The Housing Center at the American Enterprise Institute (AEI) publishes a weekly Housing Finance Watch and Inflation Watch crafted by Edward J. Pinto, Director and Assistant Director Tobias Peter.
Housing Finance Watch
Purchase rate lock volume and Home Price Appreciation (HPA) continue to decelerate and confirm a strong trend
Reversal. Notwithstanding rate and HPA headwinds, volume for 2022 week 29 came in below 2019’s level by 2%.
Additionally, HPA for August 2022 is projected at 10.2% and July 2022 is projected at 12.5%, down from 15.0% in June
Relatively low historical nominal rates (5.54% as of 7.25.22)
and negative inflation adjusted real rates, along with supply
constraints, a home equity wealth effect from monetary
stimulus, and the Work-from-Home revolution will continue
to fuel historically high HPA until later this year. If mortgage
rates remain around 6%, HPA is expected to further slow to
6% and 4%-6%, respectively, for December 2022 and 2023 (yo-y).
The Fed spiked the monetary punchbowl for too long, with the economy & housing market experiencing massive
hangovers. 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.
For the week of July 29, 2022, the Report covers these
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