Fitch, the US rating agency, is weighing in on the US housing market. Says:
- US housing market cooling off from west to east
- Estimates that US home prices were overvalued by 12.2% for 2Q 2022 on a population weighted average basis
- Expects that overvaluation will moderate in 2H 2022 with declining trend in home prices
- Home price decline is likely to spread from Western to Eastern US if mortgage rates keep going up
- Expects US home prices to continue experiencing corrections due to rising mortgage rates, and worsening affordability in 2H 2022 and into 2023
Although not saying so, the Fed is happy that the housing market is slowing. Rising housing prices have been another piece on the demand side of the equation that has increased inflation . Mortgage rates are up sharply which has not helped the affordability. Lower prices would help do that going forward.
The days of 3% mortgages are over.