Filtered by Subscriptions: US Housing Use setting US Housing
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Against a backdrop of higher mortgage rates, a weaker economy and prices falling earlier than expected, we have cut our forecast and now expect a peak-to-trough fall in house prices of 8%, down from our previous view that prices would drop by 5%. That …
6th October 2022
An upward revision to our 10-year Treasury yield forecast and a widening in spreads have led us to upgrade our mortgage rate forecasts. We now expect the 30-year fixed rate will stay close to 6.5% for the remainder of the year before falling to 5% by …
4th October 2022
The jump in multifamily housing starts in the first half of 2022 implies a surge in completions over the next couple of years to a multi-decade high. But while rental demand is now moderating, the continued lack of homes for sale means we doubt it will …
1st September 2022
With the vast majority of mortgage borrowers protected by fixed rates, it is not a surprise that the early delinquency rate has risen only marginally since the start of the year. And our forecasts for real incomes to recover and the unemployment rate to …
24th August 2022
The odds are stacking up against first-time buyers (FTBs), an important demographic for homeownership. A very limited number of starter homes on the market, higher interest rates, tight credit conditions and a weak outlook for new home sales all point to …
5th August 2022
The current surge in homes under construction has few parallels with the building boom that preceded the house price crash in the late 2000s. The build-up of homes under construction has largely been caused by delays in sourcing materials and labour, …
29th July 2022
Measures of housing market activity and prices tend to follow a predictable sequence in downturns. In this Update we highlight the key US and UK variables that clients should follow to track the housing downturn and identify turning points. With most …
24th June 2022
We have previously argued that a mortgage rate of above 6% represents the threshold at which house price falls become likely. With rates recently rising above that level, we are therefore revising down our house price forecast. That said, the prevalence …
20th June 2022
Leading indicators are pointing to a large fall in existing home sales. For example, the recent sharp decline in the NAR buyer traffic balance is consistent with a fall in sales to 4.5m annualised which, excluding the COVID-related dip of 2020, would …
14th June 2022
By increasing the demand for accommodation and boosting rents, the shift to remote work will have put some upward pressure on house prices. But while rents have seen an above-trend increase since the end of 2019, that would only have boosted house prices …
1st June 2022
Rental growth in NYC reached 22% y/y in Q1 2022, one of the fastest rates in the country. But we expect growth to cool rapidly from here and underperform other cities. The past surge in rents largely reflects a reversal of large falls in 2020, which …
25th May 2022
The surge in mortgage rates has led to a sharp deterioration in home affordability. But that doesn’t mean the mortgage debt service ratio, the share of disposable income spent on mortgage payments, will also surge from its current low level. Existing …
19th May 2022
Homebuyers looking for more space were contending with low numbers of larger homes for sale in the first quarter, not helped by an apparent rise in investor demand for bigger properties. But rising mortgage rates will encourage owners of vacant homes to …
5th May 2022
Rising mortgage interest rates and tight credit conditions pushed the cash buyer share of existing home sales to a six-year high in March. But while the cash buyer share and house price growth are loosely correlated, we don’t think such buyers will be …
21st April 2022
The surge in mortgage rates means home buyers with a mortgage preapproval from late January will see a rise in mortgage payments of 15% if they can’t find a home before their approval expires at the end of April. That is making them desperate to find a …
13th April 2022
The jump in the spread between mortgage rates and the 10-year Treasury yield primarily reflects a rise in the credit risk premium as investors react to a slowing economy, surging inflation, and the war in Ukraine. As the economic outlook becomes more …
23rd March 2022
House price-to-earnings ratios are approaching the peak hit just before the global financial crisis, and another year of strong house price growth would send them above that level. But while mortgage payments as a share of income are set to reach 15-year …
1st March 2022
Working from home has increased the demand for larger properties, and in response the median size of new homes started at the end of last year was the largest since the start of 2019. Supporting that move to larger properties has been a shift to building …
18th February 2022
We believe the link between real estate cashflows and inflation to be overplayed, a view that is backed up by the evidence of the last 44 years. But there are exceptions. One of which is low vacancy rates, which support strong NOI growth, as we expect in …
10th February 2022
The average home purchase mortgage size has ballooned over the past couple of years, but a concurrent rise in down payments will protect lenders from all but the most severe of house price shocks. Looking ahead, with the household saving ratio dropping …
After seeing strong gains over most of 2021, household formation stalled in the final quarter. A lack of homes for sale and rent, and the soaring cost of both tenures, is constraining household formation. To the extent that it is affordability that is …
3rd February 2022
A rise in mortgage rates to 4.0% by end-2022, coupled with the 25% rise in house prices seen since mid-2020, will boost mortgage payments as a share of earnings to their highest since mid-2008. That will lead to a 4% fall in existing home sales this year, …
19th January 2022
