Housing & Construction December 2018
Housing Starts Rise 1.5%
Housing starts rose 1.5% in October to a seasonally adjusted annual rate of 1.23 million units from an upwardly revised September reading. Single-family starts fell 1.8% to 865,000 units after falling to 871,000 units in September. Multifamily starts rose 10.3% to 363,000 units after falling to 330,000 units in September. Multifamily data tends to be particularly volatile on a month-to-month basis. NAHB Chief Economist Robert Dietz warned that housing affordability was becoming an increasing issue and builders are showing caution as consumer are delaying purchases. Nevertheless, 2018 construction volume should be the best since the Great Recession. Regional starts were mixed. Starts rose 13.5% in the West and 5.5% in the South. Starts fell 0.6% in the Midwest and 4.8% in the Northeast.
Building Permits Fall 0.6%
Overall building permit issuance fell 0.6% in October after falling 0.6% in September and 5.7% in August. Single-family permits fell 0.6% to 849,000 units and multifamily permits dropped 0.5% to 414,000 annualized units. Regional permit issuance was mixed. Permits rose 7.6% in the South and 3.9% in the West. Permits fell 2.4% in the Midwest and 5% in the Northeast.
New-Home Sales Drop 8.9%
Sales of newly built, single-family homes fell 8.9% in October to a seasonally adjusted annual rate of 544,000 units, the lowest pace of sales since December 2016. However, sales numbers for the previous three months were revised up, and sales were up 2.8% from October 2017. The inventory of new homes for sale rose to 336,000 in October after rising to 327,000 in September and has risen 18% over the past year. The median sales price fell 3.6% to $309,700 as the market continues to shift to lower-priced homes. The November NAHB/Wells Fargo homebuilders’ survey noted a sharp decline in buyer traffic. Regional sales were mixed. New home sales rose 6.3% in the Midwest, 4.1% in the West, and 3.8% in the South. Home sales fell 17.1% in the Northeast. 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 1.4%
Existing home sales rose 1.4% in October to a seasonally adjusted annual rate of 5.22 million units after dropping to 5.15 million units in September. Sales were 5.1% below October 2017. The National Association of Realtors said that rising inventory levels have brought more people back to the market. The median existing home price rose to $255,400; it was the 80th consecutive monthly increase in median prices. Total housing inventory dropped to 1.88 million homes in October from 1.9 million in September but was up from 1.80 million in October 2017. Inventory dropped to a 4.3-months supply in October from a 4.4-months supply in September but was up from 3.9 months a year ago. Regional home sales were mixed. Existing sales rose 1.5% in the Northeast, 1.9% in the South and 2.8% in the West. Sales dropped 0.8% in the Midwest. Rising prices and interest rates continue to limit the number of first-time buyers entering the market.
Builder Confidence Falls to 60
Builder confidence fell eight points to 60 in November after rising to 68 in October, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Despite the decline, confidence remained well in positive territory. Component scores were mixed. Current sales conditions fell seven points to 67 and buyer traffic fell eight points to 45. Sales expectations for the next six months dropped 10 points to 65. Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57. The Midwest dropped one point to 57, the South dropped two points to 68 and the West fell three points to 71.
Mortgage Rates Drop to 4.81%
A 30-year fixed-rate mortgage (FRM) dropped to 4.81% at the end of November after rising to 4.86% at the end of October. The 30-year FRM was 3.92% at the end of November 2017. Freddie Mac said that the recent stabilization in rates has drawn people back into the market and mortgage applications increased over the month.
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