Decent Spring Buying Season on Tap

• GDP
• Unemployment
• Interest Rates
• Inflation
• Business Spending
• Energy
• Housing
• Retail Sales
• Trade Deficit

Slower home-price growth along with lower mortgage rates and growing inventory indicate that the spring buying season will be fairly solid.

Housing starts and building permits declined in February, signaling that the downtrend in residential construction will continue over the next few months. Total housing starts tumbled 8.7% in February, reversing the 11.7% surge in January. Starts are now below their level for February 2018. Single-family starts declined 17% as typical winter weather returned across the nation. (Milder weather across much of the country jump-started construction activity in January.) Multifamily starts rebounded 17.8%, following declines in the previous two months. Building permits, which are a bellwether for future residential construction, dropped 1.6% in February after declining in January, too.

New-home sales rose 4.9% in February amid supply backlogs. Buyers were likely prompted by significant discounts and the fall in mortgage rates since November. Many areas still face shortages of skilled workers, which is slowing down the pace of residential construction. The slow growth in new single-family construction means that inventory remains tight: There were 340,000 such homes listed for sale at the end of February, down by 0.6% from January.

See Also: A Housing Shortage Looms as Builders Can't Keep Up

Existing-home sales bounced back in February, thanks to lower mortgage rates. Sales of existing homes jumped 11.8% from January to a seasonally adjusted rate of 5.51 million — the largest gain since 2015. Inventory has started to grow, but still sits close to historical lows. The inventory increases in recent months indicate that more homeowners are putting their homes up for sale, even as price growth is slowing down across the nation. On a year-to-year basis, total inventory was up 3.2% in February from a year ago. It would take four months at the current pace to sell through it. Properties stayed on the market for 44 days in February, up from 37 days a year ago.

Home-price growth hit its slowest pace since April 2015. The S&P CoreLogic Case-Shiller National Home Price Index rose 4.3% in January from a year ago, down from 4.6% growth the month before. Home-price growth has declined on a year-to-year basis for 10 consecutive months. Las Vegas saw the largest annual increase at 10.5%, followed by Phoenix at 7.5%. Once-hot housing markets on the West Coast have slowed sharply in recent months. Annual price gains in Seattle dropped from nearly 13% in January 2018 to 4.1% in January 2019. San Francisco saw price gains shrink from 10% to 1.7% over the same period.

Sources:

• National Association of Realtors: Existing-Home Sales
  
• Department of Commerce, New-Home Sales
  
• Department of Commerce, Housing Starts