Home Purchases Now Near Its Lowest Level of the 2019-22 Period Due to Rates More Than Doubling Since January, 2021

Key takeaways:

• The 10-year old seller’s market continues, evidenced by:
  • Modest purchase volume declines, in spite of a cumulative 39% increase in constant quality HPA since January 2020,
  • Historically tight supply,
  • The work from home revolution, and
  • Arbitrage opportunities due to metro & regional price differences.
• Purchase volume for week 35 is down 31% & 15% from 2021 & 2019, respectively, with HPA projected to moderate to 12.4%, 11.2%, & 10% in August, September, & October 2022, respectively.
• If the current mortgage rate of around 6% holds, we expect December 2022 HPA to slow to 6-8% (y-o-y) as demand will further moderate and supply will increase.
• HPA declines seem most likely at the high end of expensive markets, at the low end of some FHA markets, and in metros with stagnating or declining job growth.

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AUTHORS

EDITORS NOTE: This AEI Housing Finance Watch for Week 35, 2022 is republished with permission. ©All rights reserved.

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