Week in Review: April 22, 2022

Economic Commentary

Housing starts rose slightly in March, reaching their highest level since 2006.  The increase was driven by multi-family housing, reflecting continued strong demand for rental properties, which saw 4Q21 vacancies fall to their lowest level since 1984. Noteworthy within the report was the record backlog of homes approved for construction, but yet to be started.

Mortgage applications fell for the sixth consecutive week, bringing the number of weekly declines to 10 over the past 11 weeks.  Slowing demand was also reflected is single-family housing permits which fell 5% in March as would-be buyers reassessed their willingness or ability to buy a home with 30-year mortgage rates now above 5% for the first time since 2011.

Existing home sales fell nearly 3% in March, compared to February, and 4.5% from a year ago. Some of the slowdown was most certainly due to rising rates, but other factors like prices and inventory likely played a role. In March, the median price for an existing home reached a new record of  $375.3K, a 15% rise from a year ago. At the same time, inventory fell to 950K homes, just two months of supply at the current sales pace. Moving forward, housing data is likely to remain choppy as rising rates and record prices discourage some would-be buyers, while would-be sellers debate whether or not to sell in an attempt to profit from record prices or stay put in order to avoid having to buy their next house with a new mortgage at a presumably higher rate.

Of Note