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US Housing Market Data Response

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 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

US Housing Market Data Response

Housing Starts (Apr.)

Housing starts dropped by a marginal 0.2% m/m in April, driven by the single-family sector which also saw building permits fall for the second month in a row. Housing demand is faltering due to a surge in mortgage interest rates to a 12-year high, which helped push homebuilding confidence to a two-year low in May. That said, pent-up demand from the past couple of years means we are not expecting a crash in housing market activity, and single-family starts will fall gradually to around 1m annualised by end-2022.

18 May 2022
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US Housing Market Data Response

Mortgage Applications (Apr.)

The sharp rise in mortgage rates over the past couple of months, to a 12-year high of 5.37% in the middle of April, is now weighing on mortgage demand. Home purchase applications dropped to their lowest since the height of the COVID-19 impact two years ago. A further rise in the 10-year yield over the past week means mortgage rates will rise further, placing additional constraints on demand. That said, plenty of pent-up demand from the past couple of years and a rising share of cash buyers still make a crash in home sales unlikely.

US Housing Market Data Response

Case-Shiller/FHFA & New Home Sales (Feb./Mar.)

Month-on-month house price growth rose to a record high in February, as households desperate to buy before interest rates increased bid up the price of those few homes for sale. But the surge in mortgage rates since then means growth will now slow rapidly, to around 8% y/y by end-22. Rising mortgage rates will also weigh on new home sales, which dropped for the third month in a row in March. We expect a further modest decline in sales to around 700,000 annualised by the end of 2022.

US Housing Market Data Response

Existing Home Sales (Mar.)

Surging mortgage interest rates pushed March existing home sales down to their lowest since the height of COVID-19-restirctions in mid-2020. We expect mortgage rates to rise further over the next year, and that will lead to an additional fall in activity. But significant pent-up demand from the last couple of years, and gradual improvement in inventory mean the decline will be relatively modest. French election Drop-In (21st April, 09:00 BST/16:00 SGT): Join our Europe and Markets economists the morning after the crucial Macron vs Le Pen debate for a briefing about risks around the presidential election, including to the French economy, the European Union and the euro. Register now.

US Housing Market Data Response

Housing Starts (Mar.)

Housing starts rose a by a marginal 0.3% m/m in March, driven by the volatile multifamily sector. Single-family starts saw a small fall, as did building permits. While we expect new home demand to be resilient to higher mortgage rates, the large pipeline of homes authorised but not started, and started but not completed, implies single-family starts will tread water for the rest of the year at around 1.2m annualised.

US Housing Market Data Response

Mortgage Applications (Mar.)

Mortgage rates continue their upward climb in March, reaching a 40-month high of 4.9% by the end of the month. As yet, that has done little to cut home purchase demand. Indeed, applications saw a marginal increase last month. And so long as mortgage rates don’t rise above 6%, pent-up demand from the last couple of years will help prevent a large fall in purchase applications over the next year.

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