U.S. housing market has a supply problem

Sources: Bloomberg, U.S. Census Bureau, and Wells Fargo Investment Institute. Monthly data from January 1, 2007 to August 31, 2022. NAHB/Wells Fargo Housing Market Index: monthly data from January 1, 2007 to September 30, 2022. NAR Housing Affordability Index: monthly data from January 1, 2007 to July 31, 2022. SAAR = seasonally adjusted annual rate. NAHB (National Association of Home Builders)/Wells Fargo Housing Market Index is a widely watched gauge of the outlook for the U.S. housing sector. The NAR (National Association of Realtors®) Housing Affordability Index measures whether or not a typical family could qualify for a mortgage loan on a typical home.

Key Takeaways

  • Housing activity is winding down in response to recent increases in mortgage rates and a resulting decline in affordability to a 33-year low.
  • A loss of housing momentum is undercutting an important tailwind to the economic recovery, directly and indirectly, through its large ripple effect on other parts of the economy.