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The third quarter report by the U.S. Department of Commerce on gross domestic product shows "the very definition of a 'Goldilocks' economy," except in its housing data, revealing some warning signs.
Investment in residential property dropped four percent in the quarter, the third consecutive such decline. The last time investment decreased three times quarter-over-quarter was in late 2008 to early 2009, Bloomberg reports, and compounding this trend, new-home sales dwindled to the slowest pace in two years in September. The existing-home sales rate has hit a three-year low. Additionally, the monthly housing payment for the average American home has increased 16 percent from January 2018 to today, and three percent annually.
Now, no one is calling for a real estate crash, but it’s clear that 30-year fixed mortgage rates hovering around 5 percent — the highest since 2011 and up from less than 3.50 percent in late 2016 — are starting to bite. The National Association of Realtors says housing affordability is the lowest since 2008. And with the Federal Reserve still leaning hawkish, with more interest-rate hikes coming, housing will probably become even more unaffordable.
