The U.S. unemployment rate has hit 3.6 percent. It’s lowest level since 1969 and April saw 263,000 new jobs created beating economists’ expectations of 185,000 new jobs, according to new data today from the U.S. Bureau of Labor Statistics.
In metro Phoenix, the region is expected to add more than 110,00 new residents this year and add 69,400 jobs, according Moody’s Analytics. Maricopa County is the fastest growing county population wise in the U.S.
But home buyers are still watchful of the economy, politics and interest rates, according Jim Belfiore, president of Belfiore Real Estate Consulting.
Belfiore said despite all the strong U.S. and Arizona economic news, home buyers are not as aggressive. “We have a confidence issue,” Belfiore said.
He said new home contracts executed in metro Phoenix were down 18 percent in April compared to a year ago.
Belfiore, a leading regional real estate research expert, said home buyers are also taking longer to pull the trigger on purchases.
“It’s taking longer to convert them from home shoppers to home buyers,” he said.
That includes buyers window shopping more at model homes and tours. “They are taking three to six visits sometimes depending on the price points to make a purchase,” Belfiore said.
Belfiore said several factors are subduing home demand. He said the 35-day federal government shutdown that occurred in December and January discouraged some home buyers. He said a federal shutdown in 2013 put a similar drag on housing markets. “Buyers retreated and they stayed in hibernation through 2014,” Belfiore said.
Last year’s rate hikes by the Federal Reserve Board also dampened demand even the central bank doesn’t control mortgage interest rates.
“They think the Fed rate ultimately impacts mortgage interest rates,” Belfiore said.
Rising rental rates and population growth are working in the regional housing markets favor. Belfiore expects 22,000 new home permits this year, followed by 23,500 in 2020 and 25,000 in 2021.
The Fed kept its rates flat this week and Vice President Mike Pence said today he would like rate cuts.
That has a dynamic for prospective home buyers who might link their purchase decisions to Fed dynamics, Belfiore said.
“There is not a sense of urgency because the rates aren’t going to go up,” he said.