Housing Industry Could Get ‘Choppy’ in the Months Ahead

Filed in Economics by on October 6, 2017 1 Comment

In his remarks in the latest issue of Eye on the Economy, NAHB Chief Economist Robert Dietz provided the following overview of the housing market:  

Despite ongoing positive market conditions, recent home sales data have come in below expectations. And in the months ahead, housing data is expected to be choppy as the economic impacts of hurricanes Harvey and Irma are registered.

Contracts for sales of new single-family homes fell an estimated 3.4% in August. Though sales have trended flat through the middle of 2017, year-to-date sales are 7.5% higher than they were at this point last year. While inventory has risen to a healthy 6.1 months’ supply, affordability remains a primary concern, especially as interest rates will continue to rise into 2018.

Similarly, the pace of pending sales of existing homes declined for the fifth time in the last six months, falling an estimated 2.6% in August. The low levels of inventory, particularly entry-level homes, is restricting sales growth in both the existing- and new-home markets. The good news is that economic conditions remain stable, and recent NAHB analysis shows an increase of consumers planning to purchase a new home in the near term.

For further insights, go to the Eye on Housing blog.

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  1. Keith Gumbinger says:

    A lack of available for sale inventory and affordability issues are likely to keep home sales only at a simmer despite very favorable interest rates. It would seem that the audience most willing to buy (and especially first-time buyers) are struggling to find affordable, desirable homes to purchase. More construction may help, but only if new homes coming into the market are at a given price point and have desired amenities and locales. This could prove a challenge, given that many of the strongest housing markets are in areas where building is a complicated and lengthy process.

    It may be that the significant number of formerly-available-for-purchase homes that have been turned into rental properties represent the wildcard. If even some investors decide that the best chance to realize earnings from strong home price growth is by selling, there is at least a chance that a current investment property could again become available for purchase. Every instance of this would tend to help loosen the market to a degree.

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