Indicators Show Mixed Activity in Housing Markets

National housing market indicators available as of January showed activity in housing markets was mixed. Trends in some of the top indicators for this month include:

  • Purchases of new homes increased in December for a third
    consecutive month. New single-family home sales rose 2.3 percent
    to 616,000 units (SAAR) in December from a pace of 602,000 in
    November but were 26.6 percent lower year-over-year (y/y). Note
    that monthly data on new home sales tend to be volatile. For all of
    2022, new home sales reached 644,000, down 16.5 percent from
    771,000 in 2021 and their slowest pace since 2018. (Sources: HUD
    and Census Bureau)
  • Existing home sales fell for the eleventh consecutive month to their
    slowest pace since November 2010. The National Association of
    REALTORS® (NAR) reported that December sales of existing homes
    (including single-family homes, townhomes, condominiums, and
    cooperatives) slipped 1.5 percent to 4.02 million units (SAAR) from a
    pace of 4.08 million in November and were 34 percent lower y/y. For
    all of 2022, existing home sales dropped 17.8 percent to 5.03 million
    units from 6.12 million in 2021 and the slowest pace since 2014.
    Because existing home sales are based on a closing, December sales
    reflect contract signings in October and November. Mortgage rates
    have trended down since September, and month-to-month (m/m)
    house prices have remained the same or declined in the past several
    months—all of which should help to improve demand. Inventories
    of existing homes are still lean, however.
  • New construction of single-family homes rose to their highest level
    since August. Single-family housing starts increased 11.3 percent to
    909,000 units (SAAR) in December from a revised pace of 817,000
    units in November but were 25 percent lower y/y. Multifamily
    housing starts (5+ units in a structure), at 463,000 units (SAAR),
    fell 18.9 percent m/m and were 16.3 percent lower y/y. Note that
    m/m changes in multifamily starts are often volatile. Residential
    construction employment was up 3.2 percent y/y; residential
    construction costs were down 1.2 percent in December but up 6.9
    percent y/y. For all of 2022, total construction of new homes reached
    1.553 million units, 3.0 percent lower than in 2021 (1.601 million
    units and the strongest pace since 2006). New construction of singlefamily homes fell 10.6 percent, while starts on multifamily homes
    rose 14.5 percent in 2022. (Sources: HUD, Census Bureau and BLS)
  • Annual house price appreciation continued to decelerate in
    November, with annual gains ranging from 6.8 to 8.2 percent.
    The Federal Housing Finance Agency (FHFA) seasonally adjusted
    purchase-only house price index for November estimated that home
    values were down 0.1 percent m/m and rose 8.2 percent y/y, down
    from an annual gain of 9.8 percent in October. The non-seasonally
    adjusted CoreLogic Case-Shiller® 20-City Home Price Index, posted
    a 0.8 percent m/m decline in home values in November and a
    6.8 percent y/y increase, down from an 8.6-percent annual gain in
    October. Mortgage financing has become more expensive as the
    Federal Reserve raises interest rates, a process that began in April.
    The annual growth rate of house prices peaked in the spring of 2022
    and may well continue to decelerate. The home price data for both
    indices are based on real estate sales contracts signed in September
    and October with subsequent closings during November. (Both price
    indices are released with a 2-month lag.)
  • The inventory of homes for sale remained the same for new homes
    but fell for existing homes. The listed inventory of new homes for
    sale, at 461,000 units at the end of December, was unchanged m/m
    but was 18.5 percent higher y/y. That inventory would support 9.0
    months of sales at the current sales pace, down from 9.2 months in
    November due to an increase in sales. Available existing homes for
    sale, at 970,000 units in December, declined 13.4 percent m/m but
    were 10.2 percent higher y/y. That inventory represents a 2.9-month
    supply, down from 3.3 months in November. The long-term average
    for months’ supply of homes on the market is 6.0 months.
  • The U.S. homeownership rate fell slightly in the fourth quarter.
    The national homeownership rate decreased to 65.9 percent in the
    fourth quarter of 2022 from 66.0 percent the previous quarter but
    was up from 65.5 percent a year ago. The historic norm since 1965
    is 65.2 percent. (Source: Census Bureau)
  • Forbearance on mortgage loans remained the same. The MBA
    Forbearance Survey shows the share of homeowners with mortgages
    in forbearance was 0.70 percent (351,000 households) in December,
    the same as in the previous month, but down from 1.41 percent
    (705,000 households) one year ago. The forbearance rate was only
    0.25 percent of all home loans in the beginning of March 2020,
    before the economic effects of the COVID pandemic began to be felt.
  • Housing insecurity due to the pandemic remains elevated but
    has improved. HUD analysis of the Census Household Pulse Survey
    (Week 53: January 4-16, 2022) shows that approximately 11.4
    percent, or 5.25 million, renter households were behind on rental
    payments, an improvement over 15.1 percent, or 6.96 million,
    households one year ago. An estimated 4.6 percent, or 2.13 million,
    renter households feared eviction was imminent in the next
    two months, down from 7.1 percent or 3.17 million a year ago.
    Under Treasury’s Emergency Rental Assistance (ERA) program, an
    estimated 2.84 million renters have applied for and received rental
    assistance. Approximately 5.57 percent, or 4.59 million, homeowner
    households were behind on their mortgage payments in January, an
    improvement over 6.66 percent, or 5.50 million in January of 2021.
    An estimated 1.12 percent, or 890,000 homeowners, feared
    foreclosure was imminent in the next two months.
  • The 30-year fixed-rate mortgage (FRM) continued to ease, reaching
    its lowest level since September. The 30-year FRM reached an
    average weekly low in January of 6.13 percent the week ending
    January 26, 2023, down from the weekly low in December of 6.27
    percent and the lowest average weekly rate since last September
    (6.02 percent). The highest average weekly rate during that time
    frame was 7.08 percent in October and November. The mortgage
    rate was 3.55 percent one year ago. (Source: Freddie Mac)