US Housing Market Faces Affordability Crisis Amid Skyrocketing Mortgage Rates
Portfolio Pulse from Piero Cingari
The US housing market is facing an affordability crisis due to skyrocketing mortgage rates, which have reached a level unseen since April 2002. The average rate for a 30-year fixed loan is now 7.09%, up from 6.96% a week ago. This, combined with soaring home prices due to a severe inventory deficit, has resulted in housing affordability dropping to levels last seen in 1984. The scarcity of homes, rising expenses, and economic concerns have deterred potential buyers, causing a dip in sales of pre-owned homes. The Real Estate Select Sector SPDR Fund (NYSE:XLRE) has fallen 5% month-to-date.
August 17, 2023 | 7:28 pm
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Black Knight Inc. (NYSE:BKI) data was cited in the report, indicating a drop in housing affordability to levels last seen in 1984.
The report cites data from Black Knight Inc. (NYSE:BKI) indicating a significant drop in housing affordability. This could potentially impact the company's stock negatively as it reflects a challenging environment in the housing market.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 70
NEGATIVE IMPACT
Moody's Analytics' chief economist commented on the situation, stating that when interest rates climb beyond 7%, the market becomes extremely cautious.
The chief economist at Moody's Analytics, a subsidiary of Moody's Corporation (NYSE:MCO), commented on the rising interest rates and their potential impact on the market. This could potentially impact Moody's stock negatively as it reflects a challenging environment in the financial market.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 60
NEGATIVE IMPACT
The Real Estate Select Sector SPDR Fund (NYSE:XLRE) has fallen 5% month-to-date, marking its worst monthly performance since February 2023.
The Real Estate Select Sector SPDR Fund (NYSE:XLRE) has seen a significant drop in its value due to the current housing market crisis. This could potentially continue in the short term if the situation does not improve.
CONFIDENCE 100
IMPORTANCE 90
RELEVANCE 100