Builder Confidence Falls to 55
Builder confidence fell twelve points to 55 in July after falling two points to 67 in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the seventh consecutive month the HMI declined after hitting an all-time high of 90 last November. Rising inflation, higher mortgage rates and production bottlenecks are leading to slowing traffic and shaking confidence. All three HMI components posted declines in July: Current sales conditions dropped 12 points to 64, sales expectations in the next six months declined 11 points to 50 and traffic of prospective buyers fell 11 points to 37. Scores fell in all regions. Any number over 50 indicates that more builders view the component as good than view it as poor.
Building Permits Fall 0.6%
Overall building permits fell 0.6% in June to a 1.69 million unit annualized rate after falling to 1.70 million units in May. Single-family permits dropped 8.0% in June to 967,000 units, the lowest pace for single-family permits since June 2020. Multifamily permits increased 11.5% to an annualized 718,000 pace. Regional permits were mixed year to date.
Housing Starts Fall 2.0%
Housing starts fell 2.0% in June to a seasonally adjusted annual rate of 1.56 million units after falling to an upwardly revised reading in May. Single-family starts dropped 8.1% to 982,000 units after falling to 1.05 million units in May. Multifamily starts rose 10.3% to 577,000 units after falling to 498,000 units in May. Regional starts were mixed. NAHB says higher construction costs and interest rates are leading to falling traffic for builders.
New Home Sales Fall 8.1%
New home sales dropped 8.1% in June to a seasonally adjusted annual rate of 590,000 homes from a sharply downwardly revised reading in May. Sales were down 13.4% from June 2021. It was only the second time new home sales have fallen below 600,000 since October 2018. Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. The median sales price dipped to $402,400 in June, down 9.5% compared to May, but is up 7.4% compared to a year ago. New single-family home inventory remained elevated at a 9.3 months’ supply, up 60.3% over last year, with 457,000 homes available for sale. However, only 39,000 homes are completed and ready to occupy. The remaining have not started construction or are currently under construction. New home sales fell in all 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 Drop 5.4%
Existing home sales fell 3.4% in June to a seasonally adjusted annual rate of 5.12 million units after falling to 5.41 million units in May, according to the National Association of Realtors. It was the fifth consecutive month existing home sales fell. Sales were down 14.2% from June 2021. The inventory of existing homes rose to 1.26 million, a 3.0 months’ supply at the current sales pace, up from a 2.6-months’ supply in May. The median existing home price in June was $416,000, up 13.4% from June 2021, as prices increased in all regions. This marks 124 consecutive months of year-over-year increases, the longest-running streak on record. Properties typically remained on the market for 14 days in June, down from 16 days in May and 17 days in June 2021. The 14 days on the market are the fewest since NAR began tracking this statistic in May 2011. Eighty-eight percent of homes sold in June were on the market for less than a month.
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