WFS: More Homebuyers Will Opt for Lower Priced Homes

Wells Fargo Securities economists are optimistic that home sales will continue to increase during the second half of this year despite the 100 basis point hike in mortgage rates since May.

The higher rates will affect the type of homes and amenities “people chose rather than their decision to buy,” according to a new report by the WFS Economics Group.

In their latest “Housing Chartbook,” the economists note that institutional investors are running out of attractive low-priced homes to buy and convert into rentals. And lending standards have “eased up slightly as more lenders have returned to the mortgage market.”

Meanwhile, home price increases will likely be moderate during the second half of this year “as investors pare their purchases of distressed properties and traditional buyers opt for lower-priced homes,” the WFS report says.

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