US Housing Market is Resilient

The US housing market will be in focus this week.

Leading up to the C-19 coronavirus chos, the United States housing market was showing incredible resilience, and even promised to be the strongest year since the Great Recession, as home sales at the beginning of Y 2020 reached the highest mark since Y 2008. 

The strength of the housing market coming into Y 2020 was in part due to very low mortgage rates along with scarcity of homes for sale and strong employment and income growth. Then came the instant recession, followed by an amazing V-shaped recovery.

We expect home price growth in May to show a 12-month increase of more than 4%, while the national forecast through March 2021 suggests deceleration of price growth to 0.5%, but no significant decline. 

But, some economists are suggesting home sales are expected to have decline 5.6% in May to a seasonally adjusted 4.09-M units, up from a 17.8% fall in April.

The National Association of Realtors’ (NAR) existing home sales data is measured by contract closings as opposed to contract signings, which are measured by pending home sales.

Given the sharp 21% M-M decline in pending home sales during April, some expect another decliner in existing home sales in May.

The expected pickup in buying activity due to easing of social distancing restrictions by many US states may be reflected in existing home sales reports in coming months.

Furthermore, new home sales are expected to have bounced 1.9% in May to a seasonally adjusted 635,000 units, up from a 0.6% increase in April.

Easing of restrictions on mobility and nonessential business activity suggests contract signings for newly built homes likely rose solidly during the month, plus the weekly volume in mortgage loan applications has been increasing substantially since bottoming in April.

All should be positives for the housing market in the near term.

Have a healthy day, Keep the Faith!