Existing-Home Sales, Builder Confidence Soar

September 23, 2020

 

Overview: The economic data released over the past week, while quite strong, had little impact on mortgage markets. It was a relatively quiet period, and rates again held steady close to record-low levels.

The housing market continues to experience a swift rebound in activity. In August, existing-home sales rose to the highest level since 2006, and median existing-home prices were 11% higher than a year ago. Several trends have been supporting home sales lately, including low mortgage rates, a desire for more space from people working at home, and a shift out of densely populated cities.

 

Once again, a shortage of homes on the market held back even more impressive sales activity. Total inventory of existing homes available for sale was at just a 3-month supply and 19% lower than a year ago, far below the 6-month supply that is viewed as a healthy balance between buyers and sellers.

 

While inventory levels have remained an issue for quite a while, there was encouraging news on this front. In August, single-family housing starts rose 4% from July, and applications for permits to build, a proxy for future construction, increased 6%. In addition, the National Association of Home Builders (NAHB) housing index showed that builder confidence jumped from 78 to 83, smashing the old record.

 

Existing Home Sales (millions)

 

Week Ahead

September 24 — New Home Sales report

September 25 — Durable Goods report

October 1 — Core Personal Consumption Expenditures (PCE) Price Index

October 2 — Employment Report

 

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