According to CoreLogic This Week in Real Estate no economic expansion has lasted longer than the one the U.S. is currently experiencing. Home-equity wealth has increased $10 trillion since 2011 and stands at a record $18.7 trillion as of mid-2019. The average equity per borrower increased from $75,000 to $176,000 between the first quarter of 2011 and the second quarter of 2019. Below are a few highlights from the third week of October that influence our business:
Economic Expansion Reaches Milestone. Economists have measured business cycles dating back 165 years in America, and none have lasted more than a decade. That is, until the current expansion. The economic recovery that began mid-2009 set a longevity record as it entered July 2019, and the recovery is expected to continue at least into next year. Residential building and contractor jobs are up by nearly one million from the trough in January 2011. Home prices have rebounded from their trough in all metros. The CoreLogic Home Price Index for the U.S. has recorded a 59% increase in prices since January 2011. The CoreLogic Home Equity Report has documented the rise in wealth per homeowner: between the first quarter of 2011 and the second quarter of 2019, the average equity per borrower increased from $75,000 to $176,000 and rose $5,000 in the past year alone. Aggregated across all homeowners, home-equity wealth has increased by $10 trillion since 2011 and stands at a record $18.7 trillion as of mid-2019.
Total Housing Starts Down on Multifamily, Single-Family Edges Up. According to estimates from the U.S. Housing and Urban Development and Commerce Department, single-family starts edged up in September, consistent with recent gains for the NAHB/Wells Fargo Housing Market Index (HMI). However, the headline measure of total housing starts was down 9.4% for the month due to a large decline in the volatile multifamily sector. Single-family starts increased 0.3% to a 918,000 seasonally adjusted annual pace in September. Multifamily starts declined 28.2% to a 338,000 annualized rate after a strong reading of 471,000 in August. On a year-to-date basis, single-family starts are 1.8% lower than the first nine months of 2018. NAHB’s forecast and the forward-looking HMI suggest that future data will show slight monthly gains due to recent declines in mortgage interest rates. Indeed, single-family permits have been increasing since April, and single-family starts have been rising since May as the home construction rebound continues. We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and ongoing healthy labor markets.
Builder Confidence Hits 20-Month High. Builder confidence in the market for newly-built single-family homes rose three points to 71 in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Sentiment levels are at their highest point since February 2018 and have risen 13 points since the start of 2019. The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory. The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months. All the HMI indices posted gains in October. The HMI index gauging current sales conditions increased three points to 78, the component measuring sales expectations in the next six months jumped six points to 76 and the measure charting traffic of prospective buyers rose four points to 54. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a one-point gain to 60, the Midwest was up a single point to 58, the South registered a three-point increase to 73 and the West was also up three points to 78.
