Case-Shiller/FHFA House Prices (Jul.)

Annual house price growth set another record in July as low mortgage rates, past stimulus payments and a tight market drove values higher. But there are tentative signs that the market is beginning to cool, and the recent rise in the 10-year Treasury yield means mortgage rates will soon increase and cut purchasing power. We expect annual growth will end the year at around 15%, and end-2022 at around 3%.
Matthew Pointon Senior Property Economist
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US Housing Market Data Response

Existing Home Sales (Dec.)

Despite a 6% m/m fall in existing home sales in December, 2021 marked an impressive year for existing home sales, with sales 11% higher compared to 2020. But looking ahead, a backdrop of rising mortgage rates and a record-low inventory means that sales will drop back and average around 5.88m annualised this year, less than most other forecasters expect.

20 January 2022

US Housing Market Update

Key US Housing Market Calls for 2022

A rise in mortgage rates to 4.0% by end-2022, coupled with the 25% rise in house prices seen since mid-2020, will boost mortgage payments as a share of earnings to their highest since mid-2008. That will lead to a 4% fall in existing home sales this year, a larger dip than most other forecasters expect. New home sales will do better and that will help single-family starts make further progress this year, although a lack of labour and materials will keep the gain to around 3%. Meanwhile worsening affordability will lead to a steady decline in house price growth to around 3% y/y by end-2022, toward the bottom of consensus.

19 January 2022

US Housing Market Data Response

Housing Starts (Dec.)

Single-family starts edged back in December, but they saw a 12.1% y/y rise in 2021 overall as strong housing demand and a lack of existing homes for sale supported new home sales. Rising mortgage rates will cool demand in 2022, and material and labour shortages will be a constraint for some months yet. Nevertheless, tight markets mean builders will be keen to break more ground, and we expect a further rise in single-family starts to around 1.18m annualised by end-2022.

19 January 2022

More from Matthew Pointon

US Housing Market Data Response

New Home Sales (Aug.)

An improvement in inventory helped new home sales rise for the second consecutive month in August. Admittedly, overall housing demand has eased in recent months and a rise in mortgage rates argues against a rebound this year. But a lack of inventory in the existing home market will push buyers to the new home market and help sales rise to around 800,000 annualised by the end of this year.

24 September 2021

US Housing Market Data Response

Existing Home Sales (Aug.)

Existing home sales dropped back in August as booming house prices and a lack of affordable inventory shut out first-time buyers. A small recovery in home purchase mortgage demand suggests sales may tick-up next month but with mortgage rates set to rise and inventory to remain tight that improvement won’t be sustained, and sales will end the year at around 5.7m annualised.

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22 September 2021

US Housing Market Data Response

Housing Starts (Aug.)

A boom in multifamily construction has supported housing starts in recent months, with multifamily building permits rising to a 31-year high. On the single-family side, homebuilders have reported strong demand but material and labour shortages are preventing builders from getting to work on the large backlog of homes that have been authorised. Those constraints will not be solved overnight, so we except single-family starts will see only a gradual rise to around 1.16m annualised by the end of this year.

21 September 2021
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