Housing & Construction May 2023

Builder Confidence Rises to 45
Builder Confidence rose one point to 45 in April after rising two points to 44 in March, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the fourth consecutive monthly increase in confidence. The HMI index gauging current sales conditions rose two points to 51 and the component charting sales expectations in the next six months increased three points to 50. It was the first time these components both returned to the 50+ range since June 2022. The gauge measuring traffic of prospective buyers remained unchanged at 31. April was the first month during which the traffic component failed to improve this year. The index gauging current sales conditions rose two points to 49 and the gauge measuring traffic of prospective buyers increased three points to 31, which was 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 Fall 8.8%
Overall building permits fell 8.8% in March to 818,000 units after jumping to a 1.52 million unit annualized pace in February. Single-family permits rose 4.1% in March to 818,000 units after rising to 777,000 units in February. It was the second consecutive monthly increase 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 Fall 0.8%
Housing starts fell 0.8% in March to a seasonally adjusted annual rate of 1.42 million annual units after rising more than 9% in February to 1.45 million units. Single-family starts rose 2.7% to a seasonally adjusted annual rate of 861,000 units after rising to 830,000 units in February. Single-family starts were down 27.7% from March 2021. Multifamily starts fell 5.9% to 559,000 annual units after jumping nearly 25% to 620,000 units in February. Regional starts were mixed. The number of single-family homes under construction in March was 716,000, the 10th monthly decline. Builders completed just 15,000 more homes than were started, resulting in a decline for the construction pipeline. There are now 958,000 apartment units under construction, which is the highest level since the fall of 1973.
 
New Home Sales Rise 9.6%
New home sales rose 9.6% in March to a seasonally adjusted annual rate of 683,000 new homes after sales for February were revised downward. New home sales were down 3.4% from March 2022. New single-family home inventory fell for the sixth consecutive month. Inventory was at an 7.6-months’ supply; about six months is considered a normal, balanced market. The median new home sale’s price in February rose to $449,400 in March, up from $438,200 in February and up 3.2% compared to a year ago. Regional sales were mixed. 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 2.4%
Existing home sales fell 2.4% in March to a seasonally adjusted annual rate of 4.44 million units after rising to 4.58 million units in February, according to the National Association of Realtors. Sales were down 22.0% from March 2022. The inventory of unsold existing homes rose 1.0% in March to 980,000 homes after being unchanged in February. The median existing-home price was $375,700, down 0.9% from March 2022. It was the second consecutive month median home prices declined year over year. Prices climbed slightly in three regions but dropped in the West. Unsold inventory remained at a 2.6-months’ supply. Properties typically remained on the market for 29 days in March, down from 34 days in February but up from 17 days in March 2022. Regional sales were mixed.
 
Regional Housing Data

Mortgage Rates Rise to 6.4%

• 30-year fixed-rate mortgages rose to 6.4% at the end of April after falling to 6.3% at the end of March. Mortgage rates were 5.1% at the end of April 2022.
• While rates rose the last two weeks of April economists expect rates to slowly fall throughout the rest of the year.
• Home prices and rates are stabilizing, which is good news for home buyers.

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