Housing is an emotional purchase and the way we ‘feel’ about the market influences our buying decisions. The housing industry fell into a vicious cycle when the second-half of 2018 performed worse-than-expected after 2017 performed better-than-expected.
National new home sales* increased every year since 2011. Surprisingly, last year’s housing slowdown in the second half of the year was not enough to offset the strength during the spring selling season; full-year 2018 finished 0.7% higher than 2017. National new home sales are 4% higher than last year year-to-date through July and are on track for the best year since 2007.
Through the rest of the year, the 2018 comps should be easy to beat. New home sales fell 24% from August to December 2018 compared to the same period in 2017. For reference, sales only fell 11% from August to December 2017 compared to 2016. The graph below uses our Zonda data to show some top markets that experienced outsized drops last year.
*Not seasonally adjusted monthly data as reported by the U.S. Census Bureau
Rebounding from a slow year can provide a bump to the housing market at a time that:
Mortgage rates are at three consecutive months sub-4.0%
Expectations about the economy drive behavior. As we see year-over-year increases in home sales throughout the rest of the year, especially double-digit growth rates in some markets, consumers could view now as a good opportunity to enter the market driving additional sales.
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