Weakness In The Housing Market

There haven’t been any new data points on housing in the past few days. No economic reports came out on Veteran’s day.

The next big reports will be the housing price index on November 19th and the starts report on November 20th.

Even though there isn’t new data, I have charts which show existing data with new perspectives. The September CoreLogic report on home purchases has a lot of great metrics to review.

As you can see from the chart below, the home price index was up 0.4% month over month and 5.6% year over year in September.

CoreLogic expects future weakness as the October index is predicted to fall 0.6% month over month. The year over year growth rate in September 2019 is expected to be 4.7%.

CoreLogic expects a steady decline in year over year growth in the Case Shiller index in 2019 as well. CoreLogic has no reason to be negatively biased.

That’s just what could happen because homes aren’t affordable. If there’s a recession, these estimates will be too optimistic.

Housing – Millennials Want To Buy, But Have An Affordability Problem

CoreLogic included a survey of younger millennials. This makes sense because they are going to drive housing demand in the next 5 years.

The most common age in America is 27. First time home buyers are usually in their lower 30s.

Home buying has been delayed a few years. But it will still occur if the economy holds up. It’s pivotal to recognize the trends while understanding they aren’t destiny.

That’s very good for the housing market in the long term that America has positive demographics. However, a lack of affordability or a recession can impact the timing of the spike in demand.

In the survey, 80% of young millennials said they will move in the next 4-5 years. A strong labor market is helping millennials get passed their high student loan debt and into a house.

A 20% down payment is no longer the norm. It’s not a big stretch to buy a home. That is if they have a good job and live in a neighborhood with affordable housing.