A new report from Bank of America says there is a “significant slowdown” in the U.S. housing market as mortgage originations shrink and spending on household goods softens.
Bank of America’s new data adds another cloud via two data points.
Internal Bank of America data showed second-quarter mortgage originations fell 29% to $14.5 billion compared to last year.
Customers discovered by Bank of America Research Institute.
This is because borrowing costs are significantly higher than they were a year ago, thanks in part to Fed rate hikes. Average 30-year mortgage rates have risen by more than 200 basis points since January, “to the highest level since 2008,” according to the report.
As of July 28, 5.3% for 30-year fixed-rate mortgages, according to Freddie Mac. A year ago he was 2.5%.
On top of that, interest rates are high soaring housing prices Make the house more expensive for the buyer. In the chart below, Bank of America highlights that housing affordability has plummeted to its lowest level since 2006.
with slowdown in home salesconsumers are also refraining from purchasing household-related items.
It’s worth noting that about a quarter of first-time homebuyers open a new credit card within six months of buying a home. another study Found by Realtor.com and Experian.
But based on internal data, a Bank of America report shows spending per household at furniture stores and home improvement stores using Bank of America cards is down. Since March 2022, spending has decreased on a year-over-year basis across the country.
Furniture and home repair costs fell particularly sharply in the West and Northeast, down 7.4% and 8.1% respectively.
Write to MarketWatch reporter Aarthi Swaminthan at the following address: [email protected].
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