The latest weekly Mortgage Bankers Association data showed that the typical mortgage for a new home taken out last week was a 30Y fixed rate product with a size of $440,400 at a rate of 6.57%, giving a monthly mortgage payment of $2804, a record high. New home sales are outperforming existing home sales as mortgage applications point to weakening demandĪffordability will remain a key constraint that points to downside risks for transactions.

New home sales have consequently been performing more strongly despite the drop in mortgage applications for home purchases - the buyers that are out there simply don't have much to choose from. The more than doubling of mortgage rates over the past 18 months means many homeowners who would like to move are effectively locked in by the cheap financing they secured on their current property. Higher borrowing costs and a general lack of affordability after prices rose nearly 50% through the pandemic have constrained demand, but we also have to recognise there is a lack of supply out there, which is also contributing to lower transaction numbers. Sales had been as high as 6.3mn as recently as January 2022. By James Knightley, Chief International Economist Existing home sales remain under pressure from affordability issues and a lack of optionsĮxisting home sales fell 3.4% in April to an annualised 4.28mn, versus expectations of a 4.3m outcome.

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