Line chart, housing demand vs. supply
Y-axis: Thousands; x-axis: 2007-2022.
Existing home sales SAAR generally exceed housing inventory. In early 2007 sales were near 5.7 million with inventory near 3.6 million. By 2008 inventory briefly exceeded sales, but late in the decade sales again recovered vs. inventory. By late 2010, sales and inventory were briefly about equal. Since 2010 U.S. existing home sales have significantly exceeded housing inventory, with recent home sales between roughly five and 5.5 million, and inventory fluctuating roughly between 1.7 and 2.2 million. At the end of February 2020, existing home sales reached over 5.7 million before dropping to 3.9 million by the end of May, when housing inventory stood at just over 1.8 million. By late August, sales were at 6 million while inventory was near 1.8 million, and by late November 2020 sales were near 6.7 million with inventory near 1.6 million. As of late February 2022, sales were near 6 million and inventory was near 1.3 million.
Line chart, ratio of housing starts vs. number of months supply per 100,000 households.
Y-axis: Months supply; x-axis, 2007-2022.
From 2007 starts per 100,000 households have declined significantly, from a ratio of more than 14 starts per 100,000 households to about 5 starts per 100,000 by 2009. Since 2012 the ratio of starts per 100,000 households has climbed from roughly nine starts per 100,000 households to about 16 by early 2020. From there housing starts dropped sharply to just over 10 by the end of May.
Meanwhile, the ratio of the number of months’ supply per 100,000 households increased from about 7 in 2007 to just over 12 in early 2009. From 2009 to March 2013 the ratio decreased to just over four. Since then, the ratio of supply has fluctuated from about four to 7.5. In August 2020 it stood at about 3.3. By the end of November 2020, supply was just over 4 months, with the ratio of supply per 100,000 households stood near 15.5. As of late February 2022, supply stood at 6.3 months, with the ratio at nearly 17.7.
Line chart, housing units authorized vs. housing market index,
Left y-axis: NAHB/Wells Fargo Housing Market Index level; right y-axis: Housing units authorized by building permits (in thousands), x-axis: 2007-2022.
Authorized housing units fell from 1.6 million in 2007 to less than 600,000 by 2009. At the same time, the housing index fell from near 40 to 8 by 2009. Since 2012, however, improvement in the housing index has exceeded housing units authorized by building permits. In recent years, both the index and authorized units have leveled somewhat. By February 2020 the index stood at 74, then fell to 30 by the end of April, recovering to 83 by Q3 end. Meanwhile, authorized housing units, at over 1.3 million in March, fell to just over 1 million by the end of April, recovering to about 1.5 million by the end of August. By the end of Q1 2022, the housing index stood at 79, while authorized housing units at the end of February were nearly 1.9 million.
Line chart measures whether a typical family could qualify for a mortgage on a typical home.
Y-axis: Index Level; x-axis: 2007-2022.
NAR Housing Affordability Fixed Mortgage Index—U.S. increased from near 120 in 2007 to a recent peak of roughly 208 in 2013. It declined amid some volatility to about 138 in 2018, and rose to just over 170 in July of 2020, ending November near 168. As of Q1 2022, the index was at 143.
Sources: Bloomberg, FactSet, and Wells Fargo Investment Institute. Monthly data from January 1, 2007 to February 28, 2022. NAHB/Wells Fargo Housing Market Index: monthly data from January 1, 2007 to March 31, 2022. NAR Housing Affordability Index: monthly data from January 1, 2007 to January 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.
- The housing boom is showing early signs of cooling in response to recent increases in mortgage rates and the resulting pressure on affordability.
- A loss of housing momentum would undercut an important tailwind to the economic recovery, directly and indirectly, through its large ripple effect on other parts of the economy.