Housing market should be healthy for the rest of 2019: First American
Home sales continued to perform in line with their potential in September and indicators suggest housing will keep flourishing through the fourth quarter, according to First American.
The potential for existing-home sales in September was 5.48 million units on a seasonally adjusted annualized rate, a scant 0.02% decline from August, but an increase of 3.8% from September 2018.
Meanwhile estimated sales for the month were just 2,340 SAAR units below that potential, or 0.04%. The market performance gap decreased by an estimated 94,000 SAAR units in September compared with August. Home sales were 0.8% above their market potential in August, compared to 0.05% in July.
"Housing is the most durable consumer good we'll ever buy, and surging house-buying power fuels greater potential demand," Mark Fleming, First American's chief economist, said in a press release. "You can't buy what's not for sale, but rising existing-home sales means more homes on the market, helping to meet the growing demand.
"While several factors may trigger a directional switch for market potential, the current environment of low mortgage rates and wage growth driven by a strong labor market, supports a healthy housing market for the remainder of 2019," he added.
In September, house-buying power increased to $420,250, up 15% over the same month one year prior.
That boost to house-buying power "increased the market potential by 415,090 home sales, more than 10 times the annual gain in market potential boost of just 34,390 potential home sales in September 2018," Fleming noted.
While growth in tenure length — the time an existing-home owner remains in their property — has been slowing since March, it is still having an effect on the housing market.
"In September 2019, the impact of increasing tenure length on market potential resulted in a loss of 137,230 potential home sales, but that is dramatically less than the 421,260 in September of last year," Fleming pointed out.