Housing data due for release this week could shed more light on how higher interest rates are affecting the U.S. housing market.
Later this morning, the National Association of Realtors will report existing home sales for May. Economists forecast 5.37 million homes sold, 240,000 fewer than in April. The April figure was the lowest since June of 2020, as record-high home prices and the steeper mortgage rates have weighed on homebuyers, sharply curtailing home sales.
Tomorrow, the Mortgage Bankers Association will release its survey of weekly mortgage applications, which is a leading indicator of housing and mortgage financing activity. The index recently hit a 22-year low as refinancing demand plummeted as much as 75% from a year ago.
On Friday, the Census Bureau will also report on new residential home sales for May. New home sales are projected to have declined slightly to 580,000 in May, from 591,000 in April. This would mark the lowest figure since late 2018, falling below the April 2020 low of 582,000. New home sales make up about 10% of the housing market, and are down more than 40% from the post-financial crisis peak reached in August of 2020.
"The U.S. housing market is experiencing the kind of demand destruction we would expect to see as mortgage rates have risen all year. While the pace of home sales has slowed, prices remain stubbornly high due to tight inventory and competition from all-cash buyers. High prices and high mortgage rates will keep first-time homebuyers out of the market for the foreseeable future," stated Caleb Silver, Editor in Chief of Investopedia.