U.S.: Housing market struggling

3 min
Dan North
Dan North Senior Economist for North America

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.