Mortgage Applications at 22-Year Low
“The MBA Mortgage Market Index in the United States decreased 6.5% to 288.40 points in the week ended June 3rd 2022. It is the lowest level in 22 years as applications to refinance a home dropped 5.6% and those to purchase a single family home went down 7.1%.”
Homes for Sale Climbing
Sellers Losing Control
21% of Sellers Dropping Prices
New Home Sales Plunge 22.5% In April, 16.6%
New home sales have peaked this cycle and the bottom is nowhere in sight.
For discussion, please see New Home Sales Plunge 22.5% In April, 16.6% From Deep Negative Revisions
Who’s Buying?
Mobile Homes
What About Rent?
Home prices are not directly in the CPI, Rent is. If we are building fewer houses then there is less downward pressure on rent prices.
HUD Analysis
“I’m in the HUD-insured multifamily industry. New construction projects that were in the pipeline don’t work anymore, b/c of material costs, labor shortages, and financing interest rates. Rents will only climb more.“
New Homes For Sale Is a Poor Measure of Supply, What’s the Real Supply?
The only possible savings grace for the Fed is New Homes For Sale Is a Poor Measure of Supply.
There is a record number of units under construction. That will eventually pressure rents, but when?
How Far Behind the Curve is the BLS and Fed on Rent Inflation?
Because of the way the BLS calculates rent prices, the BLS is very lagging in rent supply price shocks.
For discussion please see How Far Behind the Curve is the BLS and Fed on Rent Inflation?
I suggest there will be baked in the contract cake upward pressure on rent in the CPI for the next three to six months.
Finally, please note that OER and rent of primary residence are over 31% of the entire CPI.
Adding to the misery, Food Prices are Still Rising and that’s another 13.4 percent of the CPI with rising energy prices another 8.3% of the CPI.
Like it or not, Biden’s Inept Energy Policy is fueling inflation in everything that uses energy.
So good luck on the notion the Fed can destroy demand enough to quickly bring inflation under control.
This post originated at MishTalk.Com.
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Mish
REITS buying houses and keeping them empty to drive up the price?
I have 200 people on my wait list for 72 units.
I do absolutely believe that the higher rents is pressuring people to move to low income housing to get more affordable rents, but the wait lists are so long it will be 2 years or more before an applicant today moves in. This is true everywhere. Where will rents be in 2 years?
Mortgage credit availability decreased in May according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from ICE Mortgage Technology.
The MCAI fell by 0.9 percent to 120.0 in May. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI decreased 0.4 percent, while the Government MCAI decreased by 1.3 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 1.1 percent, and the Conforming MCAI rose by 1.0 percent.
“Mortgage credit supply declined for the third month in a row to the lowest level since July 2021. The index remains more than 30 percent below pre-pandemic levels, as recent months’ credit tightening has occurred in refinance loan programs,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.