Housing & Construction June 2018
Housing Starts Fall 3.7%
Housing starts fell 3.7% in April to a seasonally adjusted annual rate of 1.29 million units after an upwardly revised reading of 1.34 million units in March, which was an 11-year high for housing production. Single-family starts were essentially flat, inching up 0.1% to 894,000 units after an upwardly revised March reading. Single-family starts are up 8.3% over the first four months of the year compared to the same period in 2017. Multifamily starts fell 11.4% in April to a seasonally adjusted annual rate of 393,000 units after rising to 452,000 units in March. 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 6.4% in the South. Starts fell 8.1% in the Northeast, 12% in the West and 16.3% in the Midwest. Single family construction year-to-date is up 21% in the West, 7% in the South and 4% in the Northeast. Construction is almost 7% lower in the Midwest.
Building Permits Fall 1.8%
Overall building permit issuance fell 1.8% in April to a seasonally adjusted annual rate of 1.35 million units after hitting a post-recession high in March. Single-family permits rose 0.9% to 859,000 units while multifamily permits fell 6.3% to 493,000 units after jumping 20.4% in March. Regional permit issuance was mixed. Permits rose 12% in the South. Permits fell 4.4% in the Midwest, 13.2% in the West and 31.9% in the Northeast.
New-Home Sales Drop 1.5%
Sales of newly built, single-family homes fell 1.5% in April to a seasonally adjusted annual rate of 662,000 units and numbers for March were revised down. Sales are up 8.4% year to date. The inventory of homes for sale at the end of March slipped slightly to 300,000 in April after falling to 301,000 in March. It was a 5.4-month supply at the current sales pace. Inventories of completed homes remain exceptionally lean. Regional sales were mixed. Sales rose 11.1% in the Northeast and 0.3% in the South. Sales were unchanged in the Midwest and fell 7.9% in the West. 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 Drop 2.5%
Total existing home sales dropped 2.5% in April to a seasonally adjusted annual rate of 5.46 million after rising to 5.60 million in March. The second consecutive monthly decline in sales left existing home sales 1.4% below a year ago. Single-family home sales dropped 3.0% to a seasonally adjusted annual rate of 4.84 million in April from 4.99 million in March and were 1.6% below the pace of a year ago. The NAR says the culprit is the extremely low level of inventory available; there are nowhere near enough listings to meet demand, which also means prices keep climbing, putting the home they want out of reach for many people. Total housing inventory at the end of April increased 9.8% to 1.80 million existing homes available for sale but is still 6.3% lower than a year ago and has fallen year-over-year for 35 consecutive months. Unsold inventory is at a 4.0-month supply at the current sales pace compared to a 4.2-month supply a year ago. Regional sales were mixed. Sales were virtually unchanged in the Midwest. Sales fell 4.4% in the Northeast, 2.9% in the South and 3.3% in the West.
Builder Confidence Rises to 70
Builder confidence rose to 70 in May after slipping in March and April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The component scores were mixed, with the present sales index accounting for all of the increase, climbing two points to 76. Future sales and buyer traffic were unchanged but remained solid at 77 and 51 respectively. Confidence is highest in the West and South, where job growth has been the strongest and population gains are greater than new construction. Spring finally arrived in the Midwest, where demand picked up. The Northeast was unchanged at 55.
Mortgage Rates Fall to 4.56%
A 30-year fixed-rate mortgage (FRM) fell to 4.56% at the end of May after rising to 4.58% at the end of April. The decline was driven by a sudden decrease in Treasury yields due to recent trade and geopolitical issues. Last year at the end of May rates averaged 3.94%.
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