Economic Report 08.27.19

KEY MARKET INDICATORS as of Aug 27, 2019

Better Home Sales, But Homebuilders More Cautious

This month’s housing data reflects the many cross currents in the economy. Lower mortgage rate is having a significant impact on housing affordability and is bolstering housing demand. Existing home sales reached its highest level since February, coming in at a seasonally adjusted annual rate of 5.42 million units. What is also noticeable in this month’s data is that inventory in the housing market, measured as months of supply, decreased from 4.3 months a year ago to 4.2 months. That is the first year-over-year decrease since April 2018, and could suggest that inventory is not increasing fast enough to meet rising demand, which could mean faster home price growth.

Lower Mortgage Rates

While lower mortgage rates are bringing more buyers into the market and reducing supply, new home sales and housing starts have remained largely flat in the past few months. It is not clear why lower mortgage rates are not having a bigger impact on new home sales and encouraging more construction activities. But one reason could be that homebuilders are becoming more cautious in the face of rising uncertainties in the economy.

Tian Liu, Genworth Mortgage Insurance Chief Economist
919 807.9584

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Disclaimer: Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Genworth Mortgage Insurance and are subject to change without notice. Genworth Mortgage Insurance has no obligation to provide revised assessments and assumes no duty to update information in the event of changed circumstances. While we have gathered this information from sources believed to be reliable, Genworth Mortgage Insurance cannot guarantee the accuracy of the information provided. Certain data discussed in this report is publicly available only on a time delayed basis. Genworth Mortgage Insurance strives to analyze data as it becomes available, but makes no representation that all data is reviewed immediately upon release.

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