A Hopeful Finish to a Decade of Market Instability and Underbuilding 

The 2010s threw some big punches at the housing market as the nation tried to pick up the pieces after the housing bubble burst. Many local builders folded under the tremendous financial pressure, leaving the field to fewer players who then turned to the more lucrative luxury market—hello, housing shortage. But now, at the turn of the decade, things may be looking up as new home sales hit a 12-year high in October and the low mortgage rates stimulated increased home sales. Still, as millennials age into homebuying, the shortage will continue to affect the health of the market. 

The year of rejuvenation continues for the domestic-focused U.S. real estate sector following one of the toughest years for REITs and homebuilders since the financial crisis. For the U.S. housing industry, the story of this year continues to center around the resilient demographic-led growth in household formations along with the sharp pullback of the 30-year fixed mortgage rate, which has stimulated renewed activity across nearly all segments of the housing industry. Perhaps best illustrating this rejuvenation, residential fixed investment offered a positive contribution to GDP growth in the third quarter of 2019 for the first time since the fourth quarter of 2017.1

New Home Sales recorded its strongest two months in more than twelve years in September and October as sales were higher by 31.6% compared to a year ago in October on a seasonally-adjusted annualized basis.2 Building Permits reached new 12-Year Highs in October while Housing Starts are higher by 8.5% compared with a year ago in October on a seasonally-adjusted annualized basis.3 The Mortgage Bankers Association Builder Application Survey data for October, meanwhile, showed mortgage applications for new home purchases increased 31.5% compared to a year ago.4

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