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New Home Sales (May)

New home sales rose in May, bucking widespread signs of a housing market slowdown. But given the volatility in the data we wouldn’t put too much weight on one month’s reading. After all, new home sales are not immune to higher financing costs and survey measures point to a fall in sales over the next couple of months. While a healthier inventory means the new home market will outperform existing sales, we still expect a fall in sales to around 630,000 annualised by end-2022.
Matthew Pointon Senior Property Economist
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US Housing Market Data Response

Housing Starts (Jul.)

Single-family housing starts fell for the fifth consecutive month in July, leaving them down by 25% from their high at the end of 2021. Leading indicators point to a much larger decline in the coming months. However, pent-up demand, tight supply and easing supply shortages will provide some support to starts, and we expect they will fall gradually to around 800,000 annualised by end-2022.  

16 August 2022

US Housing Market Outlook

Stretched affordability to hit sales and prices

Despite a reduction in our mortgage rate forecast, affordability is still set to be as stretched as it was during the mid-2000s housing boom. Alongside record-low homebuyer sentiment and a slowing economy, that means we have become more downbeat on housing activity this year. We now expect a 30% peak-to-trough fall in total home sales. The weaker outlook for new sales will weigh on single-family housing starts, which we think will end 2022 almost 35% below their end-2021 level. While tight markets and a lack of forced sellers will prevent a house price crash, we forecast that the annual growth rate will bottom out at -5% in mid-2023. From there, improving affordability will support a gradual recovery in activity and help price growth rise to 3% y/y by end-2024. Higher bond yields will also push apartment yields up a little this year and next. Coupled with a sharp slowdown in rental growth, that means we expect total annual returns to fall below 9% in 2022 and reach just 1.5% in 2023.

12 August 2022

US Housing Market Update

Higher rates to prevent rise in homeownership

The odds are stacking up against first-time buyers (FTBs), an important demographic for homeownership. A very limited number of starter homes on the market, higher interest rates, tight credit conditions and a weak outlook for new home sales all point to the rise in the homeownership rate in recent years coming to an end.

5 August 2022

More from Matthew Pointon

US Housing Market Data Response

Existing Home Sales (May)

Surging mortgage rates led to another fall in existing home sales in May to their lowest level since the height of the COVID-19 lockdowns two years ago. And with mortgage rates set to rise to 6.5% by early 2023, sales will see further declines. We expect they will bottom out at 4.8m annualised by the end of the year, which would represent a 23% drop from their end-21 level.

21 June 2022

US Housing Market Update

Surge in mortgage rates makes house price falls likely

We have previously argued that a mortgage rate of above 6% represents the threshold at which house price falls become likely. With rates recently rising above that level, we are therefore revising down our house price forecast. That said, the prevalence of fixed rate mortgages, tight credit conditions and a relatively healthy labour market still rules out a price crash. We now expect annual house price growth will fall to -5% by mid-2023, followed by a gradual recovery to 3% by end-2024.

20 June 2022

US Housing Market Data Response

Housing Starts (May)

Housing starts in May recorded their largest month-on-month decline since the height of the COVID-19 pandemic. A fall in housing demand due to higher mortgage rates is occurring at the same time as home completions have hit a 15-year high, which will be dissuading builders from starting new projects. That dynamic will continue over the remainder of the year, and that will push single-family starts down to 850,000 annualised by the end of the year.

16 June 2022
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