Case-Shiller/FHFA & New Home Sales (Apr./May)

A healthy level of inventory means the new home market is well placed to benefit from the recent rise in housing demand, and we therefore expect sales will rebound from the drop seen in May over the next couple of months. Beyond that, a slowing economy will constrain housing demand, and that implies house price growth will continue to ease to around 2% y/y by the end of this year.
Matthew Pointon Senior Property Economist
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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

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.

22 November 2021

US Housing Market Update

MBS taper won’t widen mortgage spreads

The announcement that the Fed will start to taper its purchases of MBS this month is not set to widen mortgage spreads. The cut in demand will be gradual and offset by a moderation in the supply of MBS as home sales decline. With the cost of the prepayment option set to remain low, we expect the spread between the 30-year mortgage rate and 10-year Treasury yield to stay close to its current level of 170bps over the next few years.

18 November 2021

More from Matthew Pointon

US Housing Market Update

House prices will avoid a dangerous bubble

House price expectations have taken off since the start of the year, and that raises the risk of a self-reinforcing bubble forming. However, there are no signs that lenders are rapidly loosening credit conditions on the back of higher house prices, and that argues against a repeat of a mid-2000s credit cycle. Rather, rising mortgage interest rates, a stabilisation in down payments and stretched affordability mean that house price gains will slow over the second half of the year.

1 June 2021

US Housing Market Update

Will expensive home sales keep booming?

Sales of expensive homes have done particularly well over the past year, with the share of existing homes sold for over $500,000 surging from 15% a year ago to a record high 26% in April. An extreme shortage of cheaper homes for sale, coupled with a jump in purchasing power thanks to larger down payments and lower mortgage rates, helps explain that shift. Inventory shortages will continue to drive buyers toward expensive homes, but purchasing power is set to ease. Overall, we expect the share of new and existing homes sold for more than $500,000 to edge back to around 20% to 22% over the next couple of years.

26 May 2021

US Housing Market Data Response

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

House price growth accelerated in March, reaching a record high of 13.9% y/y on the FHFA measure. But there are signs that the boom in prices is now weighing on housing demand and activity. New home sales dropped 5.9% m/m in April, and a steady decline in mortgage applications for home purchase points to a further moderation in sales over the next couple of months. That will help take some of the heat out of the market and bring house price growth back down to earth by the end of the year.

25 May 2021
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