Housing Starts Fall 12.3%
Housing starts fell 12.3% in June to a seasonally adjusted annual rate of 1.17 million units after rising to 1.35 million units in May. Single-family starts fell 9.1% to 858,000 units after rising to 936,000 in May. Multifamily starts dropped 19.8% to 315,000 units in June after rising to 414,000 units in May. Multifamily data tends to be particularly volatile on a month-to-month basis. 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 Fall 2.2%
Overall building permit issuance fell 2.2% in June to a seasonally adjusted annual rate of 1.27 million units after rising to 1.3 million units in May. Single-family permits edged up 0.8% to 850,000 units, the second lowest reading of the year. Multifamily permits fell 7.6% to 423,000 units after falling to 457,000 units in May. Regional permit issuance was mixed. Permits rose 6.2% in the South. Permits fell 1.8% in the West, 16.4% in the Northeast and 18.7% in the Midwest.
New-Home Sales Fall 5.3%
Sales of newly built, single-family homes fell 5.3% in June to a seasonally adjusted annual rate of 631,000 units and May sales were revised down. It was the lowest pace of monthly sales since October 2017, but sales were up 6.9% over the first half of the year. The inventory of new homes for sale ticked up to 301,000 in June from 299,000 in May, a 5.7-month supply at the current sales pace. The median sales price was $302,100. Regional sales were mixed. New home sales rose 36.8% in the Northeast. Sales fell 13.4% in the Midwest, 7.7% in the South and 5.2% in the West. 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 0.6%
Existing home sales dropped 0.6% in June to a seasonally adjusted annual rate of 5.38 million after falling to a downwardly revised 5.41 million in May. It was the fourth consecutive month that year-over-year existing home sales declined and left sales 2.2% below a year ago. Total housing inventory at the end of June climbed 4.3% to 1.95 million existing homes available for sale, 0.5% above a year ago and a 4.3-month supply at the current sales pace. It was the first year-over-year increase in inventory levels since June 2015. Regional home sales were mixed. Sales fell 5.9% in the Northeast and 2.2% in the South where inventory is in particularly short supply. Sales rose 5.9% in the Northeast and 0.8% in the Midwest. The NAR says the culprit is the extremely low level of inventory available; there are nowhere near enough listings to meet demand, which also means prices keep climbing, putting the home they want out of reach for many people.
Builder Confidence Steady at 68
Builder confidence held steady in July 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 remained unchanged at 74, expectations in the next six months dropped two points to 73 and buyer traffic rose two points to 52. According to NAHB, builders are increasingly 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 rose one point to 57, the Midwest remained unchanged at 65, the West fell one point to 75 and the South fell one point to 70.
Remodeling Confidence Rises to 58
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) rose one point to 58 in the second quarter. The RMI has been consistently above 50 for the past five years. Fifty is the level that indicates that more remodelers report that market activity is higher compared to the prior quarter than report it is lower. However, NAHB says that increasing costs for materials are holding back growth, and the current labor shortage is contributing to a backlog of jobs. Current market conditions decreased one point from the first quarter of 2018 to 57. Among its three major components, major additions and alterations fell one point to 55, minor additions and alterations decreased two points to 58, and the home maintenance and repair component rose two points to 59. The future market indicators gained four points from the previous quarter to 59. Calls for bids fell two points to 55, amount of work committed for the next three months increased two points to 56, the backlog of remodeling jobs jumped nine points to 66 and appointments for proposals rose seven points to 61.
Mortgage Rates Steady
A 30-year fixed-rate mortgage (FRM) was virtually flat at the end of July compared to June at 4.54%, dropping slightly from 4.55% in June. Last year at the end of July rates averaged 3.92%.
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