Each month, BuildFax releases its Housing Health Report (BHHR), which delivers a macro view of the economic trends affecting the U.S. housing market. This month’s report showed continued declines across new and existing housing activity, following blanket declines in November. Furthermore, the trailing three-month outlook for single-family housing authorizations was negative, contrasting last month’s positive outlook.
New Housing Supply Activity, December 2018
- Single-family housing authorizations decreased 3.76 percent year over year.
- Single-family housing authorizations decreased by 0.95 percent month over month.
Existing Housing Supply
Maintenance and remodel activity are key indicators of economic health, particularly as the U.S. housing stock ages. Decreases in remodeling and maintenance volume on a year-over-year basis indicate consumer confidence may be wavering. It’s more important than ever before to track the health of the existing housing stock to ensure properties are maintained and kept whole, especially with heightening weather activity.
Existing Housing Supply Activity, December 2018
- Existing housing maintenance volume decreased 10.71 percent year over year.
- Existing housing remodel volume decreased 15.64 percent year over year.
Comparative Analysis of Single-Family Housing Authorizations
It’s a commonly accepted that declines in the housing market are particularly indicative of a coming recession. In order to better illustrate this point, BuildFax, the leading source of property condition and history data, performed an analysis across 10 economic indicators to understand their correlation for predicting recessions between 1961 and 2018. This analysis confirmed single-family housing authorizations are the strongest predictor of economic recessions of the indicators analyzed. See the full analysis here.
Simulation: The Probability of a U.S. Economic Recession
The potential for an economic downturn has been a hot topic over the past few months. Following recent declines in single-family housing authorizations, a highly predictive indicator of economic recessions, BuildFax dug further. Is a U.S. economic recession on the horizon? According to our simulation, the probability of a recession may double between 2019 and 2020 – assuming certain factors trend as projected. While the results suggest a recession is not imminent, monitoring housing indicators – among other factors – is critical to understand how the market will fare over the next 12-months.
For more insight on the health of the U.S. housing market and whether a recession is on the horizon, download the December 2018 report