Recent housing data are a mixed bag
The Federal Reserve fully expects the housing market to cool down this year, partly in response to the series of rate increases implemented by the Fed. Public statements by Fed officials characterize the evolving housing slowdown as “moderate” and “orderly” – a pattern consistent with NAHB’s baseline (most probable) forecast.
NAHB has been warning the Fed about large downsize risks to our respective baseline forecasts for housing. These risks are associated largely with major uncertainties regarding the behavior of investors/speculators that were such a major factor on the demand sides of single-family and condo markets in 2004 – 2005.
NAHB’s surveys of builders show deepening problems in the single-family market through June, including cancellations and resales by investors/speculators. Ongoing erosion in single-family and condo markets also is shown by sales/price data for the existing-home market (from the National Association of Realtors), and the weekly series on applications for mortgages to buy homes (from the Mortgage Bankers Association) still is rattling downward. We’re also seeing a distinct downslide in issuance of single-family building permits (data through May).
Conflicting (positive) signals are coming from the May data reported by the Commerce Department for both single-family housing starts and sales of new homes. Indeed, the starts numbers were up by 2.1% in May and new-home sales were up by 4.6% — in the face of reports from public builders and NAHB’s surveys showing ongoing erosion of housing demand. [return to top]