Affordability Headwinds to Cool Demand, but Home Sales Will Stabilize above Pre-Pandemic Levels

Surging home prices and rising interest rates have decreased affordability and started to bring down demand from elevated levels, while limited inventory and the domestic impact of international crises will likely result in slower sales and home-price growth later this summer, according to the new edition of The Housing and Mortgage Market Review (HaMMR) released today by Arch Mortgage Insurance Company (Arch MI), a leading provider of mortgage insurance.

HaMMR also examines the impact of higher rates on home sales and the emergence of the “donut effect,” which describes a key shift in homebuyer preferences to lower-density housing markets and away from higher-density core city centers.

The emergence of the Millennial homebuyer and persistency of working-from-home will continue to dominate housing demand over the next few years despite the cooling we expect in the near term, according to HaMMR author Parker Ross, Arch Global Mortgage Group’s Senior Vice President and Chief Economist. “The housing market is poised for demand to take a step down as the recent jump in mortgage rates weighs heavily on affordability,” he said. “This would be a welcome development for the long-term health of the supply-constrained market and allow supply to begin to normalize to more balanced levels. More balanced market conditions should also ease further home-price appreciation over the second half of the year.”

Commentary resources:

• The Housing and Mortgage Market Review is posted at archmi.com/hammr. The current issue examines the post-pandemic housing market, the impact of rising rates and the significance of the “donut effect” in calculating homebuyer behavior.
• Parker Ross will host a Housing Update Webinar on June 9 at 11:30 a.m. ET, covering the main HaMMR points and offering his perspective on the direction of the U.S. housing market. Registration is available at archmi.com/hammr.

About Arch Mortgage Insurance Company

Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. Headquartered in Greensboro, North Carolina, Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible homeownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia and Puerto Rico. For more information, visit archmi.com.

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The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Source: Arch Mortgage Insurance Company

ARCH MORTGAGE INSURANCE COMPANY® | 230 NORTH ELM STREET GREENSBORO NC 27401 | ARCHMI.COM

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© 2022 Arch Mortgage Insurance Company. All Rights Reserved. Arch MI is a marketing term for Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company. Arch Mortgage Insurance Company and The Housing and Mortgage Market Review are registered marks of Arch Capital Group (U.S.) Inc. or its affiliates. HaMMR is a service mark of Arch Capital Group (U.S.) Inc. or its affiliates.

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