The Bank of America Institute released a new publication today which shows that consumer payments continued to increase in September, but internal data adds to growing signs that the housing market is slowing down.

Bank of America total payments increased 10% year over year (YoY) in September; this figure offers a holistic view of money flow and includes credit card, debit card, ACH (automated clearing house), wires, bill pay, person-to-person, cash and checks. Yet the year over year (YoY) growth rate in wire payments to escrow and title companies has been slowing and turned negative in 2022; these payments are typically used to pay deposits ahead of closing a housing sale. This decline is consistent with the pattern observed in new and existing single-family home sales, which have also been falling this year, according to US Census Bureau data.  

Driving the housing slowdown are high valuations and rising mortgage rates, which are weighing on affordability, particularly for new buyers. Median mortgage payments in Bank of America internal customer data rose 8.8% YoY in September. But a large proportion of existing borrowers are under fixed-rate mortgages and are not yet exposed to rising rates. This may mean their consumer spending will not be immediately impacted by a deteriorating housing market. On the other hand, roughly 34% of US households are currently renting and median rent payments across ACH, debit/credit cards and bill payments for Bank of America customers increased by 8.1% YoY. These renters, typically younger and on lower incomes, may face more upfront pressure on their discretionary spending.