Maintenance volumes experienced the first, albeit slight, year-over-year decline for the first time since May 2020, when existing housing activity started to show signs of recovery following the onset of the COVID-19 pandemic. Following strong growth in 2020 and 2021, home renovation activity may begin to cool down in step with the broader housing market.
The surprisingly quick jump in mortgage rates, driven higher by the Federal Reserve’s efforts to combat inflation, puts pressure on prospective homebuyers facing an already pricey market. It’s likely that demand will shift as many homebuyers will be priced out of the market. This, coupled with persistent increases in home prices, has taken a toll on homebuilder confidence, which declined for the fourth straight month according to the National Association of Homebuilders.
“With mortgage rates hitting 5% for the first time in more than a decade, housing affordability conditions have shifted significantly,” said Jonathan Kanarek, managing director, property intelligence solutions at Verisk. “The Federal Reserve’s tightening monetary policy to combat inflation will likely impact homebuyers as they face higher borrowing costs, and many may find themselves priced out of the market. We’re starting to see a pullback in existing housing activity for homeowners.”
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