Housing & Construction August 2020
Builder Confidence Jumps to 72
Builder confidence jumped 14 points to 72 in July after rising in May, according to the Association of Home Builders/Wells Fargo Housing Market Index (HMI). According to NAHB, housing is well-positioned to lead the economic recovery. Inventory is tight, interest rates are low, mortgage applications are increasing and confidence is now back to pre-pandemic levels.
All the HMI indices posted gains in July. The HMI index gauging current sales conditions jumped 16 points to 79, the component measuring sales expectations in the next six months rose seven points to 75 and the measure charting traffic of prospective buyers posted a 15-point gain to 58. Regional scores rose in every region for the second consecutive month. Any number over 50 indicates that more builders view the component as good than do as poor.
Building Permits Rise 2.1%
Building permits rose 2.1% in June to an annual rate of 1.22 million units after jumping 17% in May. Single-family permits increased 11.8% to a 834,000 unit rate, and multifamily permits dropped 13.4% to a 407,000 unit pace. On a year-to-date-regional basis, permits were mixed.
Housing Starts Jump 17.3%
Housing starts jumped 17.3% in June to a seasonally adjusted annual rate of 1.19 million units in June after rising to 974,000 units in May. Single-family starts rose 17.2% in June to a seasonally adjusted rate of 831,000 annual units and numbers for May were revised upwards. Multifamily starts rose 17.5% to a 355,000 annual pace. Regional starts were mixed. NAHB says demand continues to grow in lower-density areas, fueled by low interest rates and the pandemic. Builders are now dealing with rising costs, including costs for lumber.
New-Home Sales Rise 13.8%
New-home sales rose 13.8% in June to a seasonally adjusted annual pace of 776,000 units after rising to 676,000 units in May. Sales were at the highest level since the Great Recession and 6.9% ahead of the pace in June 2019. Inventory fell to a
4.7- months’ supply, with 307,000 new single-family homes for sale, 7% lower than June 2019. Just 69,000 of those homes are completed and ready to occupy. The median sales price rose to $329,200 in June from $317,900 in May and was up from $311,800 in June 2019. New home sales rose in all four regions. 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 Climb 20.7%
Existing home sales climbed 20.7% in June to a seasonally adjusted annual rate of 4.72 million after falling to 3.91 million in May. Existing home sales were down 11.3% from June 2019 after being down 26.6% YoY in May. The National Association of Realtors (NAR) noted that demand was strong and people were eager to take advantage of record-low mortgage rates. The median home price was $295,300, up 3.5% from June 2019, marking 100 consecutive months of year-over-year gains. Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May but down 18.2% from June 2019. Unsold inventory is at a 4.0-months’ supply at the current sales pace, down from 4.8-months in May and 4.3 months in June 2109. Properties typically remained on the market for 24 days in June, seasonally down from 26 days in May, and down from 27 days in June 2019. Sixty-two percent of homes sold in June 2020 were on the market for less than a month. Regional existing homes sales were mixed, with sales in all regions up from May but down year over year. The NAR expects a slow and gradual recovery, aided by continuing low mortgage rates.
Regional Housing Data
Mortgage Rates Slip to 3.01%
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