another month, Another record high for single-family home rents in the US, up 14% year-on-year in AprilFor, marking the thirteenth period of unprecedented annual profits.
Lack of supplies and a strong job market are driving up prices, according to CoreLogic, a real estate data provider.
“We expect single-family rental growth to continue increasing at a rapid pace through 2022Molly Bussell, chief economist at CoreLogic, said in a statement.
Among the large metropolitan areas the company monitors, Miami posted the largest gain: nearly 41%. That’s about seven times the 5.6% growth rate in April 2021 in the city. Meanwhile, East Coast metro areas, including New York City, Philadelphia, and Washington, D.C., saw some of the smallest increases.
on the other side, US existing home sales fell to a two-year low in May, while prices soared to a record high – exceeding $400,000 for the first time.While mortgage rates rose, pushing first-time buyers out of the market.
Despite the fourth consecutive monthly decline in sales and declining affordability, the National Association of Realtors (NAR) reported on Tuesday, the housing market remains very hot with real estate remaining on the market for a record 16 days last month.
“The market is far from weak,” said Conrad de Quadros, chief economic adviser at Brean Capital in New York. “The full effect of the monetary tightening is likely to take some time to appear“.
Existing home sales fell 3.4% to a seasonally adjusted annual rate of 5.41 million units last month, the lowest level since June 2020, when sales were recovering from the slump caused by the shutdowns. Sales increased in the Northeast, but declined in the Midwest, West, and South.
The economists surveyed included Reuters They had expected sales to drop by 5.40 million units. Home resales, which account for the bulk of home sales in the US, fell 8.6% year over year.
May sales were mostly closings for contracts signed a month or two ago, before mortgage rates started accelerating amid rising inflation expectations and aggressive rate hikes from the Federal Reserve.
The 30-year mortgage rose 55 basis points last week to a 13-1/2 year average of 5.78%According to data from mortgage agency Freddie Mac, this is the largest rise in a week since 1987. The rate has risen more than 250 basis points since January.
The report added to data on home construction, building permits and home builder sentiment to indicate that the market is losing speed under the weight of rising borrowing costs.
A separate report from the Federal Reserve Bank of Chicago on Tuesday showed that the national activity index fell to a reading of 0.01 in May from 0.40 in April.Which he said “indicates a slowdown in economic growth in May”.
The zero value of the monthly index is associated with the expansion of the national economy at a historical growth rate. Fears of a recession are growing after the Federal Reserve’s decision last week to raise interest rates by three-quarters of a percentage point, its largest rise since 1994.
The Federal Reserve raises interest rates The benchmark one-day index has been at 150 basis points since March.
The real estate market is the most sensitive sector to interest rates. Its slowdown can help the supply and demand for housing align and push prices lower.
The median price of existing homes is up 14.8% from a year earlier, reaching an all-time high of $407,600 in May. This was the first time the price broke above the $400,000 level.
As demand cools, monthly supply is likely to continue to improve. The government reported last week that homes completed in May rose to the highest level since 2007while the number of homes under construction was close to an all-time high.
At the pace of May sales, it will take 2.6 months to exhaust the existing inventory of existing homes, up from 2.5 months a year ago. A six- to seven-month supply is a healthy balance between supply and demand. 88% of homes sold in May had been on the market for less than a month.
Since home ownership is out of reach for many people, rents are on the rise. NAR said the trend is attracting more Wall Street investors to the market.alienating first-time buyers.
(With information from Bloomberg and Reuters)