Daily Spotlight

Housing Market a Help to GDP

The housing market collapse may have led to the 2007-2009 bear market, but it isn't the cause of the sharp sell-off in 2020. Indeed, prior to the escalation of the spread of the coronavirus and the ensuing economic shutdown, the housing market was holding up. The S&P/Case-Shiller National Home Price Index is one of the most closely watched barometers of the housing market. Data for December 2019 showed that prices gained 3.8% year-over-year, up from 3.5% in November. Looking into 2020, we expect to see an abrupt drop in activity in 2Q and a slow recovery in 2H20. This outlook is based on our review of several leading industry supply-and-demand indicators. These include inventory levels, which had been getting tight: currently there is a 3.1-month supply of existing homes for sale (the average range is 3.5-5.5 months), according to the National Association of Realtors. We also track new home sales, which according to the U.S. Census Bureau were running at a 764,000 per year rate through February, up 8% month-to-month but up 19% year-over-year. Meanwhile, building permits in January were up 18% year-over-year, and borrowing costs have eased as the Fed has lowered rates and is buying back mortgage bonds. ...  see an abrupt drop in activity in 2Q and a slow recovery in 2H20. This outlook is based on our review of several leading industry supply-and-demand indicators. These include inventory levels, which had been getting tight: currently there is a 3.1-month supply of existing homes for sale (the average range is 3.5-5.5 months), according to the National Association of Realtors. We also track new home sales, which according to the U.S. Census Bureau were running at a 764,000 per year rate through February, up 8% month-to-month but up 19% year-over-year. Meanwhile, building permits in January were up 18% year-over-year, and borrowing costs have eased as the Fed has lowered rates and is buying back mortgage bonds.   more

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