Housing Starts Rise 5.0%
Housing starts rose 5.0% in May to a seasonally adjusted annual rate of 1.35 million units after falling to 1.29 million units in April. Single-family starts rose 3.9% to 936,000, the second highest reading since 2008, and up 9.8% from May 2017. Multifamily starts rose 7.5% to 414,000 units after falling to 393,000 units in April, and were up 13.6% from May 2017. 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 62.2% in the Midwest, but fell 0.9% in the South, 4.1% in the West and 15% in the Northeast.
Building Permits Fall 4.6%
Overall building permit issuance fell 4.6% in May to a seasonally adjusted 1.3 million units after rising to 1.35 million units in April. Single-family permits fell 2.2% to 844,000 units in May after rising to 859,000 units in April. Multifamily permits fell 8.7% to 457,000 units after falling to 493,000 in April. Regional permit issuance was mixed. Permits rose 42.1% in the Northeast and 7.2% in the Midwest. Permits fell 4.6% in the West and 13.9% in the South.
New-Home Sales Rise 6.7%
Sales of newly built, single-family homes rose 6.7% in May to a seasonally revised annual rate of 689,000 after April sales were revised down to 646,000 units. Sales are up 14.1% from May 2017. The inventory of homes for sale at the end of May slipped slightly to 299,000 from 300,000 in April, a 5.2 month- supply at the current sales pace. Inventories of completed homes remain exceptionally lean. Regional sales were mixed. Sales rose 17.9% in the South and were up 19.2% year over year (Y/Y). Sales were flat in the Midwest and up 4.6.3% Y/Y, fell 10% in the Northeast and 16.3% Y/Y. Sales in the West fell 8.7% but were up 0.6% Y/Y. 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%
Total existing home sales dropped 0.4% in May to a seasonally adjusted annual rate of 5.43 million after falling to 5.46 million in April. The third consecutive monthly decline in sales left existing home sales 3.0% below May 2017. Single-family home sales fell for the second consecutive month, dropping 0.6% to a seasonally adjusted annual rate of 4.81 million in May after falling to 4.84 million in April and were 3.0% below the pace of May 2017. 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. Existing home sales have fallen 3.0% over the past year, but the number of homes for sale has fallen 6.1%. Total housing inventory at the end of May climbed 2.8% to 1.85 million existing homes for sale, 6.1% below the rate of May 2017. Unsold inventory is at a 4.1-month supply at the current sales pace compared to a 4.2-month supply a year ago. Regional sales were mixed. Sales rose 4.6% in the Northeast, but fell 0.4% in the South, 2.3% in the Midwest and 0.8% in the West.
Builder Confidence Falls to 68
Builder confidence fell to 68 in June after rising to 70 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). All three component scores fell one point in June, with current sales conditions falling to 75, expectations in the next six months dropping to 76 and buyer traffic edging down to 50. According to NAHB, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017. Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57, the West and Midwest remained unchanged at 76 and 65, respectively, and the South fell one point to 71. Despite the challenges, the score in the Northeast was the highest reading since 2005.
Mortgage Rates Steady
A 30-year fixed-rate mortgage (FRM) was virtually flat in June at 4.55%, dropping slightly from 4.56% in May. Last year at the end of June rates averaged 3.88%.
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