Housing Market Strength Declines

Is the COVID-related boom in the housing market starting to wane? Homebuilder confidence as measured by the NAHB/Wells Fargo Housing Market Index tumbled to a 13-month low in July, coming in at a reading of 75, against expectations for the index to be unchanged at 80. Experts say, however, that the downturn is less of a "swoon" in the housing market and more like a predictable normalization. A first look at second-quarter GDP showed a sharp decline in residential investment, with headline gross domestic product (GDP) growth missing expectations. The demand curve for single-family homes is back at pre-COVID levels, but it is not below those levels. Additionally, homebuyers are no longer making a mass exodus from cities to suburbs. Mortgage applications are steady in recent months, but after the COVID rush, a return to normal can seem like a slowdown.