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 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 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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