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Mortgage Investors Need Not Fear Supply Surge From New Housing

  • New single-family starts remain moribund a decade post-crisis
  • Agency MBS net supply forecast to drop 15 percent from 2018
New home construction in Elgin, Illinois

New home construction in Elgin, Illinois

Photographer: Daniel Acker/Bloomberg
By
Christopher Maloney

Mortgage investors are unlikely to see a net supply surge even should interest rates continue to move lower, if only because the pace of new home construction is far slower than it used to be.

People use credit to purchase homes in the U.S., whether they are new or pre-existing structures, and almost every such transaction feeds supply into the agency MBS market. So a tepid pace of single-family homes being built will translate into less supply, benefiting mortgage investors.