RITA - Housing Market Big Picture: Rates Rise Sales Downturn Price Peak Inventory Rise

• The housing market typically follows an ordered pattern: mortgage rates lead sales and construction, which in turn lead prices, which in turn lead inventory.
• In the past few months, there has been a sharp spike in mortgage rates to a 10 year high.
• The increase in rates has led to a decline in mortgage applications and home sales, which can be expected to continue and spread to construction.
• Prices are still rising at a near-record pace, but are poised to hit a wall.
• Inventory declines are abating, and inventory can be expected to trend higher for an extended period.

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