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Housing inventory increasing in mid 2022

Housing inventory increasing mid 2022
by Brad Cartier, posted in Newsletter

According to new reports, housing inventory is on the rise. Bill McBride of CalculatedRisk shows new 2022 housing completion data projecting an increase across all housing types due to a record number of construction starts:

  • Single-family completions will sit at 1.1 million, up from 970,000 in 2021.
  • Multifamily will also increase to 460,000, from 364,000 in 2021.
  • Manufactured homes will jump to 120,000, up from 106,000 last year.

Housing completions on the rise in 2022

Source: CalculatedRisk (June 2022)

That said, Fannie Mae expects housing purchases to drop despite rising inventory due to our higher inflationary and interest rate environment. Specifically, they expect home sales to drop a total of 13.5% in 2022. Doug Duncan, Fannie Mae Senior Vice President and Chief Economist, had this to say about current marketing conditions:

“The significant, sudden rise in interest rates is beginning to be felt widely as employment growth slows and stock market valuations fall…Nowhere is this more evident than in housing affordability measures, with the prospective monthly payment on a typical new mortgage climbing dramatically. As a result, both new and existing home sales continue to slow, while refinance activity has fallen substantially, with what’s left largely consisting of equity extraction.”

But, according to Reuters, we did see some unexpected sales increases in May. According to government data, new home sales increased 10.7% in May, with new home supply hitting a 14-year high, but overall housing inventory is still at historical lows. This rebound in May is expected to be short-lived.

It seems possible that many homebuyers are trying to get ahead of even bigger future interest rate hikes.

Bidding wars, for renters

We are all used to bidding wars in the hot housing market of the past few years, but as those slow down amidst a broader cooldown, a new type of bidding war is emerging. Rental bidding wars.

According to new data from CoreLogic, single-family rent growth saw its 13th consecutive month of record gains in April as supply is strained and demand high with a strong job market.

Single-family rent growth skyrocketing

Source: CoreLogic (June 2022)

A new data report on rents shows that “[m]edian rent in the top 50 metros reached $1,849–15.5% higher than at this time last year and a new rent record for the 15th month in a row.” That said, year-over-year rent growth has decelerated, decreasing every month so far this year.

Over rents at record highs but growth decelerating

Source: (June 2022)

This reality of high demand and low supply has led to bidding wars among renters. In a recent NPR article titled The housing market squeeze pushes renters into bidding wars, Jennifer Ludden explains that:

“The amount of new construction that’s been started is finally up, though supply chain delays mean it’s taking longer to complete homes and apartments. . .Meanwhile, rising mortgage rates are making it more expensive to buy a home, forcing many to stay in the rental market. And adding to all of this, the massive cohort of millennials hitting their late 20s and early 30s are eager to move out on their own.”

MarketWatch quotes chief economist Danielle Hale as noting, “Renters are being left with few options but to meet higher rents and, in some cases, even offer above asking — whether they can afford to or not.”

Also, according to the New York Times, record rents across the U.S. have even pushed young couples to move in together earlier than they originally planned.

Mortgage update

As of June 23rd, central bank data shows that the average 30-year fixed-rate hit 5.81%. With interest rates rising dramatically, many mortgage lenders have been forced to cut back staff. JPMorgan recently laid off or reassigned more than 1,000 staff in its lending division, Wells Fargo cut a number of its lending staff, Blend another 200, and also has now cut thousands of staff.

George Ratiu, a senior economist at, notes that the current increases in mortgage rates are worsening affordability for both owners and renters. Further, “[f]or buyers of a median-priced home, the one-two punch of record-high prices and rising interest rates has pushed the monthly mortgage payment to about 64% more than last year, tacking on over $800 to the cost of financing.”

According to Candyd Mendoza of MPA who reports on Fannie Mae data, the year-over-year dollar volume of refinancing applications was down 70.8% in June 2022. In a second MPA article, Mendoza notes that “[t]he median mortgage application payment increased slightly to $1,897 in May from $1,889 in April…The uptick signals a higher mortgage payment to income ratio (PIR) and worsening borrower affordability.”

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, sums up the current state of mortgages succinctly:

“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98 percent – the highest since November 2008 and the largest single-week increase since 2009. All other loan types also increased by at least 20 basis points, influenced by the Federal Reserve’s 75-basis-point rate hike and commentary that more are coming to slow inflation…Mortgage rates are now almost double what they were a year ago, leading to a 77 percent drop in refinance volume over the past 12 months.”

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