This past week’s impressive housing data had little impact on mortgage markets, and rates again held steady near record low levels.
The spectacular rebound in the housing sector from weakness during the spring due to the shutdown of much of the economy due to the coronavirus has continued. In August, sales of previously owned (existing) homes, which make up about 90% of the market, rose to the highest level since 2006. National median existing-home prices were up 11% from a year ago.
Inventory levels were down 19% from a year ago and remained the primary trouble spot. The number of homes for sale was at just a 3.0-month supply nationally, well below the 6.0-month supply which is considered a healthy balance between buyers and sellers.
August new home sales, which account for the remaining 10% of the market, were remarkably strong as well. They increased 5% from July, also to the best level since 2006, and were 43% higher than a year ago. Unlike existing home sales, which are based on closings, new home sales measure contracts signed during the month, a more current indicator of activity.
Several factors have helped boost home sales activity over the last few months including record low mortgage rates and pent up demand from March and April when many people were reluctant to buy or sell a home. In addition, the pandemic has increased the desire to live in larger homes and in less densely packed regions.
Investors will remain focused on medical advances to fight the coronavirus. Beyond that, the monthly Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the core PCE price index, the inflation indicator favored by the Fed, will come out on Thursday. The ISM national manufacturing index also will be released on Thursday.
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