Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

apartment REITs
homebuilders ETFs
single family rental REITs
manufactured housing REITs
student housing REITs
data center REITs
Cell tower REITs
net lease REITs
industrial REITs
storage REITs
office REITs
mall REITs
REIT Preferreds and Bonds
hotel REITs
Timber REITs
healthcare REITs
REIT ETFs
Billboard REITs
shopping center REIT
High-Yield Real Estate ETFs
Real Estate CEFs
Casino REITs
cannabis REITs
prison REITs
mortgage REITs
real estate crowdfunding
REIT Portfolio Strategy
REITs Taxes
1/1
Housing100logo.png
ETF express.png
  • Alex Pettee, CFA

Snapping 6-Month Skid, Existing Home Sales Beat Expectations


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.


existing home sales november 2018

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.


new existing home sales

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.


housing inventory

#homesales #inventory

REIT Forum HOYA AD.png