Mid-February Overview Of The Housing Market

Mortgage News February 27, 2023

A 5.4% decrease in newly listed homes was recorded in January compared to the same period last year. Compared to last month’s 21.0% drop and November’s 17.2% drop, this is a much slower decline. The number of new listings remains 25.0% below the levels during pre-pandemic 2017 to 2019.

Compared to the same week in 2022, the single-family active existing home inventory was up 78.0%, and down 45.4% from the same week in 2019.

As of today, there are 5.5 months under construction for new homes – well above the normal pace. Completed homes are on the market for 1.4 months. The level is close to normal.

There are a record 1.71 million housing starts under construction. The number of single-family units currently under construction (SA) is 769,000. Multi-family units currently under construction are at 943,000. Since december 1973, this is the highest level!

6.54% was the 30-year mortgage rate on February 13th, down from over 7% for most of October, but still up sharply from a year earlier. In the past year, a $500,000 house would have cost around $1,909 in principal and interest with a 20% down payment and a 4.0% interest rate on a 30-year mortgage. At 6.54% mortgage rates and 6% house price increases, $2,691 is the monthly payment on the same house – a 41% increase!

Due to higher mortgage rates, both new and existing home sales have declined. A seasonally adjusted annual rate of 4.02 million sales were reported by the NAR in December. According to the Census Bureau, sales of new single-family homes in December 2022 decreased 26.6% from December 2021, down 34.0% from 6.09 million in December 2021.

Despite the slowdown in household formation, and the addition of more supply to the market, rents are expected to continue declining. This survey indicates higher vacancy rates and falling rents in the coming months, which is an excellent leading indicator for rents and vacancy rates.

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