Weekly Economic Report

Weekly Economic Report 7.24.2017

KEY MARKET INDICATORS as of July 24, 2017

June Housing Starts, Existing Home Sales

Housing starts rebounded in June to a seasonally adjusted annual rate (SAAR) of 1.215 million units, an 8.3% increase from the revised May figure. The increase was due to higher starts in both the single-family (up 6.3% m/m) and the apartment housing segment (up 15.4% m/m). During the first half, growth in housing starts turned from apartments to single-family units as we expected. Compared to last year, single-family housing starts grew by around 8%, but apartment segment fell by 5%. Regionally, there was surprising strength coming from the Western region (up almost 12% y/y), which was led by a 14% growth in single-family starts. Single-family starts were up in the high-single digit range in the South and Midwest. But the pullback in the apartment segment dampened growth in total housing starts outside the West region.

Existing home sales decreased 1.8% m/m to a seasonally adjusted annual rate of 5.52 million units in June. Compared to 12 months ago, existing home sales were up 3.3%. The growth in existing home sales is remarkable considering that the number of homes for sale in the housing market is in fact down 7% year over year. This remains a seller’s market – unsold inventory represented 4.3 months of supply – far below the 6 months of supply that is regarded as normal. Homes were sold quickly after listing. Typical homes stayed on the market for just 28 days in June, vs. 34 days a year ago. For realtors and loan officers, this means that while homebuyers may need more time finding the right home, once they have found the right one, they will act fast to close the sale. The tight housing market condition continued to drive home prices higher, with the median home price up 6.5% from a year ago to $263,800. Interest rates on mortgages were down slightly from May. The 30-year conventional mortgage rates averaged 3.9% in June, down 11 basis points from May. In the first half, existing home sales rose by 3% y/y – slightly lower than our expectation for a 5% increase. Home sales in the West and South regions were up around 4% from a year ago, but growth were slower in the Midwest and the Northeast. The good news for the mortgage origination market is that the mix of all-cash home sales continued to trend down, reporting 18% for June vs. 22% a year ago. This means that more homebuyers used mortgages to
finance their home purchases.

Weekly Economic Graph 7.24.17

* FHFA Purchase-Only Home Price Index

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