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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.
Matthew Pointon Senior Property Economist
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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

US Housing Market Data Response

Mortgage Applications (Jul.)

Both refinancing and home purchase activity continued to trend lower in July, with the latter down by around 30% since the start of the year. Against a backdrop of stretched affordability and record-low homebuyer sentiment, we expect home purchase applications will remain subdued in the second half of the year.

3 August 2022

US Housing Market Update

Tight supply limits threat from rising construction

The current surge in homes under construction has few parallels with the building boom that preceded the house price crash in the late 2000s. The build-up of homes under construction has largely been caused by delays in sourcing materials and labour, rather than overbuilding. Many of the uncompleted homes have already been sold and a tight market will help soak up the extra supply even as demand eases. We therefore think the threat from oversupply is small.

29 July 2022

More from Matthew Pointon

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

US Housing Market Data Response

Housing Starts (Oct.)

Single-family starts dropped for the fourth consecutive month in October to a 15-month low. But we expect starts will soon turn the corner. New home demand is strong, lumber prices have eased back and homebuilder confidence has recovered to a six-month high. Indeed, single-family permits saw their largest gain since March. That said, other material and labour shortages remain, and the improvement in starts will be slow. We expect a rise from 1.04m annualised today to around 1.15m by end-2022.

17 November 2021

US Housing Market Update

Outlook good for mortgage delinquencies

Low mortgage rates, strong earnings growth, plenty of cash savings and a surge in home equity have pushed the early mortgage delinquency rate to a record low this year. Most of those factors will continue to support borrowers over the next couple of years, keeping early delinquency rates low. However, the serious delinquency rate is still elevated, and that points to a small bump in foreclosures next year as lenders work through the backlog built up during the foreclosure ban.

15 November 2021
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