Residential Housing

October 2018

Rising prices for new and existing homes, low inventories of homes for sale, interest rates climbing to heights not seen since before the recession, all combine to dampen the growth trajectory for housing.  While housing is still strong compared to a year ago, it will not be able to continue averaging such strong growth rates this year.  An average rate of 1.2 million starts represents a strong housing market in this new, post-crisis world.

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Existing Home SalesExisting Home Median Sales Price

Implication

September saw another decline in existing home sales. This month was down -3.3% from August and down -4.1% from September 2017.  Every month in 2018, except February, has seen a drop from the same month in 2017.  High prices for existing and new homes, increasing interest rates, combined with low inventories and reduced consumer interest in moving are all contributed to this downward trend.

5/1 ARM

Implication

Trend in September saw ARM’s approaching 4.0%. As of mid-October, rates are above 4%, and likely to rise further before 2018 ends.

30 YR Fixed Mortgage

Implication

Creeping to 5.0%, the 30-year fixed rate is already over that in some areas and likely to climb.  Added cost of a 100 to 150 basis points to a monthly payment is greatly impacting housing affordability.

2018-11-01T12:45:11+00:00