Home sales to fall by 35%

Increasingly restrictive measures on people’s movement, and an imminent surge in unemployment, means we expect total home sales will drop by around 35% in the second quarter compared to the end of 2019. But the dip should prove short-lived. Assuming a strong fiscal and monetary policy response, pent-up demand from the spring buying season will help sales recover by the end of the year.
Matthew Pointon Senior Property Economist
Continue reading

More from US Housing

US Housing Market Update

Conditions tighten in homeowner and rental markets

The second quarter Housing Vacancies and Homeownership survey showed market conditions tightening in both the homeowner and rental markets, with vacancy rates at 56-year and 37-year lows respectively. In the homeowner market that will act to constrain sales and support house prices. While in the rental market the lack of supply will help rental growth to recover quickly from its COVID-related dip.

28 July 2021

US Housing Market Data Response

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.

27 July 2021

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

More from Matthew Pointon

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

US Housing Market Update

Will expensive home sales keep booming?

Sales of expensive homes have done particularly well over the past year, with the share of existing homes sold for over $500,000 surging from 15% a year ago to a record high 26% in April. An extreme shortage of cheaper homes for sale, coupled with a jump in purchasing power thanks to larger down payments and lower mortgage rates, helps explain that shift. Inventory shortages will continue to drive buyers toward expensive homes, but purchasing power is set to ease. Overall, we expect the share of new and existing homes sold for more than $500,000 to edge back to around 20% to 22% over the next couple of years.

26 May 2021

US Housing Market Data Response

Case-Shiller/FHFA & New Home Sales (Mar./Apr.)

House price growth accelerated in March, reaching a record high of 13.9% y/y on the FHFA measure. But there are signs that the boom in prices is now weighing on housing demand and activity. New home sales dropped 5.9% m/m in April, and a steady decline in mortgage applications for home purchase points to a further moderation in sales over the next couple of months. That will help take some of the heat out of the market and bring house price growth back down to earth by the end of the year.

25 May 2021
↑ Back to top