Weekly Economic Report 10.01.18

KEY MARKET INDICATORS as of Oct 01, 2018

August Housing Market Update

Homebuilding activity recovered in August. Housing starts increase by 108,000 units, or 9% from the revised July figure, to a seasonally adjusted annual rate of 1.28 million units. The recovery in August was led by the multi-family segment, which reported a 27% increase from July. Single-family housing starts increased by 16,000 units (up 2%) from July to 876,000 units, but grew by just 1% from a year ago. The year-over-year growth in the single-family market slowed to 2% during the quarter, compared to 6% growth for the year so far. Compared to the past two years, when single-family housing starts grew by around 70,000 units a year, growth this year is only around 30,000 units.

At the regional level, most regions reported year-over-year growth in single-family housing starts for the year-to-date. But the fastest growth came from the West region, which has some of the highest home prices and is facing the most acute shortage in housing supply. Homebuilders have taken advantage of the market imbalance in that region to add production.

Home Sales

Home sales reported a moderate upturn in August, driven by higher new home sales. New home sales reached a seasonally adjusted annual rate of 629,000 units in August, an increase of 3.5% from the revised July figure. Existing home sales reported a seasonally adjusted annual rate of 5.34 million units, unchanged from July. Both new and existing home sales were higher compared to a year ago, due to weak sales a year ago.

In the existing homes market, the level of inventory for sale was unchanged from July at 1.92 million units, but is slightly higher compared to a year ago. This is equivalent to 4.3 months of supply at the current sales pace. The housing market remains under-supplied compared to a normal supply level of 6 months, which means that home prices should continue to face pressure to increase. In July, the FHFA home price index for home purchases grew by 6.4%. For the year-to-date, home prices are up 7% y/y.

Tian Liu, Genworth Mortgage Insurance Chief Economist
919 807.9584

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