As summer wound down in August, key housing data did too.
High prices and low inventories curtailed Existing Home Sales in August. The National Association of REALTORS® (NAR) reported that Existing Home Sales fell 1.7 percent from July to an annual rate of 5.35 million units versus the 5.42 million expected. From August 2016 to August 2017, sales were up just 0.2 percent.
Meanwhile, 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 annualized 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 construction may still 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, which make up the biggest share of the housing market, rose 1.6 percent. Multi-family dwellings fell 5.8 percent from July and are down 23 percent from August 2016. Building Permits, a sign of future construction, rose 5.7 percent from July, hitting their highest level since January.
While home sales and Housing Starts declined, home prices continued to increase. The S&P/Case-Shiller 20-city Home Price Index showed a solid increase of 5.8 percent from July 2016 to July 2017.
Also of importance, the Federal Reserve announced it will begin 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 have 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. If you have any questions about home loan financing, please get in touch.