Don’t Miss A Weekly Economic Report – Subscribe To The Genworth MI Blog Today!
We’ll email you each time a new Economic Report has been posted.
KEY MARKET INDICATORS as of May 01, 2018
March Home Sales and Q1 Housing Market Update
The housing market reported moderately higher monthly sales of both new and existing homes in March compared to February. (see post on February Home Sales) Compared to a year ago, existing home sales were down in Q1, but new home sales reported continued growth, with growth especially strong in the West region. We are seeing a transition from renting to homeownership, and this is showing up in higher homeownership rate, with the fastest growth coming from younger households. This has created a positive momentum for new construction. New construction expanded in March and Q1, but remains insufficient to meet the strong demand. And that is why home price growth is accelerating.
Existing home sales increased 1.1% m/m to a seasonally adjusted annual rate of 5.60 million units in March. For the quarter, existing home sales were down 2% from a year ago, with declines in every region except the South. Inventory level increased seasonally in March, rising 5.7% to 1.67 million units. Despite this increase, housing supply remained near record-low levels, with the implied supply at 3.6 months at current sales pace. Homes were sold quickly after listing. Typical homes stayed on the market for just 30 days in March vs. 34 days a year ago. The tight housing market condition continued to drive home prices higher, with the median home price up 5.8% from a year ago to $250,400. The combination of strong demand and lagging supply means that home price growth is likely to accelerate in 2018, and the latest home price data from the Federal Housing Finance Agency showed that home prices are more than 7% higher in the first two months of the year compared to a year ago. We expect that the housing market will continue to be a seller’s market, with strong home price growth.
New home sales reached a seasonally adjusted annual rate of 694,000 units in March, up 4% from the previous month. For the quarter, new home sales were up 9.6% from a year ago, with new home sales up around 24% in the West, and up 8% in the South. We believe that new home sales will see stronger growth than existing homes this year.
Housing starts increased 2% m/m to a seasonally adjusted annual rate of 1.319 million units in March. The increase was driven by a 16% m/m increase in the multi-family segment. Single-family housing starts decreased by 3.7% m/m to 867,000 units in much, but are up by 7% from a year ago in Q1. The increase in single-family housing starts was again led by the West region with an increase of 27%. The demand for new homes remain strong, and housing starts should continue to grow.