By New Deal democrat
Housing prices continue to increase, with both the Case Shiller and FHFA house price indexes yesterday showing YoY gains in excess of 5%. Meanwhile, mortgage rates hit a new 4-year high again yesterday at 4.58%. Are the increased purchase and monthly carrying costs of housing beginning to have an effect?
It certainly looks that way when you look at existing home sales, growth of which has nearly flatlined in the last 18 months (note this is the absolute number, not the YoY change):
But YoY% growth for new home sales, while very volatile on a m/m basis, since late 2014 has generally continued at about 5% YoY:
The Fed does keep track of real estate loans for housing, but this is a cumulative measure. So what we mainly see is growth of 50% in outstanding loans (!) during and in the immediate aftermath of the bubble, with very subdued total growth since:
Is the sideways movement in this figure since October meaningful, or just another pause? Impossible to tell.
Which brings me to purchase mortgage applications, reported weekly by the Mortgage Bankers Association. Here is Bill McBride's graph from earlier this morning:
Just a quick eyeballing of the graph seems to show a little slowing down recently, but unfortunately we don't have YoY comparisons.
But I do track this data as part of my "Weekly Indicator" watch. I've noticed some softness recently, so I went back to crunch a few numbers on a preliminary basis. I sampled the first week of each month in the last 6 months of 2017. The average YoY% increase in applications was 7%. Since the slowdown started in the latter part of December, however, the YoY% increase has slowed to an average of about 4.5%.
We had a similar pause in early 2017, and that resolved positively. It's too early to know if the recent slowdown in purchase mortgage applications is signal or just noise. But it certainly bears closer watching. At some point, increased mortgage rates and/or increased prices must slow or stall the market.