Housing activity was up in the first half of 2018 but is beginning to show signs of a potential slowdown.
Despite a strong job market and demand from maturing millennials, existing home sales, which make up about 90% of all home sales, fell for the third straight month in June because of high home prices, rising mortgage rates and low supply.
Both housing starts and permits were up in the first half of 2018; however, the month of June displayed a 3.5% year-over-year (“y-o-y”) decline in housing starts.
Single-family starts were up 8.1% in the first half of 2018, while multi-family starts were up 7.3%.
Remodeling activity remains strong likely because of the upward trajectory of home prices, as well as strong consumer confidence and a robust economy with steady job growth.
Strong demand and low inventory levels continue to drive home prices higher in all markets, especially in western cities such as Denver, San Francisco and Seattle.
The stock performance of four subsectors of the industry have underperformed the S&P 500 Index over the past 12 months, while two subsectors (Building Products Distributors and Lumber and Wood Products Manufacturers) have outperformed.