Existing Home Sales (May)

Existing home sales saw another substantial decline in May but with the country reopening, and housing demand surging on the back of record low mortgage interest rates, we suspect they have now bottomed out. That said, inventory is close to record lows, and alongside mortgage credit conditions tightening that argues against a rapid recovery, and we expect sales will end 2020 down by around 8% y/y.
Matthew Pointon Senior Property Economist
Continue reading

More from US Housing

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 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
↑ Back to top