‘Homeownership just got hit again’: Real estate expert warns of challenges ahead

Welcome back. It was a big week of housing data. February existing home sales out yesterday surging nine and a half percent. That was the largest monthly gain in a year. Both February housing starts and building permits rose for the month. That also beat expectations. The Home Builder Sentiment Index climbing for a fourth month in a row rising three points to 51 in March. Join me now as Manchin global host and Fox News real estate contributor Katrina Campins. Katrina great to see you. Your reaction to this data. Thanks so much for having me Maria. A persistent lack of existing inventory continues to drive buyers towards new homes construction and it's fueled by robust demand and mortgage rates lower than last fall's peak cycle. These factors have propelled buyer sentiment as you just mentioned above a crucial threshold in March. Now buyer demand continues to be robust and I foresee an increase in market activity if mortgage rates continue to decrease. However buyers are contending with several supply side hurdles including buildable lots a shortage of buildable lots a shortage of skilled labor and challenges poised by increasingly stringent building codes all of which contribute to escalating home construction costs. Now as mortgage rates have remained below 7 percent since mid-December more builders are scaling back on reducing home prices to stimulate sales. So in March only 24 percent of builders reported cutting prices down from 36 percent in December 2023 and marking the lowest share since July 2023. However the average price reduction in March remained steady at 6 percent for the ninth consecutive month. Meanwhile the utilization of sales incentives has remained consistent with buyers with 60 percent of builders offering some form of incentive in March. A range maintained between 58 percent to 62 percent since September. So you know home prices are continuing to rise for the most part but builders still offering are offering incentives and they are more bullish about getting into the market. So we are seeing an uptick in housing starts which is good news. I still do believe that they're going to be challenges until interest rates come down because buyers have very low inventory and have the challenge of mortgage rates at the current rate. So not to mention this NAR lawsuit I think is going to create challenges for home ownership moving forward. Yeah I mean the National Association of Realtors and they are agreeing to policy changes to resolve multiple class action lawsuits from home sellers. One of the key changes would impact who pays for real estate agents. Those agents representing the buyer. So under the proposed rules a broker representing a seller can't offer cooperative compensation on NAR affiliated multiple listing services. If passed in court these changes would be implemented in mid-July. Katrina what do you think about this and how would that change things. So you know home ownership is poised to become even more challenging in an already tough market as a result of this. The repercussions of this lawsuit are numerous and significant for those cheering the notion that agents have been exploiting consumers. It's vital to understand that this shift represents a regression in the industry by several decades. The progression to the current state originated from individuals actually seeking increased representation in home buying. And so now what's going to happen is basically buyers are going to go directly to the listing agent. Right. And think about all the misrepresentation that's going to occur at that point in time and then think about all of the kickbacks that are going to be given all the bonuses. I also think that listing agents are going to are going to actually use buyers against each other to rise you know to get an increase in price so that the seller benefits. So I think this is extremely unfortunate. And while people think that it's going to be good for the housing market I completely disagree. I don't disagree with a buyer's agent having a buyer representation form. But most buyers are not going to want to sign that form because they're not going to want to pay for their agent. Not to mention that you can't finance those costs. So now that's another cost another closing cost that can't you know be included in the home price that buyers are going to have to figure out how to pay for. So homeownership in my opinion just got hit again because of this lawsuit. All right Katrina thanks very much. We'll watch that one for sure. Katrina Campins and you can watch Mansion Global on Fox Business on Wednesday nights at 9 p.m. Eastern with Katrina. We'll take a break when we come back.