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.
Drop-In: Evergrande – What are the risks to China and the world? Chief Asia Economist Mark Williams and Senior China Economist Julian Evans-Pritchard will be joined by Senior Markets Economist Oliver Jones to take your questions about the Evergrande situation. They’ll be covering the implications of collapse for China’s financial system and growth outlook, and assessing the global markets fallout. Register here for the 0900 BST/1600 HKT session on Thursday, 23rd September.
Matthew Pointon Senior Property Economist
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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 Update

Why are pending and existing home sales diverging?

An increase in the quality of mortgage borrowers, and record low inventory, are boosting the mortgage closing rate and leading to an increase in the share of pending home sales converted into existing home sales. Those factors are not set to go into reverse anytime soon, so we don’t think existing sales will snap back to match the pending sales index over the next few months.

29 November 2021

More from Matthew Pointon

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

US Housing Market Update

Stimulus cheques help explain house price rebound

After beginning to slow at the turn of the year, house price growth has since got a second wind. We suspect the key driver behind that resurgence was the arrival of the third round of stimulus cheques, which drove up the saving rate and helped boost first-time buyer down payments by 12% between February and May. But with no more cheques on the horizon and the saving rate stabilising that support for house prices will dissipate, supporting our call that annual house price growth will soon peak.

17 September 2021

US Housing Market Update

New apartments will start to get larger soon

Apartments kept getting smaller in the second quarter of this year, with the median floor space of units falling to under 1,000 sq. ft., the lowest since records began in 1999. That trend seems at odds with rising demand for larger units to accommodate increased working from home. We suspect that dichotomy in part reflects lags in the development process, not helped by COVID-19, as well as surging steel prices. But with demand for bigger units here to stay, we don’t think it will be long before units start to get larger. We expect median floor size for multifamily starts will be back above 1,000 sq. ft. by the end of the year. In view of the wider interest, we are also sending this US Housing Update to clients of our US Commercial Property service

14 September 2021
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