Housing & Construction April 2018
Housing Starts Fall 7.0%
Housing starts fell 7.0% in February to a seasonally adjusted annual rate of 1.24 million units after rising to 1.33 million units in January. Single-family starts rose 2.9% to a seasonally adjusted annual rate of 902,000 units after rising to 877,000 units in January. Multifamily starts fell 26.1% to a seasonally adjusted annual rate of 334,000 units after jumping to 449,000 units in January. Multifamily data tends to be particularly volatile on a month-to-month basis. NAHB expects single-family starts to rise 5% this year; multifamily starts are expected to fall slightly. Regional starts were mixed. Starts rose 7.6% in the Midwest, but fell 3.5% in the Northeast, 7.3% in the South and 12.9% in the West.
Building Permits Fall 5.7%
Overall building permit issuance fell 5.7% in February to a seasonally adjusted annual rate of 1.3 million units. Multifamily permits fell 14.8% to 426,000 units. Single-family permits edged down 0.6% to 872,000 units. Regional permit issuance was mixed. Permits rose 12.7% in the Northeast and 3.4% in the Midwest. Permits dropped 3.4% in the West and 12.4% in the South.
New-Home Sales Fall 0.6%
Sales of newly built, single-family homes fell 0.6% in February to a seasonally adjusted annual rate of 618,000 units after falling to an upwardly revised 622,000 units in January. It was the third consecutive month new home sales have dropped, but sales were still up 2.2% from February 2017. The inventory of homes for sale at the end of February rose to 305,000 units, which is the most since March 2009 and a 5.9-months supply at the current sales pace. However, all of the increase came from homes not yet started or under construction. Inventories of completed homes remain exceptionally lean at just 68,000. Regional sales were mixed. Sales jumped 19.4% in the Northeast and 9% in the South. Sales fell 4% in the Midwest and 18% in the West. With strong consumer demand for housing, the NAHB expects sales to move forward in the months ahead. 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 Rise 3.0%
Total existing home sales rose 3.0% in February to a seasonally adjusted annual rate of 5.54 million after falling to 5.38 million in January. Sales were 1.1% above February 2017. Single-family home sales rose 4.2% to a seasonally adjusted annual rate of 4.96 million after dropping to 4.76 million in January and were 1.8% ahead of sales a year ago. Total housing inventory rose 4.6% to 1.59 million existing homes available for sale, which is 8.1% lower than February 2017. Unsold inventory has fallen year-over-year for 33 consecutive months and is at a 3.4-months supply at the current sales pace, down from 3.8 months a year ago. Regional sales were mixed. Sales fell 12.3% in the Northeast and 2.4% in the Midwest. Sales rose 6.6% in the South and 11.4% in the West. The NAR says that sales may have fallen in March due to very inclement weather in much of the country.
Builder Confidence Drops to 70
Builder confidence dropped one point to 70 in March from a downwardly revised reading of 71 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The component scores were mixed, with the index measuring current sales conditions holding steady at 77, the component measuring sales expectations in the next six months dropping two points to 78 and the index gauging buyer traffic falling three points to 51. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 57, the South dropped one point to 73, the West fell two points to 79 and the Midwest dropped four points to 68. NAHB Chief Economist Robert Dietz said that with low unemployment, favorable demographic trends and tight inventory, they expect to see builder confidence continue to rise in 2018, although builders continue to face scarcities of labor and increases in building materials prices.
Mortgage Rates Steady
A 30-year fixed-rate mortgage (FRM) remained at 4.4% at the end of March, breaking a stretch of three consecutive monthly increases. At the end of March last year 30-year rates averaged 4.74%.
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