Housing & Construction September 2018
Housing Starts Rise 0.9%
Housing starts rose 0.9% in July to a seasonally adjusted annual rate of 1.17 million units after falling to an upwardly adjusted reading for June. Single-family starts rose 0.9% to 869,000 units after falling to 858,000 units in June. Multifamily starts rose 3.0% to 306,000 units after dropping to a downwardly revised reading in June. Multifamily data tends to be particularly volatile on a month-to-month basis. Chronic labor shortages and rising costs for materials are delaying starts and making it tougher for builders to meet the growing demand for entry-level homes. NAHB expects single-family starts to rise 5% this year; multifamily starts are expected to fall slightly. Regional starts fell 3.0% in the West, 9.1% in the South, 35.8% in the Midwest and 40% in the Northeast.
Building Permits Rise 1.5%
Overall building permit issuance rose 1.5% to 1.31 million units in July after falling to 1.27 million units in June. Single-family permits rose 1.9% to 869,000 units after rising to 850,000 units in June. Multifamily permits rose 1.7% to 410,000 units after falling to an upwardly revised reading in June. Regional permit issuance was mixed. Permits rose 5.9% in the Northeast, 5.8% in the Midwest and 1.2% in the West. Permits fell 0.3% in the South.
New-Home Sales Fall 1.7%
Sales of newly built, single-family homes fell 1.7% in July to a seasonally adjusted annual rate of 627,000 units after June sales were revised up. The inventory of new homes for sale rose to 309,000 units in July after inching up to 301,000 in June, a 5.9-month supply at the current sales pace, up from a 5.7-month supply in June. The median sales price rose to $328,700. Regional sales were mixed. New home sales rose 10.9% in the West and 9.9% in the Midwest. Sales fell 3.3% in the South and 52.3% in the Northeast. Year-to-date, sales in the Northeast are down 14.5% as that region deals with impacts from tax reform and persistent affordability issues. 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 fell 0.7% in July to a seasonally adjusted annual rate of 5.34 million after falling to 5.38 million in June. It was the fifth consecutive month that year-over-year existing home sales declined and left sales 1.5% below a year ago. Total housing inventory at the end of July dropped 0.5% to 1.92 million existing homes available for sale after rising to 1.95 million homes in June. Unsold inventory is at a 4.3-month supply at the current sales pace, unchanged from a year ago. Regional home sales were mixed. Sales dropped 8.3% in the Northeast, 1.6% in the Midwest and 0.4% in the South. Existing home sales in the West rose 4.4%. The NAR says there are nowhere near enough listings to meet demand, which also means prices keep climbing, making it harder for first-time buyers to qualify for a mortgage.
Builder Confidence Drops to 67
Builder confidence dropped one point to 67 in August after falling to 68 in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Component scores were mixed. Current sales conditions dropped one point to 73, expectations slipped one point to 72 and buyer traffic dropped two points to 49. According to NAHB, builders remain very concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices continue to be a real issue, and 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 fell three points to 54 and the Midwest fell three points to 62. The South and West each held steady at 70 and 75, respectively.
Mortgage Rates Flat at 4.52%
A 30-year fixed-rate mortgage (FRM) was virtually flat at the end of August at 4.52%; mortgage rates have been hovering in a narrow range for the past three months. Last year at the end of August rates averaged 3.78%.
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