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US Housing Market Data Response

New Home Sales (Apr.)

New home sales dropped sharply to a two-year low in April. But while rising mortgage rates are weighing on sales, the drop looks large given the fall in mortgage applications seen so far and may be revised up over the next couple of months. After all, plenty of pent-up demand from the past couple of years will provide some support to sales, and we expect new sales will end the year at around 700,000 annualised.

24 May 2022

US Housing Market Update

Mortgage debt service ratio to remain low

The surge in mortgage rates has led to a sharp deterioration in home affordability. But that doesn’t mean the mortgage debt service ratio, the share of disposable income spent on mortgage payments, will also surge from its current low level. Existing borrowers are protected by long-term fixed mortgage rates, and tight credit conditions argue against a large rise in debt-to-income ratios for new buyers. While home sales will take a hit from higher interest rates, the housing market will remain resilient to future shocks.

19 May 2022

US Housing Market Data Response

Existing Home Sales (Apr.)

Existing home sales fell once again in April, although for now they remain above their pre-COVID-19 level. But, with mortgage rates set to stay high and credit conditions unlikely to loosen significantly, sales will fall further this year. Indeed, buyer traffic dropped sharply in April. We expect sales will fall back to around 5m annualised by end-2022.

19 May 2022

Most Recent Alerts

18 hours ago

US Housing Market Data Response

New Home Sales (Apr.)

Our view

Mortgage rates are rising and will reach 5.6% by mid-2023. As a result, mortgage payments as a share of income will match the peak seen in the mid-2000s. That will cool home sales, with existing sales ending 2022 20% down from their end-2021 level. House price growth will also fall back to zero by mid-2023, but tight markets and a lack of forced sellers argues against an outright fall. The lack of homes for sale has supported rental demand and led to a rapid recovery in rental growth, but with for-sale supply set to grow, demand for rental properties will slow, prompting rent growth to cool.