Very low mortgage rates, solid stock market performance, and a meaningful shift toward working from home are providing strong tailwinds for the housing sector, even as momentum in other areas of the economy is losing steam. Existing home sales surged 9.4% in September (following a 24.7% increase in July and 2.0% gain in August) to a very strong seasonally adjusted rate of 6.54 million units. On a year-over-year basis, sales of existing homes were up 20.9% in September. Meanwhile, tight supply and strong demand is fueling prices, with the median existing home price up 14.8% year-over-year in September. Days on the market were at an all-time low in September, with the majority of existing homes up for sale staying on the market for less than one month. The National Association of Realtors noted that demand for vacation homes is particularly strong, driven by increased flexibility to work remote. Meanwhile, total housing starts increased 1.9% in September to an annual pace of 1,415,000, led by the construction of single-family homes. Though the gain was lower than expected, due to a decline in multi-family starts, the overall report was strong with housing starts up 11.1% year-over-year. Permits (a leading indicator of future starts) increased 5.2% in September on a month-over-month basis, to an annualized rate of 1,553,000 (up 8.1% on a year-over-year basis). The National Association of Home Builders’ housing market index rose two points in October to 85, exceeding expectations, and reaching a new all-time high. With mortgage rates near an all-time low and the S&P 500 index near an all-time high, we anticipate housing trends are poised to remain solid despite a typical seasonal slowdown at this time of year.

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