Case-Shiller/FHFA House Prices (May)

House prices showed no signs of slowing in May, with annual growth setting new records on both the Case-Shiller and FHFA measures. But with housing demand falling back since the start of the year, and lenders not set to ease credit conditions, we expect annual growth will soon peak. From 16.6% y/y in May, we expect it to slow to 10% y/y by end-2021, and 3% y/y by end-2022.
Matthew Pointon Senior Property Economist
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US Housing Market Update

Are too many homes being built?

Increased demand for larger homes to accommodate working from home and continued migration to the sunbelt will support housing demand even as population growth slows. We therefore don’t think the recent surge in housing starts, and rise in the number of homes authorised but not started, pose a risk to the housing market.

22 October 2021

US Housing Market Data Response

Existing Home Sales (Sep.)

The 7.0% m/m rise in existing home sales in September does not mark the start of an upward trend in activity. With mortgage rates rising, inventory close to record lows and home buying sentiment at 39-year lows sales are set to trend down over the next six-months. Beyond that, a gradual improvement in supply and less rampant house price growth will help sales slowly rise to around 5.75m annualised by end-2023.

21 October 2021

US Housing Market Data Response

Housing Starts (Sep.)

Single-family starts and building permits have been stable over the past three months at around 1.1m annualised, as strong new home demand has run up against shortages of materials and labour. We expect new home demand will remain robust even as mortgage rates rise, but constraints on the supply side will continue. Overall, that means single-family starts will see only a small rise over the next year or so, ending 2022 at around 1.2m annualised.

19 October 2021

More from Matthew Pointon

US Housing Market Data Response

New Home Sales (Jun.)

New homes sales dropped for the third month in a row in June, as homebuilders restricted sales in an effort to catch-up with the backlog of homes sold last year. But builders have reported continued strength in prospective buyers, and that implies sales will rise later this year as supply improves. We therefore expect new sales will end the year at around 850,000 annualised.

26 July 2021

US Housing Market Outlook

Home sales to ease even as mortgage rates stay low

Even as mortgage rates have remained low, housing market activity has dropped back as booming house prices, tight credit conditions and a lack of inventory have put off buyers. We expect that dynamic to continue over the remainder of the year. While mortgage rates will see only a small rise to 3.5% by end-2021, total home sales will end the year at around 6.5m annualised, down 15% y/y. Low mortgage rates will however support house prices, and we expect growth to only slow to around 10% y/y by end-2021. Single-family housing starts have been constrained by a shortage of materials and labour. While the latter won’t be solved overnight, a sharp drop in lumber prices should help get some stalled projects off the ground and help starts average 1.16m in 2021, a 16% increase on 2020. Rental demand is recovering quickly as cities and offices reopen and households complete delayed moves. With supply also tight, that will drive up effective rental growth to 2.5% y/y by end-2021, and 4.0% y/y by mid-2022.

15 July 2021

US Housing Market Update

Will booming house prices translate into rents?

The recent surge in house price growth to record highs does not automatically mean rental growth is also set to take off. But a strong recovery in rental demand as cities reopen and households make delayed moves, coupled with low vacancy rates, mean rental growth will rise this year. From 1.9% y/y in June, we expect the rent of primary residence component of the CPI to rise to 2.5% by the end of the year, and 4.0% y/y by mid-2022.

14 July 2021
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