Market Watch

Housing Data Cooled to Close Out Summer 

Home sales and Housing Starts cooled in August, but Building Permits were hot.

The National Association of REALTORS® reported that Existing Home Sales fell

1.7 percent in August from July to an annual rate of 5.35 million units versus the 5.42 million expected. Sales were up just 0.2 percent over the prior year.

Mother Nature dampened New Home Sales data. The Commerce Department reported that Hurricanes Harvey and Irma impacted data reporting for August, driving New Home Sales down 3.4 percent from July to an annual rate of 560,000 units. Sale status was collected for only 65 percent of cases in Texas and Florida counties affected by the hurricanes versus the normal response rate of 95 percent. New home inventory had a 6.1-month supply in August, up from 5.7 in July, which was a welcome sign.

New construction may encourage buyers yet this fall, but the numbers weren’t favorable in August. The Commerce Department reported that Housing Starts fell for the second straight month, slipping 0.8 percent from July to an annual rate of 1.18 million units. On a positive note, year-over-year Housing Starts rose 1.4 percent. Single-family starts, the biggest share of the housing market, rose 1.6 percent. Building Permits rose 5.7 percent from July, hitting their highest level since January.

Home prices continued to increase. Research firm CoreLogic reported that home prices rose 6.9 percent from August 2016 to August 2017, up from a 6.7 percent annual gain in July.

News From the Fed
The Federal Reserve announced plans to unwind its massive $4.5 trillion balance sheet starting on the ninth business day of October and continuing every ninth business day of the month thereafter. The balance sheet is made up of Mortgage Backed Securities and Treasury Bonds. The plan is designed to cause little disruption to the market. Seeing that this has never been done before, it remains to be seen what happens over time to Mortgage Bond prices and the home loan rates tied to them.

For now, home loan rates remain just above all-time lows. Stay tuned for your next quarterly update in January.