Housing & Construction April 2023

Builder Confidence Rises to 44
Builder Confidence rose two points to 44 in March after jumping to 42 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the third consecutive monthly increase in confidence. The index gauging current sales conditions rose two points to 49 and the gauge measuring traffic of prospective buyers increased three points to 31, the strongest traffic reading since September of last year. Sales expectations in the next six months fell one point to 47. Builders continued to reduce prices and offer sales incentives to stimulate sales. Any number over 50 indicates that more builders view the component as good than view it as poor.
 
Building Permits Rise 13.8%
Overall building permits jumped 13.8% in February to a 1.52 million unit annualized pace after inching up to 1.34 million units in January. Single-family permits rose 7.6% in February to 777,000 after falling to 718,000 units in January. The increase came after ten consecutive monthly declines in permits. Multifamily permits rose 21.1% to an annualized pace of 747,000 units after rising to 621,000 units in January. Regional permits were mixed. 
 
Housing Starts Rise 9.8%
Housing starts rose 9.8% in February to a seasonally adjusted annual rate of 1.45 million after falling to 131 million units in January. Single-family starts rose 1.1% to a seasonally adjusted 830,000 units after falling to 841,000 units in January. Single-family starts were down 31.6% from February 2021. Multifamily starts rose 24% to 620,000 units after plunging to 473,000 units in January. Regional starts were mixed.
 
New Home Sales Rise 1.1%
New home sales rose 1.1% in February to a seasonally adjusted annual rate of 640,000 new homes after January’s 7% increase was revised downward. New home sales were down 19% February 2022. New single-family home inventory fell for the fifth consecutive month. Inventory was at an 8.2-months’ supply; about six months is considered a normal, balanced market. The median new home sale price in February rose to $438,200, up 2.5% compared to a year ago. A year ago 15% of homes were priced below $300,000; today just 10% of new homes are in that price range. Sales fell in all regions. 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 Jump 14.5%
Existing home sales jumped 14.5% in February to a seasonally adjusted annual rate of 4.58 million units after falling to 4.0 million units in January, according to the National Association of Realtors. Sales were down 22.6% from February 2022. The inventory of unsold existing homes was stable after rising to 980,000 units in January and was up 15.3% from February 2022. Unsold inventory is at a 2.6-months’ supply, up from 1.7 months in February 2022. The median existing home price fell 0.2% in February from February 2022, the first year-over-year decline in existing home prices in 131 months, which had been the longest streak on record. Properties remained on the market for an average of 34 days in February, up a day from January. Regional sales were mixed.
 
Regional Housing Data

Mortgage Rates Fall to 6.3%

• 30-year fixed-rate mortgages fell to 6.3% at the end of March after rising to 6.5% at the end of February. Mortgage rates were 4.7% at the end of March 2022.
  
• Economic uncertainty continues to bring rates down after a brief increase in February. 
• The rate environment is encouraging rate-shopping as rates now vary more among lenders and homebuyers can save between $600 and $1200 annually by shopping around. 

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