Housing Starts Fall 5.3%
Housing starts fell 5.3% in September to a seasonally adjusted annual rate of 1.2 million units after rising to 1.28 million units in August. Single-family starts fell 0.9% to 871,000 units after rising to 876,000 units in August. Multifamily starts fell 15.2% to 330,000 annual units after rising to 408,000 units in August. 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. Although lumber prices have declined and the new trade deal with Canada and Mexico is expected to be approved soon by each country, builders remain concerned about labor shortages, and the number of open construction jobs has reached a post-recession high. Regional starts were mixed. Starts rose 29% in the Northeast and 6.6% in the West. Starts fell 13.7% in the South and 14% in the Midwest.
Building Permits Fall 0.6%
Overall building permit issuance fell 0.6% in September after falling 5.7% in August. Single-family permits rose 2.9% to an annualized rate of 851,000 while multifamily permits dropped 7.6% to 390,000 units. Permit issuance rose 11.1% in the West and 0.6% in the South. Permits were down 9.8% in the Northeast and 18.9% in the Midwest.
New-Home Sales Fall 5.5%
Sales of newly built, single-family homes fell 5.5% to a seasonally adjusted annual rate of 553,000 units in September and sales for August, July and June were revised down, leaving sales up 3.5% from September 2017. It was the lowest sales pace since December 2016. The inventory of new homes for sale rose to 327,000 in September after rising to 318,000 in August. The median sales price was $331,500. Regional sales were mixed. New home sales rose 6.9% in the Midwest. Sales fell 1.5% in the South, 12% in the West and 40.6% in the Northeast. On a year-to-date basis, home sales are higher in all regions except the Northeast, which has registered a 16.5% decrease in sales volume. 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 Drop 3.4%
Existing home sales dropped 3.4% to a seasonally adjusted annual rate of 5.15 million units in September after stabilizing at 5.34 million homes in August. Sales were 4.1% below September 2017. It was the lowest level for existing home sales since November 2015. The median existing home price has risen for 79 consecutive months and was $258,100 in September. Total housing inventory dropped to 1.9 million homes in September but is up from 1.86 million in September 2017. Inventory was at a 4.4-months supply, up from 4.1 months in August and 4.2 months a year ago. Regional home sales were mixed. Existing sales were flat in the Midwest, but fell 2.9% in the Northeast, 3.6% in the West and 5.4% in the South. The combination of rising interest rates, high home prices and lack of inventory continues to push entry-level and first-time buyers out of the market.
Builder Confidence Rises to 68
Builder confidence rose one point to 68 in October after being stable in September, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Component scores were mixed. Current sales conditions rose one point to 74, expectations rose one point to 75 and buyer traffic rose four points to 53. The recent decline in lumber prices from record-high levels over the summer was a welcome relief, but builders still face many challenges producing competitively priced homes, especially in the face of rising wages and labor shortages. Looking at the three-month moving averages for regional HMI scores, the Northeast rose three points to 57 and the South rose one point to 71. The West held steady at 74 and the Midwest fell two points to 57.
Mortgage Rates Rise to 4.86%
A 30-year fixed-rate mortgage (FRM) rose to 4.86% at the end of October after rising to 4.72% at the end of September and 3.94% at the end of October last year. Rates inched up despite the volatility of the market in October. Freddie Mac expects rates to continue to rise gradually, which will put downward pressure on homebuying.
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