How the Russian Invasion of Ukraine Could Impact the U.S. Housing Market

Redfin Deputy Chief Economist Taylor Marr says the Russian invasion of Ukraine and the resulting economic uncertainty is likely to impact the U.S. housing market in several key ways.

On a large scale, Redfin’s housing-market outlook for slowing home-price growth and plateauing sales is unchanged despite economic volatility. That’s because opposing forces could simultaneously slow mortgage-rate increases and dampen demand.

Financial uncertainty has already slowed rising rates, which could prevent monthly payments from becoming less affordable for buyers.

But plummeting stock markets could make it harder for homebuyers to pull together the cash for a down payment, and could erode consumer confidence.

Rising gas prices could also dampen homebuyer demand.
The conflict could also decrease Russian demand for U.S. homes.

Waking up to the news of the Russian invasion of Ukraine was devastating, and we were saddened to see videos of missile strikes and photos of battles igniting across the country. We want to take a moment to address how the conflict on the other side of the world could impact the U.S. housing market.

The escalating conflict in Europe will make the global economy weaker, resulting in opposing pressure on mortgage rates: The Federal Reserve fighting inflation is pushing rates up, while the conflict is pulling them down. Even with uncertainty and economic volatility, our most recent housing-market outlook–which predicts slowing sales volume and price growth, as well as small mortgage-rate increases throughout the year–is unchanged.

The swift rise in mortgage rates is slowing

Financial uncertainty is slowing the rise in mortgage rates, with the average 30-year fixed mortgage rate sitting at 3.89% in the week ending February 24. That’s down slightly from the 3.92% peak the week before, but up from roughly 3.1% at the beginning of the year.

Pumping the brakes on rising mortgage rates could help homebuyers by making monthly payments slightly smaller than they otherwise would have been.

Economic uncertainty may reduce homebuyers’ ability to make down payments

Global markets don’t like conflict and investors don’t like uncertainty, which means the financial markets are volatile and weakened.

That impacts the housing market because many homebuyers rely on selling stock or tapping into their 401(k) for a down payment, which is especially true as rising home prices increase the amount of cash necessary for a down payment. This will have a particularly big impact in expensive tech hubs like the Bay Area, Seattle and Austin.

Volatility in the financial markets may also erode consumer confidence around the U.S., which already fell earlier this month.

.https://www.redfin.com/news/russia-ukraine-impact-housing-market

How the Russian Invasion of Ukraine Could Impact the U.S. Housing Market

How the Russian Invasion of Ukraine Could Impact the U.S. Housing Market

Anarcho-Capitalist Categorical Imperatives

AnCaps' Laissez-faire Free Trade Zone