- The 10-year old seller’s market continues, evidenced by:
- Modest purchase volume declines, in spite of a cumulative 39% increase in constant quality HPA since January 2020,
- Historically tight supply,
- The work from home revolution, and
- Arbitrage opportunities due to metro & regional price differences.
- Purchase volume for week 31 is down 36% and 27% from 2021 & 2019, respectively, with HPA projected to moderate to 9.6% in the first half of September.
- If the current mortgage rate of around 6% holds, we expect December 2022 HPA to slow to 4-6% (y-o-y ) as demand will further moderate and supply will increase.
- HPA declines seem plausible at the high end of expensive markets, at the low end of some FHA markets, and in metros with stagnating or declining job growth.
- While in the midst of the most rapid slowdown in Home Price Appreciation (HPA) since the bust of 2007-2011, demand pull inflation continues to exert a strong influence on general inflation.
- While HPA is rapidly slowing, loan originations (other than FHA) continue to exhibit stressed mortgage default rates that will contain default levels.