Housing & Construction May 2018
Housing Starts Rise 1.9%
Housing starts rose 1.9% in March to a seasonally adjusted annual rate of 1.32 million units after falling to 1.24 million units in February. Single-family starts fell 3.7% to 867,000 units after rising to 902,000 units in February. Multifamily starts rose 14.4% to 452,000 units, the highest level for multifamily starts since December 2016. 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 jumped 22.4% in the Midwest and inched up 0.8% in the Northeast. Starts declined 0.6% in the South and 1.5% in the West.
Building Permits Rise 2.5%
Overall building permit issuance rose 2.5% in March to a seasonally adjusted annual rate of 1.35 million units. Multifamily permits accounted for all of the increase, jumping 19% to 514,000. Single-family permits dropped 5.5% to a seasonally adjusted annual rate of 840,000. Regional permit issuance was mixed. Permits rose 9.0% in the Midwest, 3.0% in the West and 2.1% in the South. Permits declined 5.5% in the Northeast.
New-Home Sales Rise 4.0%
Sales of newly built, single-family homes rose 4.0% in March to a seasonally adjusted annual rate of 694,000 units and starts for February were adjusted up. The increase reversed three consecutive months of declines and was well ahead of expectations. The inventory of homes for sale at the end of March fell to 301,000, a 5.2-month supply at the current sales pace, down from a 5.9-months supply in February. Inventories of completed homes remain exceptionally lean. Regional sales were mixed. Sales jumped 28.3% in the West and rose 0.8% in the South. Sales plunged 54.8% in the Northeast and fell 2.4% in the Midwest. The big drop in the Northeast was blamed on adverse weather. 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 1.1%
Total existing home sales rose 1.1% in March to a seasonally adjusted annual rate of 5.6 million units from 5.4 million in February. Sales were down 1.2% from March 2017. Total housing inventory fell to a 3.6-month supply from a 3.8-month supply in March 2017. Homes stayed on the market an average of just 30 days in March. Regional sales were mixed. Sales rose 6.3% in the Northeast and 5.7% in the Midwest. Sales dropped 0.4% in the South and 3.1% in the West. The NAR had expected March sales to decline overall based on severe weather in much of the country.
Builder Confidence Falls to 69
Builder confidence fell one point to 69 in April after slipping one point to 70 in March, 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 falling two points to 75, the component measuring sales expectations over the next six months dropping one point to 77 and the index gauging buyer traffic holding steady at 51. Looking at the three-month moving averages for regional HMI scores, the South remained unchanged at 73, the Northeast fell one point to 55, the Midwest dropped two points to 66 and the West fell three points to 76. NAHB Chief Economist Robert Dietz said that they attributed the slight drop in confidence to lingering winter weather slowing housing activity in some parts of the country.
Remodeling Confidence Falls to 57
The Remodeling Market Index (RMI) fell three points to 57 in the first quarter, according to the National Association of Home Builders (NAHB). The RMI has been above 50, the level that indicates more remodelers report market activity is higher compared to the prior quarter than say it is lower, since the second quarter of 2013. NAHB points out that higher prices for labor and materials like lumber continue to cause delays in project starts and higher overall project costs. The scores for the major additions and alterations component fell four points to 56, minor additions and alterations rose one point to 60 and home maintenance and repair fell four points to 57. The future market indicators index fell four points to 55.
Mortgage Rates Rise to 4.58%
A 30-year fixed-rate mortgage (FRM) rose to 4.58% at the end of April after remaining at 4.4% at the end of March. Rates are now at their highest level since the week of August 22, 2013. Higher Treasury yields, driven by rising commodity prices, more Treasury issuances and the steady stream of solid economic news, are behind the uptick in rates during April. Last year at the end of April rates averaged 4.03%.
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