Housing & Construction July 2024

Builder Confidence Falls to 43
Builder Confidence fell two points to 43 in June after falling six points to 45 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). All three HMI component indices dropped in May, with current sales conditions falling six points to 51, sales expectations in the next six months dropping nine points to 51 and traffic of prospective buyers slipping four points to 30. Regional three-month moving averages were mixed. Any number over 50 indicates that more builders have a positive outlook than a negative one.
 
Building Permits Fall 3.8%
Overall building permits fell 3.8% in May to 1.39 million units after falling to 1.44 million units in April. Single-family permits fell 2.9% in May to 949,000 units after falling to 976,000 units in April. It was the lowest pace since June 2023. Multifamily permits fell 5.6% to 437,000 annual units after falling to 485,000 units in April. Regional permit issuance was mixed.
 
Housing Starts Fall 5.5%
Housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.28 million units after falling to 1.36 million units in April. Single-family starts fell 5.2% to a seasonally adjusted annual rate of 982,000 after falling to 1.02 million units in April. Single-family starts were up 18.8% from very low numbers in May 2023. Multifamily starts, which include apartment buildings and condos, fell 6.6% to 295,000 annualized units after falling to 329,000 units in April and were down 11% from May 2023 to the lowest level since September 2022. Multifamily starts are typically very volatile. Regional housing starts were mixed.
 
New Home Sales Fall 11.3%
New home sales fell 11.3% in May to a seasonally adjusted annual rate of 619,000 new homes, but sales for April were revised sharply upward, from a 4.7% decline to a 2.0% increase, according to the National Association of Home Builders. Sales were down 16.5% from May 2023. New home inventories rose 1.5% in May to 481,000 homes, a 9.3 months’ supply at the current sales pace. Higher inventories of existing homes and mortgage rates that continue to hover around 7% have slowed new home sales. Higher inventory levels may be limiting growth in new home prices. The median sales price fell to $417,400 in May, 0.9% below the median price one year ago. Builders also stepped up their use of incentives to entice buyers. Regional new home 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 0.7%
Existing home sales slipped 0.7% in May to a seasonally adjusted annual rate of 4.11 million homes after falling to 4.14 million homes in April, according to the National Association of Realtors. Sales were down 2.8% from May 2023 after being down 1.9% year over year in April. The median price jumped 5.8% from May 2023 to $419,300, the highest price ever recorded. It was the eleventh consecutive month of year-over-year price gains. The inventory of existing homes ready for sale grew 6.7% to 1.28 million at the end of May, a 3.7 months' supply at the current monthly sales pace. A chronic shortage of existing inventory continues to spur new home construction and sales despite high prices. Regional existing home sales were mixed.
 
Regional Housing Data

Mortgage Rates Fall to 6.9% 

•  30-year fixed-rate mortgages fell to 6.9% at the end of June after falling back to 7.0% at the end of May. Mortgage rates were 6.7% at the end of May 2023.
  
• Expectations of a future rate cut from the Fed and gradually improving housing supplies were behind the monthly decline. 

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