US Housing

US Housing Market Data Response

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 Data Response

New Home Sales (Oct.)

The marginal improvement in new home sales in October was flattered by a downward revision to September’s data, and the bigger picture is that sales have been fairly steady since May. Looking ahead housing demand will ease as mortgage rates rise but, with new home inventory set to remain much healthier compared to existing homes, new sales will see a steady rise to 880,000 annualised by end-2022.

24 November 2021
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US Housing Market Data Response

Existing Home Sales (Oct.)

Existing home sales eked out a small gain in October, slowing considerably from last month’s increase. With inventory at a record low, buyer sentiment in a pit and mortgage rates on the rise, we expect sales will fall back to around 5.7m annualised by mid-2022, before rising slowly to 5.75m by end-2023.

US Housing Market Data Response

Housing Starts (Oct.)

Single-family starts dropped for the fourth consecutive month in October to a 15-month low. But we expect starts will soon turn the corner. New home demand is strong, lumber prices have eased back and homebuilder confidence has recovered to a six-month high. Indeed, single-family permits saw their largest gain since March. That said, other material and labour shortages remain, and the improvement in starts will be slow. We expect a rise from 1.04m annualised today to around 1.15m by end-2022.

US Housing Market Data Response

Mortgage Applications (Oct.)

Mortgage rates rose to an eight-month high in October, which drove a significant decline in refinancing activity. But home purchase demand saw a much smaller dip, and we expect it will trend down only gradually as mortgage rates rise to around 3.5% by end-2021. After a period of stability, the average size of home purchase mortgages increased to $411,000 in October. That reflects a dwindling share of first-time buyers in the market and therefore doesn’t point to another surge in house price growth.

US Housing Market Data Response

Case-Shiller/FHFA & New Home Sales (Aug./Sep.)

The FHFA reported that annual house price inflation declined in August for the first time since May 2020. Rising mortgage rates mean that slowdown will continue, and we expect it to fall back to 3% y/y by end-2022. Meanwhile, new home sales surged to 800,000 annualised in September supported by relatively healthy inventory. We expect sales will see further modest gains and reach 880,000 by end-2022.

US Housing Market Data Response

Existing Home Sales (Sep.)

The 7.0% m/m rise in existing home sales in September does not mark the start of an upward trend in activity. With mortgage rates rising, inventory close to record lows and home buying sentiment at 39-year lows sales are set to trend down over the next six-months. Beyond that, a gradual improvement in supply and less rampant house price growth will help sales slowly rise to around 5.75m annualised by end-2023.

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