It's the Economy That Matters: Most Recent Housing Market Trends

Several key economic indicators are released every week to help provide insight into the overall health of the U.S. economy. Policymakers and advisors closely monitor these indicators to understand the direction of interest rates. The data trends can significantly impact business decisions and financial markets. Last week, a handful of releases provided insight into the current state of the housing market, and this article takes a deeper look into three of them: existing home sales, building permits, and housing starts. These indicators will have an impact on home builders and residential real estate ETFs such as Invesco Dynamic Building & Construction ETF (PKB A), iShares U.S. Home Construction ETF (ITB A), SPDR S&P Homebuilders ETF (XHB A+), and iShares Residential and Multisector Real Estate ETF (REZ A-).

In the week ending on May 18th, the SPDR S&P 500 ETF Trust (SPY A) rose 1.72% while the Invesco S&P 500® Equal Weight ETF (RSP B+) was up 1.22%.

Existing Home Sales

Existing home sales retreated for a second straight month in April, slowing the momentum from a few months before. The existing home inventory is currently extremely limited. Homebuyers are reluctant to deal with the prevailing high mortgage rates in the market. As a result, existing home sales fell 3.4% in April to a seasonally adjusted annual rate of 4.28 million units. The latest data came in below expectations of a 0.1% month-over-month increase to 4.30 million units.

The scarcity of available homes has created intense competition among buyers, leading to multiple offers and subsequent price increases. In April, the median price for an existing home climbed for the third consecutive month to $388,800. This marks a 3.6% rise from March and the largest monthly increase in a year.

Existing Home Sales