Housing finance: Insights on the new normal (week 5, 2022) | American Enterprise Institute

Key takeaways:

• The 10-year old seller’s market continues, evidenced by:
  • Strong volume, in spite of a cumulative 27% increase in constant quality home price appreciation (HPA) since January 2020,
  • Historically tight supply,
  • The work from home revolution, and
  • Arbitrage opportunities due to wide metro and regional pricing differences.
• As we get ready to enter the spring buying season, we expect the strong purchase volume and HPA to continue at least until the rates rise by ⅜% – ⅝% (4.25%-4.5%). As housing demand drops and supply grows, the high end of expensive markets and the low end of some FHA markets will be impacted. This may spook the Fed.

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