Rise in appraisal threshold a positive, but a small one

A hike in the threshold at which mortgages require a home appraisal, from $250,000 to $400,000, is long overdue and has the potential to reduce closing times, raise closing rates and boost house prices. However, with mortgages sold to or guaranteed by the GSEs or government agencies exempt, the number of mortgages impacted by the change will be small. That will limit the positive impact of the change.
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

What’s driving the surge in rent expectations?

Consumer expectations of rental growth have surged to record highs over the past couple of months. But that appears to reflect optimism around the housing market in general, rather than the rental sector in particular. We therefore doubt actual rental growth will follow expectations to record highs. That said, a rise in demand as cities and offices reopen means rental growth will recover, albeit to a fairly modest 2% y/y by the end of the year.

10 June 2021

US Housing Market Chart Book

Home sales cool and prices will soon follow

Both new and existing home sales dropped back in April and the May pending home sales index points to further declines in existing sales over the next couple of months. House price growth of over 13% y/y and a rise in mortgage rates since the start of the year have stretched affordability and alongside record low inventory that is weighing on housing market activity. But unlike the mid-2000s, we doubt an unsustainable boom in house prices is on the horizon. Credit conditions tightened last year, and we expect only a gradual easing over the coming months. Price growth will therefore soon follow the downturn in home sales. Rental demand is recovering swiftly as the economy has reopened and vacancy rates are now falling. We expect that trend will continue, pushing rental growth up to 2.0% y/y by the end of the year.

8 June 2021

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
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