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Dueling Data Reports Offer Contradictory Housing Views

Phil Hall
Sep 26, 2018
Do you agree with me that today’s housing supply has narrowed, and mortgage demand is uncertain

Two new data reports are offering very different views of the housing market, with one pointing to increased sales and another calling out stagnant demand.
Sales of new single-family houses in August were at a seasonally adjusted annual rate of 629,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This represents a 3.5 percent increase from the revised July rate of 608,000 and a 12.7 percent rise above the August 2017 estimate of 558,000.
The median sales price of new houses sold in August was $320,200 and the average sales price was $388,400. The seasonally-adjusted estimate of new houses for sale at the end of August was 318,000, which represents a supply of 6.1 months at the current sales rate.
However, the latest the Redfin Housing Demand Index continued the four-month trend of static activity, with new data finding the index barely rising 0.3 percent from July to 125.2 in August. On an annualized measurement, the Demand Index is down 11.9 percent.
Redfin added that the number of homebuyers requesting tours fell 3.5 percent year-over-year in August, the third consecutive month of annual declines. The number of homebuyers making offers dropped 20.2 percent from August 2017, the sharpest annual decline since March 2016.
"The housing market is past the heydays of spring and early summer, when most homes received multiple offers from buyers desperate to get a home under contract," said Taylor Marr, Redfin Senior Economist. "Several factors are contributing to stalling demand. Tax reform and higher home prices are causing homebuyers to be more careful about their decision-making. Meanwhile buyers on the West Coast are finding that a growing supply of homes can work in their favor, enabling them to be more selective and make less aggressive offers. While overall demand still remains strong, easing inventory pressure is allowing homebuyers to be more careful in their purchases."
Genworth Mortgage Insurance Chief Economist Tian Liu added, “The strong shift in housing demand towards owner-occupied housing will continue to underpin new home sales because that demand must ultimately result in higher housing construction and sales of new homes. However, that demand is currently being weakened by rising interest rates and rising home prices on existing homes. This provides an opportunity for homebuilders to expand sales provided they can find workers and maintain cost control.”

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