Housing & Construction June 2023

Builder Confidence Rises to 50
Builder Confidence rose five points to 50 in May after rising to 45 in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the fifth consecutive monthly increase in confidence. All three major HMI indices posted gains in May. The HMI index gauging current sales conditions rose five points to 56, the component charting sales expectations in the next six months increased seven points to 57 and the gauge measuring traffic of prospective buyers increased two points to 53. It was the first time these components both returned to the 50+ range since June 2022. Builders continue to reduce prices and offer sales incentives to stimulate sales and help offset rising mortgage rates. Any number over 50 indicates that more builders view the component as good than view it as poor.
 
Building Permits Fall 1.5%
Overall building permits fell 1.5% in April to 1.42 million annual units, reversing two months of overall increases. Single-family permits rose 3.1% in April to 855,000 annual units but were down 21.2% from April 2022. Multifamily permits fell 7.7% to an annualized pace of 561,000 units. Permits fell in all regions.
 
Housing Starts Rise 2.2%
Housing starts rose 2.2% in April to a seasonally adjusted annual rate of 1.40 million units after falling to a downwardly revised number in March. Single-family starts rose 1.6% to a seasonally adjusted annual rate of 846,000 after March numbers were downwardly revised. Starts were down 28.1% from April 2022. Multifamily starts rose 3.2% to 555,000 annual units after March numbers were downwardly revised. Regional starts were mixed.
 
New Home Sales Rise 4.1%
New home sales rose 4.1% in April to a seasonally adjusted annual rate of 683,00 after March sales were revised downward, according to the National Association of Home Builders (NAHB). Year-to-date sales were down 9.7% from 2022. New home sales were down 3.4% from March 2022. New single-family home inventory increased 0.2% after six consecutive months of declines but remained at a 7.6-months’ supply; about six months is considered a normal, balanced market. The median new home sale’s price in April fell to $420,800, about an 8% decline from April 2022. Regional sales were down year to date in all regions. 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 3.4%
Existing home sales fell 3.4% in April to a seasonally adjusted annual rate of 4.28 million units after falling to 4.44 million units in March, according to the National Association of Realtors. Sales were down 22.4% from April 2022. The median existing-home sales price of $388,800 was up from March but down 1.7% from April 2022. The inventory of unsold existing homes increased 7.2% from March to 1.04 million homes at the end of April, a 2.9 months' supply at the current sales pace. Single-family resale inventories rose 5.8% in April, the largest monthly increase since mid-2022. Existing home sales were down in all regions.
 
Regional Housing Data 

Mortgage Rates Rise to 6.57%

• 30-year fixed-rate mortgages rose to 6.57% at the end of May after rising to 6.4% at the end of April. Mortgage rates were 5.1% at the end of May 2022.
• The resilient economy and worries over the debt ceiling sent rates up in May. 
• Existing home owners are unwilling to put their homes on the market and give up their low mortgage rate, which is contributing to chronic inventory shortages and fueling the new home market.

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