Mortgage Housing

Chart of the Day: US Mortgage Debt Continues to Rise, Despite Recent Falling Home Sales

Despite a significant fall-off in acquisition financing in the last two quarters of 2021, loan refinancings, particularly for FHA, Fannie Mae, Freddie Mac, and bank balance sheets, helped lift total mortgage balances for the third quarter.

The US mortgage debt balance will hit $14.412 trillion in 2022 as consumers continue to snap up homes at a pace not seen since before the Great Recession. This shakes out to roughly $177,500 per mortgage account, up 3.3% over 2021. In spite of looming rate hikes and limited housing inventory, the national mortgage debt balance will approach $15 trillion next year. See this in the chart below and learn more here.

Mortgage Debt 2022-JAN

It was an outstanding year in 2021 for housing where we saw both median and average prices hit fresh all-time highs for new homes (up almost 17%). In fact, as the chart below shows, new home prices are currently rising more than twice as fast as they did during the last housing bubble. See this in the chart below and learn more here.

Home Prices 2021

Is the froth ready to come out of the housing market? Amid Omicron anxiety, surging mortgage rates, and a dip in homebuilder sentiment, analysts expected a modest 0.6% MoM drop in existing home sales in December, but while they were right on direction, the magnitude was way off as December Existing Home Sales crashed 4.6% MoM – the biggest MoM drop since Feb 2021. See this in the chart below and learn more here.

Housing Sales 2022-JanGiven that house prices are on a terror upward and mortgage credit is only rising moderately, much of the home purchases in 2021 were cash and/or investment purchase and do not resemble a normal housing market. With potential rising mortgage rates in 2022, it will not be surprising to see further declines, or at least a stalling, in house purchases.

Perhaps this is finally good news for home buyers. How far this decline becomes may be a story to watch in 2022.

See more #chartoftheday posts.

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 RWR original article syndication source.

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  1. Cash purchases derived from big state home equities moving to such places as Idaho is really jacking up home prices and blocking a lot of 20% down/conventional loan buyers’ home ownership dreams.

  2. Even with the 4.6% downturn in December, home prices are still very elevated making home ownership closer to city centers unattainable for many. This isn’t such a bad thing because second and third tier cities and towns with lower home costs are experiencing a spike in population which is good for their economies. This is the capitalist way of “spreading the wealth”.

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Written by Tom Williams

Born down on the farm in America's Midwest, my early life was spent climbing the ladder via a long career in information technology. Starting as a technician, and after earning a degree going to night school, I eventually found a place working at ATT Bell Laboratories as a software engineer.

Later moving into management and then a long stint in a major management consulting firm working with major banking, telecommunications, and retail companies. Working in various states in America, I also spent considerable time living and working in several European countries - currently expat in France. As a side career, I was heavily involved in real estate development and an avid futures trader. This experience can give one a unique view of the world.

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