Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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Consistent with the trends in the starts and permitting data, new and existing home sales data has been generally weak over the last six months following a strong start to 2018. Existing Home Sales stabilized in November, rising to a Seasonally-Adjusted Annualized Rate of 5.32 million, topping estimates of 5.20 million. This was the first month since April that EHS data topped consensus estimates, snapping a six month skid of missed expectations. Despite the beat, existing sales remain lower by 7.0% on a SAAR basis and 2.6% lower on a TTM basis. New Home Sales, however, remain higher by 5.2% on a TTM basis.


We continuing to reiterate that weak trends in existing home sales are not necessary a cause for alarm at this point. By historical standards, new home sales remain at mid-1990s levels and even lower after adjusting for population growth. The growth in existing home sales have slowed since 2015, but this rate remains healthy by historical standards. Too many existing home sales (as we saw from 2003-2006) indicate that either mortgage standards have gotten overly loose or short-term housing flipping activity has increased. At around 7% per year, the turnover rate of existing homes is roughly in line with pre-2000 levels. New home sales remains the key indicator to watch to accurately gague the overall health of the single family housing industry.


Of note over the last several months, however, is that new and existing home inventory is no longer receding, turning positive on a year over year basis for the first time since May 2015. The tight supply of existing homes has been blamed for moderate home sales activity and there is hope that a slight loosening of conditions may lead to increased transaction activity. Looser conditions in the single family markets are also expected to slow the pace of home price appreciation, which has risen at more than double the rate of inflation since 2012. In November, however, EHS inventory declined for the second straight month following a steady rise througout the summer. At 3.9 months, EHS supply in November 2018 is consistent with November 2017 at 3.9 months.


#homesales #inventory

  • Alex Pettee, CFA


Housing starts bounce back in November, led by a jump in multifamily building. The trailing twelve month growth rate for total housing starts, however, slowed to 4.4% from 5.4% last month. Multifamily starts jumped to 5.2% on a TTM basis, a sharp recovery after dipping as much as 10% on a TTM basis as recently as February.


Permit data has yet to confirm the recent recovery in multifamily building activity as multifamily starts remain lower on a TTM basis by 2.3%. Single Famiy starts continue to moderate to the weakest level since 2015.



  • Alex Pettee, CFA


The NAHB Homebuilder Sentiment gauge tumbled to the weakest level in more than three years as the combination of rising mortgage rates, persistently rising housing costs, and signs of softness across the housing market continue to weigh on builder optimism. All three index components dipped from last month with buyer traffic dipping to 43. On the regional level, the Northeast suffered a steep decline from 52 to 37, the lowest since March 2015.


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