Housing & Construction April 2017
HOUSING STARTS RISE 3.0%
Housing starts rose 3.0% in February to a seasonally adjusted annual rate of 1.288 million units from an upwardly revised January reading. Single-family starts rose 6.5% to 872,000 units after rising to 823,000 units in January. Multifamily starts fell 3.7% to 416,000 units after falling to 423,000 units in January. It was the overall highest level of starts since late 2007. Regional starts were mixed. Starts rose 35.7% in the West. Starts fell 3.8% in the South, 4.6% in the Midwest and 9.8% in the Northeast.
BUILDING PERMITS FALL 6.2%
Building permits fell 6.2% in February to a seasonally adjusted annual level of 1.213 million units after rising to 1.285 million units in January. Single-family permits rose 3.1% to 832,000 units after falling to 808,000 units in January. It was the highest level for single-family permits since September 2007. Multifamily permits fell 21.6% to 381,000 units after rising to 477,000 units in January. Regional permit issuance was mixed. Permits rose 25.4% in the Midwest. Permits fell 10.0% in the West, 10.4% in the South and 22.3% in the Northeast. Permits have been above the one million level for nineteen consecutive months, the longest stretch in seven years.
NEW-HOME SALES RISE 6.1%
Sales of new single-family homes rose 6.1% in February to a seasonally adjusted annual rate of 592,000 units after rising to 555,000 units in January. The inventory of new homes for sale rose slightly to 266,000 from 265,000 in January, a 5.4-month supply at the current sales pace, down from a 5.7-month supply in January. Regional sales were mixed. Sales rose 30.9% in the Midwest, 7.5% in the West and 3.6% in the South. Sales fell 21.4% in the Northeast. NAHB says that the uptick in mortgage interest rates is having minimal effect on new home sales thus far, and that ongoing job creation, rising household formations and affordable home prices should keep the market moving up in 2017. Sales of new homes are tabulated when contracts are signed and are considered a more timely barometer of the housing market than purchases of previously-owned homes, which are calculated when a contract closes.
EXISTING HOME SALES FALL 3.7%
Existing home sales fell 3.7% in February to a seasonally adjusted annual rate of 5.48 million units after rising to 5.69 million units in January. Sales were up 5.4% from February 2016. Total housing inventory at the end of February rose 4.2% to 1.75 million existing homes, but remained 6.4% lower than inventory at the end of February 2016, and has fallen year-over-year for 21 consecutive months. Unsold inventory was at a 3.8-month supply at the current sales pace, up from a 3.5-month supply in January. Tight housing supply is impacting affordability and driving up rents as well. Regional sales were mixed. Sales fell 13.8% in the Northeast, 7.0% in the Midwest and 3.1% in the West. Sales rose 1.3% in the South, the nation’s largest housing market.
BUILDER CONFIDENCE RISES TO 71
Builder confidence rose six points to 71 in March after falling to 65 in February, according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index). All three HMI components posted strong gains in March, with current sales conditions rising seven points to 78, sales expectations in the next six months up five points to 78 and buyer traffic up eight points to 54. The three-month moving averages for HMI scores rose three points in the Midwest to 68 and one point in the South to 68. The West fell three points to 76 and the Northeast dropped one point to 48. It was the twenty-second consecutive month the HMI remained above 50. Builders were enthusiastic about President Trump’s actions on regulatory reforms, particularly his executive order to rescind or revise the waters of the U.S. rule that impacts permitting. NAHB expects some moderation in the index moving forward, as builders continue to face a number of challenges, including rising material prices, higher mortgage rates and shortages of lots and labor.
MORTGAGE RATES STEADY
The 30-year mortgage rate was 4.14% at the end of March, little changed from 4.16% at the end of February. However, rates did tick up throughout the month, reaching 4.23% during the third week of March before falling back. In March last year 30-year rates averaged 3.71%.
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