Housing Activity Grinds to a Halt – May 29, 2019

Housing is in a mild recession.

The data—

  • Existing home sales: down 14-straight months vs a year ago.
  • New home sales: up over the last 4 months vs a year ago– it’s the one relatively bright spot.
  • Single-family housing starts: down 6 of the last 7 months vs a year ago.
  • Single-family building permits: down 7-straight months vs a year ago.
  • Residential construction, measured in the quarterly GDP report: down 5-straight quarters.

Sources: Natl Assoc of Realtors, U.S. Census, U.S BEA April 2019; Residential construction through Q1 2019

Sales are down, and activity is down.

Positives

  • Homebuilder confidence has recently improved per the NAHB Wells Fargo Housing Market Index.
  • Mortgage rates have tumbled this year.

Investor’s corner

A lack of inventory in some markets and bidding wars pushed prices beyond the upper limits of affordability. Last year’s spike in mortgage rates was too much for buyers to bear.

Housing is a leading economic indicator; it is flashing red. However, most leading indicators are pointing to modest growth through year end.

Inventories of existing homes remain low (NAR data), but the big drop in mortgage rates is a favorable development for housing activity. 

Created 2019-05-29 14:32:31

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