Builder Confidence Falls to 79
Builder confidence fell three points to 79 in March after falling to 82 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI hit an all-time high of 90 last November. The decline marked the first time the HMI has been below 80 in six months. Ongoing lumber and building material supply side constraints, rising construction costs and expectations of higher interest rates continue to negatively affect builder sentiment even as buyer demand remains relatively solid. The HMI index gauging current sales conditions fell three points to 86, the index measuring sales expectations in the next six months fell 10 points to 70 and the index charting buyer traffic rose two points to 69. Regional scores remained mixed. Any number over 50 indicates that more builders view the component as good than view it as poor.
Building Permits Fall 1.9%
Overall permits fell 1.9% in February to 1.86 million annual units after inching up to 1.90 million units in January. Single-family permits were essentially unchanged at 1.21 million annual units. Multifamily permits dropped 4.4% to 652,000 annual units after dropping to 694,000 units in January. There are now 799,000 single-family homes under construction, a 28.3% year-over-year gain. Regional permits were mixed year to date.
Housing Starts Rise 6.8%
Housing starts rose 6.8% in February to a seasonally adjusted annual rate of 1.77 million units after falling to 1.64 million units in January. Starts were up 22.3% from February 2021. Single-family starts rose 5.7% to 1.22 million units after falling to 1.12 million units in January. Multifamily starts rose 9.8% to 554,000 units and were up 9.3% from February 2021. Regional starts were mixed. The number of single-family homes under construction continues to rise as supply chain log jams prevent homes from being completed. Rising costs combined with mortgage rates that are creeping up are making housing less affordable and pricing more first-time buyers out of the market.
New Home Sales Fall 2.0%
New home sales fell 2.0% in February to a seasonally adjusted annual rate of 772,000 homes after falling to a downwardly revised reading in January. New home sales are down 6.2% from February 2021. New single-family home inventory was up 33.0% over last year, rising to a 6.3 months’ supply, with 407,000 homes available for sale. However, just 35,000 homes are completed and ready to occupy. The median sales price rose to $400,600 in February and is up 10.6% compared to a year ago even as residential construction material costs are up 20% over the same period. Rising mortgage rates and construction costs depressed sales even though demand remains strong. 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 7.2%
Existing home sales fell 7.2% in February to a seasonally adjusted annual rate of 6.02 million units after jumping to 6.5 million units in January, according to the National Association of Realtors. Sales were down 2.4% from February 2022. The inventory of unsold existing homes increased slightly to 870,000 homes, a 1.7-months’ supply, after falling to an all-time low of 860,000 in January. The median existing-home sales price was up 15.0% year over year to $357,300. Year-over-year prices have risen for 120 consecutive months. Properties were on the market for an average of just 18 days in February, with homes priced under $500,000 being snapped up in even less time. Existing home sales fell in all regions.
Regional Housing Data
Mortgage Rates Rise to 4.67%
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