Housing & Construction October 2017

Housing Starts fall 0.8%
Housing starts fell 0.8% in August to a seasonally adjusted annual rate of 1.18 million units after falling to an upwardly revised number in July. Hurricane Harvey, which hit the last week in August, may have cut into starts in Houston, which has long been the number one market for single-family starts and a top market for apartment construction. Single-family starts rose 1.6% to a seasonally adjusted annual rate of 851,000 from a downwardly revised reading in July. Single-family starts are up 8.9% year to date.  Multifamily starts fell 6.5% to 329,000 from an upwardly revised number of starts in July, but are 9.9%below the same time period in 2016.  Regional starts were mixed. Starts rose 22.0% in the Midwest and 4.0% in the West. Starts fell 7.9% in the South and 8.7% in the Northeast.
 
Building permits Rise 5.7%
Building permits rose 5.7% in August to a seasonally adjusted annual rate of 1.30 million units after falling to 1.22 million units in July. Single-family permits fell 1.5% to 800,000 units after being steady in July. Multifamily permits rose 19.6% to 500,000 units after falling to 412,000 units in July.  Regional permit issuance was mixed. Permits rose 15.3% in the West, 8.8% in the Midwest and 3.7% in the South. Permits fell 13.0% in the Northeast.
 
New-Home Sales fall 3.4%
Sales of newly built, single-family homes fell 3.4% in August to a seasonally adjusted annual rate of 560,000 units from an upwardly revised reading in July. However, revisions to past months’ data subtracted 28,000 sales from June and May, with most of the corrections in the South. New home sales were up 7.5% from August 2016. The inventory of new homes for sale rose slightly to 284,000 in August, a 6.1-month supply at the current sales pace, up from a 5.8-month supply in July. Regional sales were mixed. New home sales were unchanged in the Midwest. Sales fell 2.6% in the Northeast, 2.7% in the West and 4.7% in the South. 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 1.7%
Existing home sales fell 1.7% in August to a seasonally adjusted annual rate of 4.74 million units after falling to an unrevised 5.44 million units in July. Single-family home sales dropped 2.1% in August to a seasonally adjusted annual rate of 4.74 million units from 4.84 million in July but are still 0.4% above the pace of August 2016. Total housing inventory at the end of August fell 2.1% and is now 6.5% lower than last year, marking the 27th consecutive month of year-over-year declines. 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 rose 10.8% in the Northeast and 2.4% in the Midwest. Sales fell 5.7% in the South and 4.8% in the West. Some of the decline in sales in the South was due to the impact of Hurricanes Harvey and Irma, which likely delayed closings. Demand is still strong, but low inventory, price appreciation and tight credit are depressing sales.
 
Builder Confidence falls to 64
Builder confidence fell three points to 64 in September after rising a downwardly revised one point in August, according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index). Hurricanes Harvey and Irma impacted the two largest states for new single-family homebuilding, which may interrupt activity in both states. Texas and Florida account for 25% of the nation’s single-family permits. NAHB expects builder confidence to rebound once the rebuilding process gets underway. All three HMI components posted losses in September but remained at healthy levels. The component gauging current sales conditions fell four points to 70, the index charting sales expectations for the next six months dropped four points to 74 and the component measuring buyer traffic slipped one point to 47. The three-month moving averages for regional HMI scores were mixed. The West increased three points to 77 and the Northeast rose one point to 49. The South dropped one point to 66 and the Midwest fell three points to 63.
 
Mortgage Rates Hold Steady
A 30-year fixed-rate mortgage (FRM) held virtually steady at the end of September at 3.83% after falling to 3.86% at the end of August. In September last year 30-year rates averaged 3.42%. 

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