Weekly Economic Review: Existing Home Sales Rebound Despite Low Supply

Posted by Laine Smith on 10/22/17 2:44 PM

Topics: Economy

In this week’s economic review, existing home sales posted their first gain in months and home builder optimism increased as housing starts and permits came in below low-end estimates.

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Housing Market Index

After easing from very strong levels over the last couple months, home builder optimism bounced back strongly in October with a 4-point gain. At an overall level of 68, strength in the report was led by future sales, up 5 points to a level of 78, with current sales also jumping 5 points to a level of 75.

The traffic component, however, continues to trend below the breakeven level, coming in at a level of 48 with a 1 point gain for the month.

Housing Starts

The September housing starts report came in weaker-than-expected with starts falling 4.7 percent, well under low-end estimates. Permits fell 4.5 percent.

The positive of the report was the increase single-family permits, which jumped 2.4 percent to an 819,000 rate and a year-over-year gain of 9.3 percent. Multi-family permits, however, fell 16.1 percent to a 396,000 rate and a yearly rate of minus 24 percent.

Existing Home Sales

After four months of declines, existing home sales posted a gain of 0.7 percent in September. While the sales rate stands at an annualized 5.390 million, the September sales increase came at a price discount with the median price falling 3.2 percent to $245,100. The median sales price still stands at a respectable 4.2 percent year-over-year gain.

Supply on the other hand remains very tight with 1.9 million resales on the market. Though supply was up 1.6 percent in September, the yearly inventory is down 6.4 percent and remains at a limited 4.2-month supply.

This week in the economy:

  • Mortgage rates fell as of October 19th. The 30-year average fixed rate was 3.88 percent with 0.5 points, according to Freddie Mac.
  • Purchase applications increased a seasonally adjusted 4 percent in the week of October 13. Refinancing applications climbed after falling for a month straight with a 3 percent gain. Despite the increase, the share of refinance activity fell 0.4 percent to 48.6 percent.
  • In the week of October 14, jobless claims returned to pre-hurricane levels, coming in at a lower-than-expected 222,000. This reading marks the lowest level of initial claims in 2017. The 4-week average is down 20,500 to 248,250.
  • After posting two significant drops, the Bloomberg Consumer Comfort Index climbed 1.2 points to a level of 51.1.

The economic calendar for the week of October 23rd, 2017:

  • Wednesday – MBA Mortgage Applications, FHFA House Price Index, New Home Sales
  • Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Pending Home Sales Index
  • Friday – GDP, Consumer Sentiment

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