The American housing market has weathered the COVID-19 pandemic in good health. It has been able to flourish despite (or in some places because of) infection rates, protective measures and changing lifestyles.
In the week ahead we will see how it is withstanding rising interest rates, high inflation and persistent recession worries.
There are several housing data points due out. On Tuesday, the existing home sales report will give investors the temperature of how springtime homebuyers are dealing with higher borrowing costs. This May data will be examined for the resilience of demand in the face of rising mortgage rates. It also will reflect how sellers are responding to the jump in interest rates.
The average 30-year mortgage rate hit 5.3 percent according to Freddie Mac. That rate was close to 3 percent at the beginning of the year. That increase adds more than $400 a month to the payment on a $350,000 home.
On Wednesday, homebuilder KB Home is expected to report its second quarter financial results. Homebuilders have been waylaid by inflation in two ways. First, higher costs of doing business thanks to more expensive materials and labor. Second, by the Federal Reserve’s battle against its first challenge — inflation — by raising interest rates.
On Thursday, new home sales for May will give investors a broader sense of the appetite and ability to build new homes.
Even if you’re not in the market to buy or sell a home, these reports will provide investors an update on a big chunk of the U.S. economy. Housing and housing services make up about 17 percent of the American GDP.
With the stock market in need of repair, a healthy housing market could help rebuild some confidence.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of “Nightly Business Report” on public television. Follow him on Twitter @HudsonsView.