Weekly Economic Report

Weekly Economic Report 8.1.2017

KEY MARKET INDICATORS as of Aug 01, 2017

Key Market Indicators 8.1.17

June New Home Sales, Q2 Homeownership Rate

New home sales increased by 0.8% in June to a seasonally adjusted annual rate (SAAR) of 610,000 units. During the first half of the year, new home sales had an annualized run rate of 607,000 units, which was an increase of 11% (or close to 50,000 units) from a year ago. While this is what we expected at the beginning of the year (~10% year over year growth), it remains well-below what is needed to satisfy rising demand. The imbalance in the housing market today between demand and supply is especially large at the lower-price segment, where demand is strong but supply has seen relatively little growth. Sales of new homes priced below $300,000 grew by just 11% between 2014 and 2016, while demand from first-time homebuyers has grown by 36% during the same period. We are hearing that homebuilders are beginning to turn their attention to this market segment, and growth appears to be accelerating this year. But clearly not enough to remove pressure on inventory and home prices in the near term. Regionally, both the West and the Northeast reported strong year over year growth in new home sales in June. For the first-half, year over year growth rates ranged from the high-teens (West) to the high-single digit (South).

Homeownership rate climbed in the second quarter to 63.7% during the second quarter, compared to 62.9% a year ago (that was the lowest level in 50 years). Compared to a year ago, the number of households that are home owners increased by 1.26 million, while the number of renter households decreased by 702,000. The result points to the same trend as we are seeing in the increasing number of first-time homebuyers as they transition from renting to owning homes.

Weekly Economic Graph 8.1.17

* FHFA Purchase-Only Home Price Index

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