Housing & Construction September 2017

Housing Starts Fall 4.8%
Housing starts fell 4.8% in July to a seasonally adjusted annual rate of 1.16 million units after rising to 1.22 million units in June. Single-family starts fell 0.5% to a seasonally adjusted annual rate of 856,000 units after June numbers were strongly revised upwards. Multifamily starts fell 15.3% to 299,000 units after rising to 366,000 units in June. Regional starts were mixed. Starts rose 0.6% in the South, the nation’s largest housing market. Starts fell 1.6% in the West, 15.2% in the Midwest and 15.7% in the Northeast.
 
Building permits Fall 4.1%
Building permits fell 4.1% in July to a seasonally adjusted annual rate of 1.22 million units after rising to 1.25 million units in June. Single-family permits held steady at 811,000 units and multifamily permits fell 11.2% to 412,000 units after jumping to 443,000 units in June. Regional permit issuance was mixed. Permits rose 19.2% in the Northeast. Permits fell 1.4% in the South, 7.9% in the West and 17.4% in the Midwest.
 
New-Home Sales fall 9.4%
Sales of newly built, single-family homes fell 9.4% in July to a seasonally adjusted annual rate of 571,000 units from an upwardly revised reading in June. It was the lowest sales reading since December 2016. New home sales have risen 9.2% so far this year. The inventory of new homes for sale rose slightly to 276,000 in July, a 5.8-month supply at the current sales pace, up from a 5.4-month supply in June. Sales continue to be held back by shortages of inventory, lots and labor and rising costs for building materials. Regional sales were mixed. New home sales rose 6.2% in the Midwest. Sales fell 4.1% in the South, 21.3% in the West and 23.8% in the Northeast. 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 1.3%
Existing home sales fell 1.3% in July to a seasonally adjusted annual rate of 5.44 million units after dropping to a downwardly revised 5.51 million units in June. Sales were 2.1% above July 2016. Single-family home sales fell 0.8% in July to an annual rate of 4.84 million units after falling to 4.88 million units in June, but remained 1.7% above the pace a year ago. Total housing inventory at the end of July dropped 1.0% to 1.92 million existing homes available for sale, 9.0% below a year ago. Inventory has now fallen year over year for 26 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, down from 4.8 months a year ago. Regional sales were mixed. Sales rose 2.2% in the South and 5.0% in the West. Sales fell 14.5% in the Northeast and 5.3% in the Midwest. Homes are selling very quickly, with the typical listing on the market for just 30 days. The slowdown was largely due to falling sales in the Midwest and Northeast. Competition among homebuyers is intense, with more than half of the homes sold over the summer on the market for less than one month. Low supplies, affordability and tight credit are keeping the percentage of first-time buyers in the low thirties, down from 35% in 2016.
 
Builder Confidence rises to 68
Builder confidence rose two points to 68 in August after falling to 64 in July, according to the HMI (National Association of Home Builders/Wells Fargo Housing Market Index). NAHB says members are encouraged by rising demand in the new-home market. NAHB expects to see a gradual strengthening of the housing market, but noted that builders continue to face supply-side challenges, including lot and labor shortages and rising costs for building materials. All thee HMI components rose in August, with the component gauging current sales conditions rising four points to 74, the component charting sales expectations in the next six months jumping five points to 78 and the component measuring buyer traffic rising one point to 49. The three-month moving averages for regional HMI scores were mixed, with the Northeast rising one point to 48, while the West, Midwest and South remained unchanged at 75, 67 and 66, respectively.
 
Mortgage Rates Fall to 3.86%
A 30-year fixed-rate mortgage (FRM) fell to 3.86% at the end of August after rising to 3.92% at the end of July. A 30-year FRM was at the lowest rate of the year, thanks to falling yields on the 10-Year Treasury Bond. In August last year 30-year rates averaged 3.7%. Mortgage rates dropped for four consecutive weeks in August, as bond yields lagged on the tepid outlook for inflation. 

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