Housing & Construction May 2019

Housing Starts Fall 0.3%   
Housing starts fell 0.3% in March to a seasonally adjusted annual pace of 1.14 million units and starts for February were revised lower. Single-family starts fell 0.4% in March to 785,000 units and multifamily starts remained steady at 354,000 units. Single-family starts are 5% below the level they were at during the first quarter of 2018. Regional starts were mixed. Combined single-family and multifamily starts year to date were down 4.2% in the Northeast, 10.9% in the Midwest and 27.1% in the West. Starts were up 1.5% in the South.
 
Building Permits Fall 1.7%
Building permits fell 1.7% in March to a seasonally adjusted annual level of 1.27 million units. Single-family permits fell 1.1% to 808,000 units, the lowest level in more than two years. Multifamily permits fell 2.7% to 461,000 units. Regional permits were mixed. Year to date, permits were down 3.7% in the Midwest, 0.4% in the South and 16.9% in the West. The level of permits in the Northeast was unchanged.
 
New-Home Sales Rise 4.5%
New-home sales rose 4.5% in March to a seasonally adjusted annual rate of 692,000 units and February sales were adjusted slightly. It was the highest pace of sales since February 2017. There were large gains at lower price points where demand is strong. In March of 2019 50% of new home sales were priced below $300,000, compared to 39% in March of 2018. The inventory of new homes for sale was 344,000, a 6-months’ supply at the current sales pace, a number that has remained fairly steady since December. The median sales price dropped to $302,700 in March from $315,300 in February and has been dropping since December as more activity has been occurring in the $200,000 to $400,000 price range. Median prices are down 9.7% year over year. Regional new home sales were mixed. New home sales fell 17.6% in the Northeast, 8.1% in the Midwest and 5.9% in the West. Sales rose 9.6% in the South, which accounted for 58% of all new home sales in March. 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 4.9%
Existing home sales fell 4.9% in March to a seasonally adjusted annual pace of 5.21 million after jumping a downwardly revised 11.2% in February. Sales were down 5.4% from March 2018. Sales declined in all regions, falling 2.9% in the Northeast, 7.9% in the Midwest, 3.4% in the South and 6.0% in the West. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.6 months in February and 3.6 months in March 2018. The median existing home price in March was $259,400, up 3.8% from March 2018. It was the 85th consecutive month of year-over-year increases in home prices, but the pace of home appreciation has definitely moderated, and homes are remaining on the market longer.
 
Builder Confidence Rises to 63
Builder confidence rose one point to 63 in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builders report solid demand for new single-family homes but are dealing with affordability problems stemming from what has become a chronic shortage of construction workers and buildable lots, according to NAHB. Scores for the HMI components were mixed. The index measuring current sales conditions rose one point to 69, the component gauging expectations in the next six months fell one point to 71 and the component measuring buyer traffic rose three points to 47. The three-month moving averages for regional HMI scores were mixed. The Northeast rose three points to 51, the South was up one point to 67 and the Midwest increased two points to 53. The West remained unchanged at 69.
 
Mortgage Rates Inch Up to 4.20%
A 30-year fixed-rate mortgage (FRM) rose to 4.20% at the end of April after falling to 4.06% at the end of March, ending a streak of four consecutive months of falling rates. Freddie Mac expects rates to average 4.5% this year and 4.8% next year.
 
Remodeling Index Falls to 54
The National Association of Home Builders’ Remodeling Market Index (RMI) fell three points to 54 in the first quarter. The RMI has been above 50 since the second quarter of 2013. A reading of 50 or higher indicates that the majority of remodelers report that market activity is higher compared to the previous quarter. Current market conditions fell four points to 53. Among the major components, major additions and alterations fell seven points to 49, minor additions and alterations dropped a point to 55 and home maintenance and repairs fell three points to 56.  Future market indicators fell two points to 54, calls for bids fell three points to 54, work committed for the next three months rose two points to 54, the backlog of jobs fell five points to 54 and appointments for proposals held steady at 55. NAHB says that demand is still strong in many parts of the country, due to insufficient home construction and aging housing stock, but it can be difficult to find skilled labor for remodeling projects. NAHB call for slowing growth due to declining home appreciation and existing home sales combined with rising construction costs.

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