Housing & Construction October 2022
Builder Confidence Falls to 46
Builder confidence fell three points in September to 46 after dropping six points to 49 in August, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the ninth consecutive monthly decline for the HMI after it hit an all-time high of 90 last November. The decline left the HMI below 50 for the second consecutive month. Rising inflation, higher mortgage rates and production bottlenecks are leading to slowing traffic and shaking confidence. All three HMI components posted declines in September. Current sales conditions dropped three points to 54, sales expectations in the next six months declined one point to 46 and traffic of prospective buyers fell one point to 31. Scores fell in all regions. Any number over 50 indicates that more builders view the component as good than view it as poor.
Building Permits Fall 10%
Overall building permits fell 10% in August to a 1.52 million unit annualized pace after falling to 1.67 million units in July. Single-family permits fell 3.5% in August to 899,000 units after falling to 967,000 units in June. It was the lowest reading for single-family permits since June 2020. Multifamily permits dropped 17.9% to 618,000 permits after rising to an annualized 746,000 permits in July. Regional permits were mixed year to date.
Housing Starts Rise 12.2%
Housing starts rose 12.2% in August to a seasonally adjusted annual rate of 1.58 million units after falling to 1.45 million units in July. Single-family starts increased 3.4% to 935,000 units after dropping 10.1% to 916,000 units in July and were down 4.0% year to date. Multifamily starts jumped 28% to 640,000 units after falling to 530,000 units in July. Regional starts were mixed. NAHB says higher construction costs and interest rates are causing builder traffic to decline.
New Home Sales Rise 28.8%
New home sales rose 28.8% in August to a seasonally adjusted annual rate of 685,000 new homes after falling to an upwardly revised reading in July. Sales were down 14% from August 2021. Inventory remained elevated at 461,000 new homes, an 8.1 months’ supply, up 24.6% from August 2022. However, only 49,000 of those new homes are completed and ready to occupy. The remaining are currently under construction or have not even started construction. The median new home price was up 8.2% from August 2021 to $436,800. The slowing in price increases reflects the growing number of builders who are cutting prices due to falling demand. New home sales fell 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 0.4%
Existing home sales fell 0.4% in August to a seasonally adjusted annual rate of 4.80 million after dropping almost 6% to 4.81 million in July, according to the National Association of Realtors. It was the seventh consecutive month existing home sales fell. Sales were down 19.9% from August 2021. The inventory of existing homes dropped for the first time in five months, falling to 1.28 million homes, a 3.2-months’ supply at the current sales pace, down from 3.2 months in July. The median existing home price in July fell to $389,500 but was still up 7.7% from August 2021. Median prices have no increased year over year for 127 consecutive months, the longest-running streak on record. Regional sales were mixed.
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