New Home Sales (Feb.)

Severe weather, tight inventory and worsening affordability pushed new home sales down to 775,000 annualised in February. And with mortgage rates likely to rise to 4.0% by the end of the year, home sales face strong headwinds. That said, higher savings and the reopening of the economy will support activity and help new home sales end the year at around 830,000 annualised.
Sam Hall Assistant Property Economist
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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 Data Response

Mortgage Applications (May.)

Home purchase mortgage demand continued its downward trend in May and is now broadly in line with its pre-virus level. Easing credit conditions and the reopening of the economy will provide some support to home purchase demand in the coming months. But with record low inventory constraining sales and affordability stretched, we think that home purchase applications have a little further to fall this year.

2 June 2021

More from Sam Hall

US Housing Market Data Response

Mortgage Applications (May.)

Home purchase mortgage demand continued its downward trend in May and is now broadly in line with its pre-virus level. Easing credit conditions and the reopening of the economy will provide some support to home purchase demand in the coming months. But with record low inventory constraining sales and affordability stretched, we think that home purchase applications have a little further to fall this year.

2 June 2021

US Housing Market Data Response

Existing Home Sales (Apr.)

Existing home sales recorded another decline in April and are down 13% from the peak last October. Home sales are being constrained by record low inventory, which will continue to weigh on housing market activity in the coming months. And with mortgage rates set to rise to 4.0% by end-2021, we expect existing home sales will fall back to around 5.6m by the end of the year.

21 May 2021

US Commercial Property Valuation Monitor

Rising Treasury yields to squeeze valuations further

Following a sharp increase in Treasury yields, property valuations worsened for the second consecutive quarter in Q1. And we expect 10-Yr Treasury yields to resume their upward trend to reach 2.25% by end-2021, which will squeeze property valuations further. Widespread falls in valuation scores across the sectors mean that industrial and apartments now look fair value, with office and retail still looking undervalued. But given the weak rental growth prospects in those sectors, we think that office and retail assets may need to see further yield rises before they become sufficiently appealing to attract investors.

21 May 2021
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