Builders and economists are telling clients not to worry about a housing slowdown, and forecast stronger industry data by this spring.
Bank of America Merrill Lynch economists, led by Michelle Meyer, recently told clients, "The sector is challenged but should only be a slight drag on growth, adding, "The decline in mortgage rates is very well timed ahead of the spring selling season. We suspect that potential homebuyers who may have been scared from the market during the period of rising rates in the fall could see it as an opportunity to jump back in." As well, a recent note to clients from Jefferies equity strategists led by Sean Darby says that concerns about housing affordability are "unfounded," citing the latest Mortgage Bankers Association purchase index data "[hinting] at a rebound in sales," Markets Insider reports.
Earlier this month, Lennar reported lower-than-expected quarterly home sales and orders, compounding fears of weakness in the market. Still, Stuart Miller, the company's executive chairman, attempted to assuage investors' concerns. "With recent pressure on both volume and margin, many have become concerned that the housing market has completely stalled," Miller said on the quarterly earnings conference call. "We still do not agree. As rates have started to ease, we have seen traffic pickup. Therefore, we continue to believe the market has taken a natural pause. It will adjust and recalibrate and demand, driven by fundamental economic strength, will resume."
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