Housing & Construction November 2017

Housing Starts Fall 4.7%
Housing starts fell 4.7% in September to a seasonally adjusted annual rate of 1.13 million units after falling to 1.18 million units in August. Starts are up 9.1% from September 2016. Single-family starts fell 4.6% to a seasonally adjusted annual rate of 829,000 units after rising to 851,000 units in August. The decline in single-family starts was due to a 15.3% drop in the hurricane-ravaged South. All other regions saw an increase in single-family starts. Regional starts were mixed. Starts rose 15.7% in the West. Starts fell 9.2% in the Northeast, 9.3% in the South and 20.2% in the Midwest.
 
Building Permits Fall 4.5%
Building permits fell 4.5% in September to a seasonally adjusted annual rate of 1.22 million units after rising to 1.30 million units in August. Single-family permits rose 2.4% to 819,000 units after falling to 800,000 units in August. Multifamily permits fell 16.1% to 396,000 units after rising to 500,000 units in August. Regional permit issuance was mixed. Permits rose 9.2% in the Northeast and 0.5% in the Midwest. Permits fell 5.6% in the South and 9.2% in the West.
 
New-Home Sales Rise 18.9% 
Sales of newly built, single-family homes rose 18.9% in September to a seasonally adjusted annual rate of 667,000 units from an upwardly revised August reading. New home sales were up 8.6% from September 2016. The inventory of new homes for sale fell to 279,000 units in September from 284,000 in August, a 5.0-month supply at the current sales pace, down sharply from a 6.1-month supply in August. Sales were up in all regions. Sales rose 33.3% in the Northeast, 25.8% in the South, 10.6% in the Midwest and 2.9% in the West. One of the reasons there have been such dramatic swings in the percentages of increases and losses is that the overall number of sales remains relatively low. 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 0.7%
Existing home sales rose 0.7% in September to a seasonally adjusted annual rate of 5.39 million from an upwardly revised 5.35 million in August but were 1.5% below the pace of August 2016. It was the first increase in existing home sales in four months. Single-family home sales rose 1.1% to a seasonally adjusted annual rate of 4.79 million in September from 4.74 million in August but were 1.2% below the pace of September 2016. Total housing inventory at the end of September rose 1.5% to 1.90 million existing homes, still 6.4% below inventory a year ago. Inventory has fallen year-over-year for 28 consecutive months. Unsold inventory was at a 4.2-month supply at the current sales pace, down from 4.5 months a year ago. Regional sales were mixed. Sales were unchanged in the Northeast and fell 0.9% in the South. Sales rose 1.6% in the Midwest and 3.3% in the West. Demand for housing is still strong, but low inventory, price appreciation and tight credit continue to depress sales.
 
Builder Confidence Rises to 68
Builder confidence rose four points to 68 in October after falling to 64 in September, according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index). It was the highest reading since May, and according to NAHB, shows that builders are rebounding from the initial shock of Hurricanes Harvey and Irma. All three HMI components posted gains in October. The component gauging current sales conditions rose five points to 75, the index charting sales expectations in the next six months rose five points to 78 and the component measuring buyer traffic rose one point to 48. The three-month moving averages for regional HMI scores were mixed. The South rose two points to 68 and the Northeast rose one point to 50. Both the West and Midwest were unchanged at 77 and 63, respectively.
 
Remodeling Index Rises
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) rose two points to 57 in the third quarter. The RMI has been at or above 50 for 18 consecutive quarters. Fifty is the level that indicates that a majority of remodelers report market activity is higher compared to the prior quarter. Remodelers are finding it more difficult to find skilled labor, with more than 90% of respondents saying there is a shortage of finish carpenters. In the third quarter of 2013 just 44% of respondents reported a shortage of finish contractors.
 
Mortgage Rates Rise to 3.94% 
A 30-year fixed-rate mortgage (FRM) rose to 3.94% at the end of October after being virtually unchanged at 3.83% at the end of September. In October last year 30-year rates averaged 3.47%. 

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