Housing & Construction August 2017
Housing Starts rise 8.3%
Housing starts rose 8.3% in June to a seasonally adjusted annual rate of 1.22 million units after falling to 1.09 million units in May, breaking a string of three consecutive monthly declines in starts. Single-family starts bounced back, rising 6.3% to a seasonally adjusted annual rate of 849,000 units after dropping to 799,000 units in May. Multifamily starts also recovered, rising 13.3% to 366,000 units after falling to 289,000 units in May. Regional starts were mixed. Starts rose 87.3% in the Northeast, 22.0% in the Midwest and 1.6% in the West. Starts fell 3.8% in the South, the nation’s largest housing market. Wells Fargo noted that the increase in starts was widely expected and that the decline in starts in May was due to unusual seasonal factors that have now played themselves out.
Building permits Rise 7.4%
Building permits rose 7.4% in June to a seasonally adjusted annual rate of 1.25 million units after falling to 1.17 million units in May. Single-family permits rose 4.1% to 811,000 units and multifamily permits jumped 13.9% to 443,000 units. Regional permit issuance was mixed. Permits rose 19.7% in the Midwest, 9.9% in the West and 6.9% in the South. Permits fell 13.9% in the Northeast.
New-Home Sales rise 0.8%
Sales of newly built, single-family homes rose 0.8% in June to a seasonally adjusted annual rate of 610,000 units from a downwardly revised reading in May. New home sales have risen 11% so far this year. NAHB expects further gains throughout the remainder of the year as the labor market continues to strengthen. The inventory of new homes for sale rose slightly to 272,000 in June, a 5.4-month supply at the current sales pace, up slightly from a 5.3-month supply in May. Sales continue to be held back by shortages in inventory, lots and labor and rising costs for building materials. Regional sales were mixed. New home sales rose 12.5% in the West and 10.0% in the Midwest. Sales were unchanged in the Northeast and fell 6.1% in the South. The median price of a new home fell 4.2% in June, reflecting a shift toward lower priced homes and an increase in first-time buyers. 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 1.8%
Existing home sales dropped 1.8% in June to a seasonally adjusted annual rate of 5.52 million from 5.62 million in May. Sales were 0.7% above June 2016. Single-family home sales fell 2.0% in June to a seasonally adjusted annual rate of 4.88 million from 4.98 million in May but remained 0.6% above the pace a year ago. Total housing inventory at the end of June dropped 0.5% to 1.96 million existing homes available for sale, 7.1% below a year ago. Inventory has now fallen year over year for 25 consecutive months. Unsold inventory is at a 4.3-month supply at the current sales pace, down from 4.6 months a year ago. Regional sales were mixed. Sales rose 3.1% in the Midwest. Sales fell 2.6% in the Northeast, 4.7% in the South and 0.8% in the West. Homes are selling very quickly, with the typical listing on the market for just 28 days. Low supplies, affordability and tight credit have kept the percentage of first-time buyers around 32%, down from 35% in 2016.
Builder Confidence drops to 64
Builder confidence fell two points to 64 after falling to a downwardly revised score of 67 in June, according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index). Despite the second consecutive monthly decline, the HMI remains firmly in positive territory. All three HMI components posted losses in June but two out of three remained at healthy levels. The component gauging current sales conditions fell two points to 70, the index charting sales expectations in the next six months dropped two points to 73 and the component measuring buyer traffic fell one point to 48; it was the only component below 50, the level that indicates improving confidence. The three-month moving averages for regional HMI scores were mixed, with the Northeast rising one point to 47, while the West and Midwest each fell one point, to 75 and 66, respectively. The South dropped three points to 67. Builders are growing increasingly concerned over rising prices for building materials, particularly lumber. Lumber prices are up around 17% from the recent cycle low registered in late June. Consumer interest in the new-home market remains strong, according to the NAHB.
Mortgage Rates rise slightly
The 30-year mortgage rate rose to 3.92% at the end of July after rising to 3.88% at the end of June. In July of last year 30-year rates averaged 3.48%. Mortgage rates have been volatile of late, swinging along with yields on the 10-Year Treasury Bond.
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