Builder Confidence Falls to 82
Builder confidence fell two points to 82 in March after rising to 84 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It marked the seventh consecutive month the index was above 80. While buyer demand is strong, rising costs and lengthening delivery times for materials, particularly softwood lumber, are impacting sentiment. Supply shortages and strong demand have sent lumber prices up 200% since last April, which is adding about $24,000 to the cost of the average new home. The HMI index gauging current sales conditions fell three points to 87, while the component measuring sales expectations in the next six months rose three points to 83. The gauge charting traffic of prospective buyers held firm at 72. Regional scores were mixed for the fourth consecutive month. Any number over 50 indicates that more builders view the component as good than view it as poor.
Building Permits Fall 10.8%
Overall building permits fell 10.8% in February to a seasonally adjusted annual rate of 1.68 million units after rising to 1.88 million units in January. Single-family permits dropped 10.0% to a 1.14 million unit pace after rising to 1.27 million units in January. Multifamily permits dropped 12.5% to 539,000 units after jumping to 612,000 units in January. On a year-to-date regional basis, permits were mixed.
Housing Starts Fall 10.3%
Housing starts fell 10.3% in February to a seasonally adjusted annual rate of 1.42 million units after falling to 1.58 million units in January. Single-family starts dropped 8.5% to a seasonally adjusted annual rate of 1.04 million units after dropping to 1.16 million units in January. The multifamily sector, which includes apartment buildings and condos, dropped 15% to a 381,000 units pace after rising to 418,000 units in January. Combined single-family and multifamily regional starts were mixed year to date compared to 2020. Single-family starts for the first two months of the year are up 6.4% compared to 2020, but the number of single-family homes permitted but not yet under construction has jumped 36% since February 2020.
Single-family starts are expected to rise this year, but at a much slower pace than they did during 2020.
New Home Sales Fall 18.2%
New home sales fell 18.2% in February to a seasonally adjusted annual rate of 775,000 units after rising to 923,000 units in January. Inventory rose slightly to a 4.8 months supply, with 312,000 new single-family homes for sale, 12.7% below February 2020. The median sales price was $349,400, up 5.3% over the $331,800 median sales price in February 2020. Regional new home sales were mixed. 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 6.6%
Existing-home sales fell 6.6% in February to a seasonally-adjusted annual rate of 6.22 million after inching up to 6.69 million in January, according to the National Association of Realtors (NAR). Sales were up 9.1% from February 2020, the last month before the pandemic began impacting results. The median existing-home sales price rose $10,000 to $313,000, 15.8% higher than February 2020, as prices rose in every region. It was the 108th consecutive month that prices have increased. As of the end of February, housing inventory remained at a record-low of 1.03 million units, down by a record decline of 29.5% year over year. Properties typically sold in 20 days, also a record low. Wells Fargo believes that sales will likely moderate further in coming months, reflecting low inventories and the impact of harsh winter weather, particularly in Texas during February. Affordability is also becoming more challenging, with the median price of an existing home jumping 15.8% over the past year to $313,000. The spike in prices also reflects a shift in composition of sales, however, with more buyers competing for larger homes priced above the median, which has pulled both the average and median price higher over the past year. Regional existing-home sales for January were mixed but were up year over year in all regions.
Regional Housing Data
Mortgage Rates Rise to 3.17%
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