Housing & Construction June 2024

Builder Confidence Falls to 45
Builder Confidence fell six points to 45 in May after holding steady at 51 in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Despite eight consecutive monthly declines, it was the first time the HIMI has been below 50 since May 2020. All three HMI component indices dropped in May, with current sales conditions falling six points to 51, sales expectations in the next six months dropping nine points to 51 and traffic of prospective buyers slipping four points to 30. Regional three-month moving averages were mixed. Any number over 50 indicates that more builders have a positive outlook than a negative one.
 
Building Permits Fall 3.0%
Overall building permits fell 3.0% in April to 1.44 million units after rising to 1.46 million units in March. Single-family permits fell 0.8% in April to 976,000 units, the lowest pace since August 2023. Multifamily permits fell 1.2% to 485,000 annual units after rising to 487,000 annual units in March. Permit issuance was down in all regions. 
 
Housing Starts Fall 5.7%
Housing starts fell 5.7% in April to a seasonally adjusted annual rate of 1.36 million units in April after plunging to 1.32 million units in March. Single-family starts fell 0.4% in April after falling 12.4% to a seasonally adjusted annual rate of 1.022 million units in March. Single-family starts were up 17.7% from April 2023. Multifamily starts, which include apartment buildings and condos, fell to 329,000 annualized units but were up 30.6% year over year. Multifamily starts are typically very volatile. Regional housing starts were mixed.
 
New Home Sales Fall 4.7%
New home sales fell 4.7% in April to a seasonally adjusted annual rate of 634,000 new homes, according to the National Association of Home Builders. Sales were down 7.7% from April 2023. New single-family home inventory remained high at 480,000 homes, a 9.1 months’ supply at the current building pace; a 6 months’ supply is considered normal. Completed, ready to occupy inventory (97,000 homes in April) is up 42.6% from a year ago but remains just 20% of total inventory. April’s median new home sale price was $433,500, down 1.4% from March, and up 3.9% from April 2023. New home sales were up year over year 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 1.9%
Existing home sales slipped 1.9% in April to a seasonally adjusted annual rate of 4.14 million homes after falling to 4.19 million units in March, according to the National Association of Realtors. Sales were down 1.9% from April 2023. The median existing-home sales price grew 5.7% from April 2023 to $407,600, the tenth consecutive month of gains. The inventory of unsold homes climbed 9% from one month ago to 1.21 million at the end of April, or the equivalent of 3.5 months' supply at the current monthly sales pace, up from 3.2 months in March and 3.0 Months in April 2023.  A chronic shortage of existing inventory continues to spur new home construction and sales despite high prices. Regional existing home sales were mixed.
 
Regional Housing Data

Mortgage Rates Fall to 7.0%

• 30-year fixed-rate mortgages fell back to 7.0% at the end of May after rising to 7.2% at the end of April. Mortgage rates were 6.4% at the end of April 2023.
• Rates had dropped during the month, but inched back up after mixed economic signals caused people to dial back expectations for a rate cut from the Fed.
• Uneasy potential homebuyers are still sitting on the sidelines waiting for the Fed to cut rates even though home prices continue to rise, and inventory remains in short supply.

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