US Housing

US Housing Market Data Response

Mortgage Applications (Nov.)

A rise in mortgage rates to an eight-month high of 3.31% by the end of November failed to dampen home purchase demand, which surged to a nine-month high. The drop in 10-year Treasury yields from the arrival of the Omicron variant implies mortgage rates will fall back over the next couple of weeks, which may provide some further support to demand. But with affordability stretched we doubt the current level of home purchase applications can be sustained beyond the next few weeks.

1 December 2021

US Housing Market Data Response

Case-Shiller/FHFA House Prices (Sep.)

Annual house price growth fell for the first time in 16-months in September, and stretched affordability means it should continue to slow. It is too soon to say what impact the arrival of the Omicron variant will have on the housing market. But one immediate effect has been a fall in interest rates, which if sustained may give prices some support over the remainder of the year.

30 November 2021

US Housing Market Update

Why are pending and existing home sales diverging?

An increase in the quality of mortgage borrowers, and record low inventory, are boosting the mortgage closing rate and leading to an increase in the share of pending home sales converted into existing home sales. Those factors are not set to go into reverse anytime soon, so we don’t think existing sales will snap back to match the pending sales index over the next few months.

29 November 2021

Our view

Surging house prices coupled with tight credit conditions have stretched affordability and pushed homebuying sentiment to 39-year lows. We therefore expect new and existing home sales will see a further small decline this year. A rise in mortgage rates will take some of the heat out of house price growth, which we think will soon peak. Single-family starts will continue to be constrained by material and labour shortages, but the large number of authorised homes means they should see modest gains over the next couple of years. The reopening of the economy has been accompanied by a strong recovery in rental demand, and rental growth is set for further gains.

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US Housing Market Data Response

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Outlook good for mortgage delinquencies

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