The market is cooling due to both market fundamentals as well as the seasonal decline in market activity that normally comes with fall.
Apartment demand will likely remain robust and rent growth remain elevated in 2022, given the current rates of absorption, rising mortgage rates in 2022, and the lower level of construction activity relative to current demand.
Housing market activity in September inclined 7.0% from August 2021, with existing-home sales reaching a 6.29 million seasonally adjusted annual rate.
The 30-year fixed mortgage rate rose to 3.09% from 3.05% the previous week, and rates went up by 10 basis points (0.10%) in the past two weeks.
Based on increased home construction and the ending of the mortgage forbearance program, more inventory will appear next year compared to this year.
U.S. advance estimates of retail and food service sales for September 2021 increased from the prior month, with retail sales recording a seasonally adjusted total of $625.4 billion in September, a 0.7% increase from August.
With people returning to physical stores and food and drinking places, demand for retail space in Q2 2021 exceeded pre-pandemic peak levels.
Mortgage rates rose sharply to 3.05% this week from 2.99% last week as consumer and producer prices continue to inflate due to persistent supply bottlenecks and labor difficulties. NAR forecasts the 30-year fixed mortgage rate will reach 3.6% by mid-2022.
Inflation is lingering amid the strain on supply chains, labor difficulties, and rising rent prices.
At the national level, housing affordability increased for the second consecutive month in August compared to the previous month, with the monthly mortgage payment falling by 1.1% and the median family income falling modestly by 0.7%.
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