Economic Insights

Insights and Perspectives on U.S. Housing Economies and Property Markets

Veros Economic Insights provides our recent forecasts, analysis, and articles for an up-to-date picture of the U.S. housing market. 

OPINION

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Inflation is going to be here for a while …

We said early in 2021 that Inflation was going to be a problem in the future because of the Fed’s lack of timely action in increasing interest rates and reducing the pace of bond purchases.

The Fed and other officials early on indicated that there would be no inflation, then said risks for inflation were weighted to the upside, then once it hit called it transitory, and then recently when it did not abate quickly stated it had peaked.

Friday’s increase in the inflation rate to 8.6% was a new 40-year high showing there are no signs of things letting up.

Though many official forecasts from reputable sources show that Inflation will be in the 3% range over the next 12 months, we do not foresee such a sharp reduction. Rather, we see inflation as strong throughout the remainder of the year with some slight softening as we enter 2023 to produce an annual inflation rate in the upcoming 12 months more in the 6% to 6.5% range. Assuming that the Fed chooses to continue to increase interest rates to combat this magnitude of inflation, mortgage rates will likely drift higher than they are today which will keep the housing market from appreciating as quickly as it has been.

Economic Indicators

Mortgage Rate
September 2022
6.70%
Inflation
September 2022
8.2%
Housing Starts​
September 2022
1.439 million​
Housing Inventory
September 2022
1.26 million
Unemployment Rate
September 2022
3.50%
Hourly Earnings
September 2022
$32.46

HOUSING OUTLOOK

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Veros Economists find no evidence of racial bias in its AVM

One of the mortgage industry’s biggest challenges is identifying and preventing potential racial bias in the home valuation process. This report analyzes home valuation data in minority communities in the following cities:  Chicago, Atlanta, Houston, Los Angeles, Philadelphia

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Featured Opinions

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Insights

Labor market expected to remain strong in the short-term, but unemployment predicted to rise beyond 4% over the next 12 months

The real estate market is rebalancing as supply and demand are adjusting to the higher mortgage rate environment. An increasing number of prospective homebuyers have found that their dream homes have been pulled out of reach as mortgage rates climb…

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House for Sale
Insights

Buy now or later? A prospective homebuyers’ dilemma

The real estate market is rebalancing as supply and demand are adjusting to the higher mortgage rate environment. An increasing number of prospective homebuyers have found that their dream homes have been pulled out of reach as mortgage rates climb…

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Insights

A look at the housing market cool-off beyond existing supply and demand

The housing market cool-off started as mortgage rates started to climb at the beginning of 2022. The 30-year fixed mortgage rate is now close to 7%, a level last seen in the early 2000s. Affordability constraints cooled down demand significantly, ending the housing market frenzy seen in 2020-21.

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House with for Sale Sign
Insights

Pending home sales data suggests that housing demand weakened in several metros in Q3 2022

Pending listings declined over Q3 2022 in the highlighted markets, but the extent of the decline varied regionally. Salt Lake City, UT and Las Vegas, NV witnessed the sharpest declines of 24.3% and 22.4% respectively from June to September, while in San Diego, CA the decline was less than 10%.

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Insights

The housing market is cooling-off. Is it headed for a crash like in 2008? Find out why not.

After two years of rapidly rising prices, the housing market seems to have lost steam. There is widespread expectation that the U. S. will fall into recession as the Fed continues to raise interest rates. The following indicators also confirm that the trend in the housing market has shifted.

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Insights

Despite rising prices and mortgage rate, why are home prices forecast to rise even higher?

The data suggests that while some first-time homebuyers are getting priced out of the housing market due to affordability, prices are being driven by demand from repeat and all-cash buyers as they compete for a low supply of homes.

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