The popularity of U.S. residential sales has peaked since the third quarter of 2021, when the Federal Reserve's monetary policy turned, and then gradually declined.

By the end of June 2022, annual U.S. new home sales had reached 590,000 units, down 12.7% year-over-year for the month.

The monthly growth rate for new home sales has been negative for 13 consecutive months, with manufactured home sales largely reflecting the same pattern.

In terms of the absolute level of sales, monthly sales have been below the 12-month average since March 2022.

It typically takes 4-6 quarters to show the effect of rate hikes on curbing home prices.

Over the past three decades, the Federal Reserve has gone through five rate hike cycles.

Except for the decline in U.S. home prices on the eve of the financial crisis, home prices did not fall significantly in the other four instances, usually maintaining a good upward trend for 1-2 years in the first half of the rate hike, with the rate of increase only decreasing at the end of the hike.

To gradually normalize money, the Federal Reserve began a three-year interest rate hike in December 2015, raising the target range for the federal funds rate from 0%-0.25% to 2.25%-2.50%.

In the short term, the rapid increase in mortgage rates led to a significant and rapid increase in interest on monthly mortgage payments for homebuyers, thereby dampening the release of demand.

At the end of the third quarter of 2021, the Federal Reserve announced that it would reduce QE purchases during the year, thus initiating the process of monetary policy tightening.

Since then, long-term U.S. mortgage rates have bottomed out, leading to increased pressure on individuals to service their debt.

By the end of the second quarter of 2022, the 30-year U.S. mortgage fixed rate had risen to 5.27%, about 240 basis points higher than the 2.87% level in the third quarter of 2021.

Correspondingly, personal interest expense growth reached 9.8% and personal interest expense growth began to outpace personal income growth, with total U.S. personal income growing at less than 5% in the second quarter.

After the ultra-loose policy environment of the first phase of the epidemic, the U.S. residential savings rate rapidly declines from a staggering 33.8% to single digits.

As of June 2022, the U.S. residential savings rate has fallen to 5.1%, which is not only below the pre-epidemic average of 6%-7%, but also the lowest level since the Lehman Brothers thunderbolt explosion in September 2008.

The historically low savings rate means that the ability of U.S. residents to pay will be greatly diminished in the next period, and their ability and space to borrow from banks will become very limited.

In 2022, a number of negative news stories have severely impacted the U.S. housing market.

The market has already passed the inflection point in home prices between April and May, shifting from increasingly hot price growth to slightly cooler price growth.

This slowdown is a clear signal that buyers are reconsidering their housing needs.