The real estate market cannot grow forever. The demand for real estate loans in the US continues to decline. As reported by Wolfstreet , mortgage applications for the purchase of a home decreased by 12% compared to the previous week and by 15% compared to a year ago.
In its report, the Mortgage Bankers Association added today that "potential home buyers have been deterred by higher rates and worsening accessibility conditions," that is, to put it simply, as homes have become too expensive. over the last few years, not the last two or eight months, a ridiculous tweak in the interest rate was enough to get it all down.
The MBA mortgage purchase demand index fell to its end-2018 lows. At the time, the Fed had raised rates and tight monetary policy had pushed mortgage rates beyond 5%, volume had fallen strongly. By then, however, inflation had been in check and in the end Powell had not raised rates and triggered a housing crisis.
The 30-year average fixed mortgage rate with compliant balances and falling 20% this week fell slightly to 5.49%, according to today's MBA, from 5.53% the previous week, both the highest mortgage rates since. 2009 (data via Investing.com):
Evidently the real estate market is becoming very unstable, demand is lowering, and when demand is low, volatility rises. So interest on mortgages can range from 3% to 5.5% compared to an increase in interest rates of only 1%.
So there are three factors that are stressing the market:
- rising rates;
- very high real estate prices, at the limit of the ability to cope with them;
- negative economic prospects, including on the securities market
The essential question remains: when will we go from stress to the crack of the market?
The article The US housing market begins to creak. When the crack comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-mercato-immobiliare-usa-inizia-a-scricchiolare-a-quando-il-crack/ on Thu, 19 May 2022 07:00:11 +0000.