United States: are cracks appearing in the residential market?


The National Association of Home Builders (NAHB) Housing Market Index, which gauges builder confidence, fell from 68 to 60 in November, a sharper fall than at any time since 2014. The index now stands at its lowest level since the summer of 2016. The sharp fall hit both current and future levels of single-family home sales and was broad-based, affecting many regions across the US. Historically, falls in this index precede falls in housing starts by several months.


This drop marks another sign of a slowdown in the US residential sector. In October, building permits, which are less volatile than housing starts, were 3% lower than the same time last year. As mentioned in a previous Chart of the Week, higher mortgage rates are making US property more expensive and the shift now appears to be affecting activity levels in the residential market. The question is, will this slowdown become a downturn?

The opinion expressed above is dated November 22th 2018, and liable to change.

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