The
NAR reported that Existing-home sales saw a minor decline in April, continuing
March’s drop in sales, according to the National Association of Realtors®. Two
of the four major U.S. regions saw a slight dip in sales, while the West saw
growth and the Midwest essentially bore no changes last month.
Lawrence Yun, NAR’s chief
economist, said he is not overly concerned about the 0.4 percent dip in sales
and expects moderate growth very soon. “First, we are seeing historically low
mortgage rates combined with a pent-up demand to buy, so buyers will look to
take advantage of these conditions,” he said. “Also, job creation is improving,
causing wage growth to align with home price growth, which helps affordability
and will help spur more home sales.”
Interest rate are back to almost
historic lows last seen during the Fed’s QE programs, with the 30-year
conforming fixed rate down to 3.50 percent, and High-Balance fixed rate @ 3.75
percent for a 1 point origination fee.
Refinancing applications jumped 8
percent last week, and purchase applications are 7 percent over last year,
according to the Mortgage Bankers Association, because of the most recent rate
declines, which are largely due to economic uncertainties (with outcomes of the
trade wars, in particular).
And housing starts rose 5.7 percent
on the month to a higher-than-expected annual rate of 1.235 million while
permits gained 0.6 percent to 1.296 million, which is slightly higher than
expected. But the battle is still uphill for housing as year-on-year
comparisons show: at minus 2.5 percent for starts and minus 5.0 percent for
permits.
Total
existing-home sales, https://www.nar.realtor/existing-home-sales, completed transactions that include
single-family homes, townhomes, condominiums and co-ops, fell 0.4 percent from
March to a seasonally adjusted annual rate of 5.19 million in April. Total
sales are down 4.4 percent from a year ago (5.43 million in April 2018).
Existing-sales of single-family homes, the key
component in this report, did fall 1.1 percent in the month to a 4.620 million
rate but here too the 3-month average is positive, at 4.733 million for the
best showing since August last year. Condo sales, the second and much smaller
component in the report, were a big positive in April, up 5.6 percent to a
570,000 rate.
Housing data are often volatile and 3-month averages
can offer a more balanced view, as we know, and on this basis April's results
are still good at a 5.293 million rate for the best showing since September
last year.
I see 2019 housing purchases continuing to improve,
largely because there is a disconnect between a fully employed economy (at 3.4
percent unemployment rate) and record-low interest rates. It really means too much uncertainty in the
financial markets, which translates to low demand, which leads to low overall
inflation (reason for all the retail discounting), and bottom-level interest
rates.
Consumer sentiment is also soaring at the moment, with
the U.
of Michigan survey at a 15-year high.
It will continue to boost builder optimism and housing construction that
is struggling to keep up with sales, as long as the optimism prevails. Sentiment can change on a dime, however,
should we have what is called a ‘black swan’ event (a term for something totally
unexpected, such as another trade war, or real war). And that seems to be how this administration
likes it, unfortunately.
Harlan Green © 2019
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