest of the year in both Houston and parts of Florida.
Sales of newly constructed homes were also affected by Irma and Harvey. In August, new home sales unexpectedly dropped from July to the lowest level since December 2016. However, according to the Commerce Department, only 65% of the data from Florida and Texas was collected, compared to the usual 95% response rate. To top things off, consumer confidence fell slightly in September, particularly in Texas and Florida, where people were most impacted by the hurricanes.
Housing Market Remains Strong, Despite Minor Setbacks
While the hurricane season resulted in temporary setbacks, the housing market is resilient and has already begun to recover. The National Association of Home Builders’ Chief Economist, Robert Dietz, explains, “With ongoing job creation, economic growth and rising consumer confidence, we should see the housing market continue to recover at a gradual, steady pace throughout the rest of the year." NAR’s Lawrence Yun agrees that home sales will also recover, stating, “nearly all of the lost activity will likely show up in 2018."
What’s more, despite the dip in consumer confidence in the aftermath of the hurricanes, consumer confidence remains at a healthy level. Lynn Franco, Director of Economic Indicators at The Conference Board, explains, “consumers’ assessment of current conditions remains quite favorable and their expectations for the short-term suggest the economy will continue expanding at its current pace.”
Knowing this, what does it mean for current and prospective homeowners? With a positive outlook for economic growth and rising consumer confidence, mortgage rates and home prices will likely continue to increase. Bottom line: If you are looking for a new home or considering a refinance in the near future, do so now before rates and prices go up even further..