Housing Market Supply

Chart Housing Market Supply
During 2018 the housing market and particularly the new home market began running into headwinds from rising mortgage rates and increased materials costs, causing consumers to exercise a greater deal of caution when considering buying a new home. As we moved through the back half of 2018 and into 2019, input costs and transportation costs remained elevated, leading to sluggish demand and a slowdown in real estate appreciation. However, in late 2018, U.S. interest rates began falling, which was expected to provide some relief to the softening housing market. Unfortunately, the fall of mortgage rates has not been enough to offset housing market softness, particularly in the new home market. As can be seen in the chart above, since the beginning of 2018 the supply (in months) of new and existing homes has risen, and fairly sharply when looking at new homes. If mortgage rates continue to move lower, it could provide the consumer the push they need to get back into the housing market, but that has not been the case thus far.