Shortages of materials and labour over the past year have not stopped builders from starting a lot more single-family homes. But they do appear to have prevented them from finishing them. That implies a surge of homes will be completed later this year as …
6th January 2022
The pandemic turbo-charged a move away from major coastal cities, and that drop in demand led to a sharp fall in their rents relative to the national average. But with those moves now made and cities reopening, we doubt they will continue to get cheaper. …
9th December 2021
An increase in the quality of mortgage borrowers, and record low inventory, are boosting the mortgage closing rate and leading to an increase in the share of pending home sales converted into existing home sales. Those factors are not set to go into …
29th November 2021
The announcement that the Fed will start to taper its purchases of MBS this month is not set to widen mortgage spreads. The cut in demand will be gradual and offset by a moderation in the supply of MBS as home sales decline. With the cost of the …
18th November 2021
Low mortgage rates, strong earnings growth, plenty of cash savings and a surge in home equity have pushed the early mortgage delinquency rate to a record low this year. Most of those factors will continue to support borrowers over the next couple of …
15th November 2021
Despite the exodus from cities and booming home sales last year, the homeownership rate in the third quarter was virtually unchanged from its level prior to the arrival of COVID-19. And with soaring house prices and tight credit conditions shutting out …
4th November 2021
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 …
22nd October 2021
Sales of condos have been on tear in recent months, with their share in total existing home sales reaching a 14-year high in June. The reopening of cities helps explain that development, and condo sales have also benefitted from comparatively favourable …
7th October 2021
Soaring house prices and tight credit conditions have pushed the first-time buyer share to a joint six-year low which, alongside strong housing starts, has arrested the decline in the for-sale home inventory. With foreclosures also resuming, we expect …
29th September 2021
It is an under-statement to say that house prices have weathered the pandemic well; housing markets are positively booming. Yet the drivers of this rise in prices are rather different to those of the pre-2007 housing boom, meaning that we do not seem to …
28th September 2021
The Evergrande crisis has made waves in financial markets this week. But, while the developed property markets we cover may see some short-term upheaval, we think the impacts outside of China are unlikely to be severe or lasting. For property investors, …
23rd September 2021
After beginning to slow at the turn of the year, house price growth has since got a second wind. We suspect the key driver behind that resurgence was the arrival of the third round of stimulus cheques, which drove up the saving rate and helped boost …
17th September 2021
Apartments kept getting smaller in the second quarter of this year, with the median floor space of units falling to under 1,000 sq. ft., the lowest since records began in 1999. That trend seems at odds with rising demand for larger units to accommodate …
14th September 2021
Our forecast for mortgage rates to rise to 4.2% by end-2023 will help slow house price gains, but we don’t think that increase will be enough to cause an outright fall in values. And with homes not particularly overvalued, inventory close to record lows …
26th August 2021
The eviction ban has been extended to early October, but we doubt it will be renewed again. Given the strength of the labour market, significant government support and robust rental demand, the resumption of evictions will not boost the rental vacancy …
19th August 2021
Surging demand for single-family homes has revived institutional investor interest in the single-family rental (SFR) market. With few homes available to buy, interest in build-for-rent (BFR) investment is growing. But given constraints in the home …
3rd August 2021
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 …
28th July 2021
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 …
14th July 2021
There is mounting evidence that the exodus from cities is winding down. As economies reopen, we think that cities will come back to life, bringing a wave of new demand for high-rise apartments. But once the dust settles, the shift to working from home …
9th July 2021
Although we remain optimistic about the near-term demand outlook, we think that the price of US lumber will fall further in the coming months as domestic supply continues to revive . The price of US lumber (CME random lengths) briefly rose to a record …
23rd June 2021
The housing market hit a milestone in April, with real house prices rising above the previous peak recorded during the boom of the mid-2000s. But that doesn’t mean valuations are at dangerous levels. House prices look far more reasonable when gains in …
22nd June 2021
The home equity share has surged to a 31-year high, which in the past may have persuaded mortgage lenders to ease credit conditions. But Ability to Repay regulations brought in after the financial crisis have broken the link between home equity and …
17th June 2021
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 …
10th June 2021
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 …
1st June 2021
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 …
26th May 2021
Booming home sales, record low inventory, the shift to working from home and a surge in savings have all helped boost home improvement spending over the past three quarters. While home sales are set to ease, tight inventory and accumulated savings will …
19th May 2021
Increased demand for larger apartments to accommodate working from home is already evident in NYC, where the inventory of units with two or more bedrooms has seen a sharper decline compared to smaller units. With working from home set to stay even as …
14th May 2021