Housing & Construction December 2016
HOUSING STARTS JUMP 25.5%
Housing starts jumped 25.5% in October to a seasonally adjusted annual rate of 1.32 million units after falling to 1.047 million units in September. Single-family starts rose 10.7% to a seasonally adjusted annual rate of 869,000 units after rising to 783,000 units in September. Multifamily starts bounced back, rising 68.8% to 454,000 units after falling to 264,000 units in October. Starts rose in all regions. Starts were up 44.8% in the Northeast, 44.1% in the Midwest, 17.9% in the South and 23.2% in the West. NAHB says that such a high level of starts is not sustainable, but a firming job market, growing economy and rising household formations should keep the housing recovery on track into next year.
BUILDING PERMITS RISE 0.3%
Building permits inched up 0.3% in October to a seasonally adjusted annual rate of 1.23 million, virtually unchanged from September’s numbers. Single-family permits rose 2.7% to a rate of 762,000 and multifamily permits fell 3.3% to 467,000. Regional permit issuance was mixed. Permits increased 12.1% in the Midwest and 7.5% in the West. Permits dropped 21.1% in the Northeast and 2.4% in the South. Permits have been above the one million level for sixteen consecutive months, the longest stretch in seven years.
NEW-HOME SALES SLIP 1.9%
Sales of new single-family homes fell 1.9% in October from a downwardly revised September reading to a seasonally adjusted annual rate of 563,000 units. Numbers for July and August were also revised downward. The inventory of new homes for sale rose to 246,000 in October from 235,000 in September, a 5.2-month supply at the current sales pace, up from a 4.8-month supply in September. Regional sales were mixed. Sales fell 9.1% in the Northeast, 13.7% in the Midwest and 3% in the South. Sales increased 8.8% in the West. Analysts noted that the mix of sales has shifted slightly toward lower-priced homes, and pointed out that mortgage rates have gone up nearly half a percentage point since the presidential election. Much of the inventory in the pipeline is either under construction or not yet started. 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 RISE 2.0%
Existing home sales rose 2.0% in October to a seasonally adjusted annual rate of 5.60 million from an upwardly revised 5.49 million in September. Sales were 5.9% above a year ago and at the highest level since February 2007. The NAR says two consecutive months of big increases are due to the release of pent-up demand; many would-be buyers during the summer were frustrated by a lack of inventory. Total housing inventory at the end of October dropped 0.5% to 2.02 million existing homes available for sale, a 4.3-month supply at the current sales pace, down from 4.4 months in September of this year and unchanged from October 2015. Inventory has fallen year-over-year for 17 consecutive months. Sales rose in all regions. Sales were up 1.4% in the Northeast, 2.3% in the Midwest, 2.8% in the South and 0.8% in the West.
BUILDER CONFIDENCE STEADY AT 63
Builder confidence held steady in November after falling two points to 63 in October. Confidence remained at the second-highest level of 2016 according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index) The component measuring buyer traffic rose one point to 47, the index gauging current sales conditions held steady at 69 and the component measuring sales expectations for the next six months fell two points to 69. The three-month moving averages for HMI scores rose two points in the Northeast (45), Midwest (58) and West (77). The South remained unchanged at 66. It was the nineteenth consecutive month the HMI remained above 50. NAHB says builders continue to express concerns about shortages of lots and labor.
MORTGAGE RATES RISE TO 4.03%
The 30-year mortgage rate rose to 4.03% during the last week of November, up from 3.47% at the end of October. In November of last year 30-year rates averaged 3.95%. Though still extremely low by many measures, rates have gone up more than half a point since Trump’s election. Experts attribute the rise to several factors including a better-than-expected September jobs report.
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