U.S. Housing – Strenght or a Relapse?
Existing Home Sales came at level of 6.2 million vs. 5.7 million consensus and 5.6 million level the month before. Positive figure courtesy of late extension of first time home buyer tax credit (closing required by November) and record low mortgage rates.
Chart 1. Existing Home Sales
Source: Econoday
Looking back to the last’s week housing data it appears that the odds in favor of a relapse increased. Firstly, the National Association of Home Builders Housing Market Index was unchanged at 17 in November (the October figure was revised from 18 to 17). Looking at the graph, a clear gap between expectations component and the current components.
Chart 2. Housing Market Index (HMI) and The Three Components: 1995-Present
(Seasonally Adjusted)
Source: NAHB/Wells Fargo Housing Market Index
MBA Purchase Applications came at -4.7 % following a -11.7 % the week before. In absolute terms 210.6 reading was the lowest since 1998. More important as MBA Purchase Applications are seen as a leading indicator.
Chart 3. MBA Purchase Applications
Source: Bloomberg
Housing starts came at 529k from 590k the month before, at lowest levels in 50 years.
Chart 4. Housing Starts
Source: www.data360.org
To note mortgage rates are at rock bottom. I believe that the part of this slowdown in mortgage application and housing starts is attributable to the late extension of first time home buyer tax credit and seasonal efects, but overall, I think we are heading into housing crisis relapse.
Existing Home Sales, MBA Purchase Applications, NAHB/Wells Fargo Housing Market Index, U.S. Housing Starts