If your business is influenced by prospective customers moving into new homes or offices, this newsletter is for you. Never have home sales been lower than in the past 30 years. So what is the outlook? How can we plan? Here’s how:
- HOME SALES DEPEND ON FINANCING: Almost everyone buying a new home or building is looking for a loan or mortgage.
- MORTGAGE LOANS: These are negotiated with a financial institution and secured by the property that is being financed.
- MORTGAGE LOAN RATES: This is the amount of interest that the homeowner pays to the financial institution for the money they borrowed to buy the property. The lower the mortgage rate, the less the monthly interest due to the financial institution.
- HIGHER MORTGAGE LOAN RATES: This has been the problem with low home sales beginning in late 2022 and continuing in 2023 as the Federal Reserve Bank has raised their prime lending rate over 11 times to around 8% in December.
- MORTGAGE RATE UNDER 3% DURING PANDEMIC: Rates began to creep under 5% after the housing bust in 2009 and have stayed there until 2022.
- CURRENT RATES HAVE HOME SALES AT LOWEST RATE IN 30 YEARS: If homes don’t sell, there are fewer families to buy new items for their home.
- GOOD NEWS ON THE WAY: The CME FedWatch Tool (see below) is indicating a 38% chance of a ¼ point cut in the Prime Rate in March, an 88% chance in June.
- LOWER RATE. MORE HOME SALES. MORE BUSINESS FOR YOU: That means more homes will sell, and we’ll have families that need to buy new goods for their new homes.
So now is the time to begin to get prepared. Get your sales and marketing in order now. With the new 100% machine page ranking at Google, it takes about 90 days to see results. Plan now.
Onward & Upward!
For more information: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html