The report from the Commerce Department on Tuesday added to a stream of weak housing data, and suggested that the Federal Reserve's aggressive monetary policy tightening campaign to slow the economy in order to tame inflation was achieving some desired results in the housing market. But with house prices remaining elevated amid a critical shortage of previously owned properties, a total housing market collapse is unlikely.
Economists polled by Reuters had forecast that new home sales, which account for 9.6% of U.S. home sales, would decrease to a rate of 575,000 units. The Fed has hiked its policy rate by 225 basis points since March. Fed Chair Jerome Powell's address on Friday at the annual Jackson Hole global central banking conference in Wyoming could signal how much further the U.S. central bank needs to tighten monetary policy.
A "For Rent, For Sale" sign is seen outside of a home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger/File Photo Stocks on Wall Street were mixed. The dollar slipped against a basket of currencies. U.S. Treasury prices rose.Mortgage rates, which move in tandem with U.S. Treasury yields, have soared, with the 30-year fixed-rate mortgage averaging 5.13%, up from 3.22% at the start of the year, according to data from mortgage finance agency Freddie Mac.
With builders facing a multitude of challenges, including supply constraints, some of these houses will probably not be built. Completed houses accounted for 9.7% of the inventory, well below a long-term average of 27%.
Normal English, people that want to sell still have to catch up. A lot of people still have low interest and staying is cheaper or cant move because the loan it to high. But inventory is growing and it will turn around. The turnaround is expected between 6 to 18 months.