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Forecasts for Existing and New Home Sales (September 2019)

mattspeakman

Home sales, both existing and new, have followed an inconsistent path for much of 2019, and despite recent trends pointing to signs of a strengthening housing market, September's figures are likely to be a modest step backward.

August's figures represented the second straight year-over-year gain for existing sales, following 16 consecutive months with a year-over-year decrease. Much of this recent success can be attributed to mortgage rates, which have stayed low for the better part of the year and finally appear to be enticing would-be buyers into entering the market. However, despite favorable conditions that low rates theoretically bring, home shoppers continue to be hamstrung by a shortage of for-sale inventory, especially at the lower-priced, entry-level end of the market. The number of U.S. homes for sale in September was the lowest since at least 2013.

New home sales also are riding a recent high, and while September should see volume of new home sales decline from August, sales remain decidedly higher than last year: 2019 is shaping up to be the best year for new home sales since 2007.

More homes are definitely needed to meet demand, and market watchers are looking to home builders to help fill the void. Construction activity remains steady and builder sentiment continues to stand strong in the midst of increasingly uncertain economic outlook, which is a positive sign for the industry. But challenging building conditions, brought about by land shortages and high regulatory costs, are forcing builders into constructing more expensive homes, rather than the much-needed entry-level homes.

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