Existing Home Sales (Dec.)

Existing Home Sales (Dec.)

Existing home sales recorded a marginal gain in December but are set to fall back over 2021. Mortgage rates will not decline any further and rising house prices have already reversed the boost to affordability they provided. Record low inventory will also bring sales back toward their pre-COVID trend. Indeed, the pending home sales index has fallen for three months in a row, and we expect existing sales will end 2021 at around 5.7m annualised.
Matthew Pointon Senior Property Economist
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US Housing Market Chart Book

Home demand drops as prices surge

Despite mortgage rates seeing little movement in recent months, mortgage applications for home purchase have dropped to their lowest level since April last year. That implies home sales have further to fall. Booming house prices, which reached a record high 15% y/y in April, and a shortage of inventory are constraining sales. While low mortgage rates mean affordability is still historically favourable, lenders are not easing lending standards and that will be weighing on purchasing power. By contrast, rental demand is recovering as cities have reopened. The recovery in the labour market will cut arrears, and strong earnings will help boost rental growth. Total apartment returns will average a healthy 6% p.a from 2021-25.

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Major Apartment Markets Outlook (Q2 2021)

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Valuations still reasonable despite house price boom

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