Sales and starts still soft

The housing market has yet to shake off the weakness seen in the early stages of the year. Despite increasingly solid economic data and a drop in mortgage interest rates, mortgage applications and new home sales are very subdued. And the rise in existing home sales has yet to reverse its earlier fall. Meanwhile, although homebuilder sentiment is at healthy levels, housing starts are not, suggesting that labour shortages are taking their toll. But supply conditions are improving slowly, helping to steer the rate of house price inflation towards slower, more sustainable rates.