Weekly Economic Report 10.24.18

KEY MARKET INDICATORS as of Oct 23, 2018

September housing starts

September Housing Starts, Existing Home Sales

The housing market is undergoing a period of adjustment as interest rates have increased. Looking at the September housing starts, most of the adjustment is taking place in the multi-family market, where starts have pulled back from around 400,000 units (seasonally adjusted annual rates) up to May to around 320,000 units in the past 4 months. In the single-family market, housing starts have pulled back moderately from around 890,000 units up to May to 870,000 units in the past 4 months. A few homebuilders have commented on softer demand, but demand in the entry-level market continues to be strong. Regionally, the West region continues to see the fastest growth in single-family housing starts, up by 13% y/y in September and up by 15% y/y for the year to date. Growth in the rest of the country have been more muted and less consistent this year, and that partially explains the slowdown.

In the existing homes market, sales have been in decline since March (5.6 million units seasonally adjusted), and were down to 5.15 million units in September. Housing inventory shortage is beginning to ease gradually. Compared to the current sales pace, the unsold inventory is equivalent to 4.4 months of supply, higher than the 4.2 months of supply a year ago. But compared to the historical standard of 6 months of supply, the housing market remains under-supplied, which means that home prices should continue to increase, but at a slower pace. We are beginning to see slower home price growth. In July, the FHFA home price index for home purchases grew by 6.4% compared to 7% growth for the year-to-date.

September housing starts

Tian Liu, Genworth Mortgage Insurance Chief Economist
tian.liu@genworth.com
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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