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[Animated glitches containing various letters flip to spell out the following financial terms]
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Bear Market
Business Cycle
Risks
Bull Market
Fixed Income
Inflation
Equities
Diversification
Interest Rates
Opportunities
Geopolitics
Market Catalysts
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Market Decode
On-screen disclaimer:
Please read important information at the end of this program. Recorded on 8/28/2024.
[Lauren Sanfilippo speaking throughout]
Through much of the long, hot summer, the housing market has been stuck in a deep freeze. Could a thaw be on the way?
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Lauren J. Sanfilippo
Senior Investment Strategist
Chief Investment Office, Merrill and Bank of America Private Bank
I'm Lauren Sanfilippo, here to discuss what a long-awaited drop in interest rates could mean for homebuyers, the economy, and investors.
For the past few years, rising rates have kept many homeowners with low-rate mortgages from selling. The result? Falling inventory, higher prices and a stagnant market.
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High Interest Rates and Housing
- Falling inventory
- Higher home prices
- Market stagnation
It's been a tough environment for homebuyers — especially first-time buyers, following a challenging spring market and with the median price of existing homes still near all-time highs.
But now, amid growing expectations of Fed rate cuts, mortgage rates have dropped to 15-month lows and mortgage applications are up, while sales of existing homes rose mildly in July.
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Encouraging signs
- ↓Declining Mortgage rates
- ↑Increasing Mortgage applications
- ↑Increasing Home sales
These early signs are modest and with two-thirds of mortgage holders still locked into rates under 4%,Footnote 1 housing inventory may be slow to rebuild.
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Two-thirds of mortgage holders are locked into rates below 4%.
Source: Federal Housing Finance Agency as of March 2024
Yet, real life circumstances, such as growing family size, job moves or retirement will ultimately drive some housing activity. And if interest rates continue to normalize as we expect, it could accelerate a housing market rebound.
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The Multiplier Effect
Housing impacts industries ranging from building materials to home furnishings.
As an investor, keep in mind that the housing market has what we call a "multiplier effect" on the economy, meaning that many related industries rise or fall with its fortune. So, a future rebound in housing could also mean potential opportunities in industries ranging from building materials to home furnishings.
For more timely insights on the economy and markets, be sure to read our weekly Capital Market Outlook.
On-screen disclaimers:
Important Disclosures
The opinions expressed are as of the date of this video and are subject to change.
Investing involves risk, including the possible loss of principal.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., ("Bank of America") and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S" or "Merrill"), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp.").
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