August housing data, along with record homebuilder sentiment in September, shows the market still on a tear. Though material costs continue to rise, we have yet to see any meaningful dampening effect on demand with mortgage rates persistently close to all-time lows. Urban flight continues to generate a meaningful amount of housing demand in lower-cost suburban neighborhoods, helped along by the work from home revolution’s generation of a truly mobile workforce.

Related ETF: iShares U.S. Home Construction ETF (ITB)

The housing market stayed red hot in August as sales of new homes leapt 4.8% MoM to a seasonally adjusted annual rate of 1.01 million units, per Census Bureau data. The rate was the highest since 2006 and the latest in four consecutive months of increases. It also marks a 43.2% increase YoY.

September Builder confidence in the market for single-family homes increased 5 points to 83 on the monthly NAHB/Wells Fargo Housing Market Index, a new record in the survey’s 35-year history.

All three of the index’s components rose to record highs. Current sales conditions rose 4 points to 88. Sales expectations in the next six months increased 6 points to 84. Traffic of prospective buyers increased 9 points to 73.

Once again, in their September commentary, the NAHB noted the “suburban shift” playing a major role in continually rising housing demand. MRP first highlighted data substantiaing reports of massive relocation by high-density urban populations in the wake of COVID and civil unrest last June. At the time, The New York Times estimated that some 420,000 New Yorkers with the resources had made the choice to head for the hills, whether permanently or temporarily…

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