This week’s housing data suggest that the housing market remains strong, underpinned by strong demand, low mortgage rates, and tight supply. Most of the data were in line or slightly below expectations, suggesting that housing trends remain solid but aren’t overheating. Total housing starts rose 6.3% in June to an annual pace of 1,643,000, in line with expectations. Single-family starts rose 6.3% in June while multi-family starts were up 6.2%. On a year-over-year basis, housing starts were up 29.1% in June, due in part to a decline in activity due to the pandemic last year. Permits fell 5.1% month-over-month in June, with declines for both single- and multi-family housing. Existing home sales rose 1.4% in June to a seasonally adjusted rate of 5.860 million units, slightly below the consensus forecast. Mortgage rates remain near historic lows, with the average for a 30-year loan at 2.78%, according to Freddie Mac. However, home prices are firm (up 14.9% year-over-year in April, according to the Case-Shiller 20-city home price index), due in part to tight inventory. We will get an update on home prices next week. The NAHB/Wells Fargo housing market index eased by one point to 80 in July, reflecting a modest decline in buyer traffic.
