Housing: A Ray of Sunshine in a Dark Night – August 26, 2020
Many are aware of the powerful stock market rally. Amid the economic uncertainty, one sector of the real economy that has surged is housing.
Following a steep decline in activity, housing has rebounded sharply.
- July existing home sales and new home sales hit their best levels since the 2000s housing bubble.
- Single-family housing starts are up 38% from the April low.
- Single-family building permits are up 48% from the April low.
- Home builder sentiment hit a record high in August.
- For the first time ever, the median price of an existing home surpassed $300,000 (July data).
Sources: National Assoc of Realtors, U.S. Census, Natl Assoc of Home Builders
Key reasons—
- Record low mortgage rates, a shift in demand to suburban and more rural markets, and pent-up demand as buying plans earlier in the year were sidelined.
Drawbacks and Risks—
- First-time buyers are grappling with very low inventory and rising prices.
- The end of mortgage forbearance and soaring lumber prices could create headwinds for housing.
Bottom line
Today, housing is a bright spot in an otherwise uncertain landscape. As a leading economic indicator, housing is a tailwind that is set to lend support to the U.S. economy in the fall.
Created 2020-08-26 14:49:48
