The housing market is somewhat of a bright spot for the economy despite the U.S.'s continuous struggle with weaker exports and slowing global growth, the Fannie Mae Economic & Strategic Research Group reported Friday. The macroeconomic picture in the U.S. continues to battle economic headwinds—namely a September jobs report that came in below expectations and an appreciating dollar which will pressure the already growing U.S. trade deficit, Fannie Mae said. Yet, housing remains in a fairly positive zone, considering all of the factors weighing it down.
The GSE research group noted that single-family and multifamily starts—as well as existing home sales—may have dropped in August, but new home sales reached a high during the same month and builder confidence rose in September. The National Association of Home Builders/Wells Fargo Housing Market Index saw confidence in the new single-family home construction index rise one point to a level of 62 on a scale of 100, the highest reading since October of 2005, NAHB said in September. The same month, the association estimated that 1 point 1 million total housing starts will be recorded in the U.S. this year.
The Mortgage REIT sector—an investment class in which participants invest in secondary market mortgages—is unlikely to catch a break in the third quarter due to rate uncertainty, quick prepayments and spread widening, analysts with Keefe, Bruyette & Woods said Friday. Still, the single-family rental segment continues to look fairly solid. KBW called the third quarter difficult and estimates mREIT book values will fall 3 point 5 percent quarter-over-quarter, with more mREITs reporting earning misses than positive results.