Housing Starts Rise 5.7%
Housing starts rose 5.7% in April to a seasonally adjusted annual rate of 1.24 million units from an upwardly revised reading in March. Single-family starts rose 6.2% to 854,000 units after falling to 785,000 units in March and multifamily starts rose 4.7% to 381,000 units. Regional starts were mixed. Combined single-family and multifamily starts year to date rose 84.6% in the Northeast and 42% in the Midwest. Starts dropped 5.7% in the South and 5.5% in the West.
Building Permits Rise 0.6%
Building permits rose 0.6% in April to an annual rate of 1.3 million units after falling to 1.27 million units in March. Single-family permits fell 4.2% to 782,000 units, the lowest level since October 2016. Multifamily permits rose 8.9% to 514,000 units. Regional permits were mixed. Year to date, permits rose 2.2% in the Midwest and 5.3% in the West. Permits fell 4% in the Northeast and 1.2% in the South.
New-Home Sales Fall 6.7%
New-home sales fell 6.7% in April to a seasonally adjusted annual rate of 673,000 units after March sales were revised sharply upwards to 723,000 units, the highest monthly rate since the Great Recession. The inventory of new homes for sale was 332,000, a 5.9-months’ supply at the current sales pace, a number that has remained fairly steady since December. The median sales price rose to $342,200 in April after dropping to $302,700 in March. The median sales price in April 2018 was $314,400. Regional new home sales were mixed. New home sales rose 1.3% in the Midwest, 6.7% in the West and 10.3% in the South. Sales fell 17.6% in the Northeast. 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 0.4%
Existing home sales fell 0.4% in April to a seasonally adjusted annual rate of 5.19 million after falling to 5.21 million in March. Sales were down 4.4% from April 2018 and have fallen in five of the previous six months. Much of the decline in sales was due to a 1.1% drop in single-family sales; condo and co-op sales were up 5.6%. Regional sales were mixed. Sales fell 4.5% in the Northeast and 0.4% in the South. Sales were unchanged in the Midwest and rose 1.8% in the West. Unsold inventory is at a 4.2-month supply at the current sales pace, up from 3.9 months in March and 4.0 months in April 2018. The median existing home price for all housing types in April was $267,300, up from $259,400 in March and up 3.6% from April 2018. It was the 86th consecutive month of year-over-year increases in home prices, but the pace of home appreciation has definitely moderated and homes are remaining on the market longer.
Builder Confidence Rises to 66
Builder confidence rose four points to 66 in May after rising to 63 in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builders report solid demand for new single-family homes and improved demand due to interest rate that are hovering just above 4% after peaking near 5% in the fourth quarter. Scores for the HMI components all rose. The index measuring current sales conditions rose three points to 72, the component gauging expectations in the next six months rose one point to 72 and the component for buyer traffic rose two points to 49. The three-month moving averages for regional HMI scores all rose as well, with the Northeast rising six points to 57, the West increasing two points to 71, the Midwest gaining one point to 54 and the South rising one point to 68.
Mortgage Rates Fall to 3.99%
A 30-year fixed-rate mortgage (FRM) fell to 3.99% at the end of May after rising to 4.20% at the end of April. Rates were 4.56% at the end of May 2018. Freddie Mac expects rates to average 4.5% this year and 4.8% next year. While economic data points to continued strength, financial sentiment is weakening, with the spread between the 10-year and the 3-month Treasury bill narrowing as fears of the impact of the trade war with China grow. Freddie Mac noted that lower rates should give a boost to the housing market.
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