Market Forecast: Existing Home Sales, FHFA House Price Index, and New Home Sales
Markets are closed today in observance of Dr. Martin Luther King Jr. Day. The US government remains in a state of partial shutdown, delaying the release of some economic indicators, including the new home sales report. The existing home sales report is scheduled to come out on Tuesday and the Federal Housing Finance Agency (FHFA) house price index is scheduled for Wednesday.
Existing home sales or resales account for approximately 90% of residential real estate transactions. Resales increased in November, up 1.9% month-over-month to a seasonally adjusted annual rate of 5.32 million units, the second straight month of gains. Three out of four regions improved, with only the West declining, possibly because of the California wildfires. Although housing activity started to slow in 2018, a year-end drop in mortgage rates spurred some new purchase and refinance mortgage activity.
The FHFA house price index tracks the month to month changes in the values of homes financed through conventional mortgages. Though the data subset is smaller than that of the more comprehensive S&P CoreLogic Case-Shiller home price index, it is still used to gauge home price appreciation trends. In October, the FHFA house price index appreciated 0.3% month-over-month and 5.7% year-over-year. After several years of heated housing markets, house price appreciation has started to slow, a welcome reprieve for home buyers looking to enter the market in 2019.
The new home sales report accounts for approximately 10% of all residential real estate transactions. The release of the November new home sales report was delayed due to the partial government shutdown, and the release of December’s figure may also be delayed if the shutdown lasts through Thursday.
Mortgage rates have not moved significantly this month amidst political uncertainty surround the US government shutdown and pending global economic disruptions like Brexit. Due to the government shutdown, many furloughed government employees have not received paychecks. If you have questions about your existing mortgage or originating a new loan during the shutdown, please consult me or your financial advisor.
Sources: CNBC, Econoday, MarketWatch, Mortgage News Daily