The housing market is struggling with low supply, falling affordability, and mortgage rates which have risen sharply and are now over 5% for the first time in eight years. Existing home sales fell for the sixth straight month to a
-4.1% y/y rate, and now stand at the lowest level in almost three years. Prices fell for the third straight month to +4.2% y/y and supply remains very tight at 3.4 months. Hurricane Florence may have affected the results as sales in the South fell -5.4% m/m, but it was the ninth loss in ten months. Housing starts fell -5.3% m/m to a +3.7% y/y rate. Starts may also have been affected by the hurricane as starts in the South fell -13.7% m/m but starts in the Midwest fell even more, losing -14% m/m. Permits fell for the second consecutive month to -1% y/y. Q3 GDP will be released on Friday and is expected to be around +3.5% annualized q/q, but residential investment will clearly be a drag.