Housing Starts Post Highest Level in 3 Years

Article by: Associated Press, Reuters

Housing Starts Post Highest Level in 3 Years

Housing starts rose 1.5 percent in January from December, led by a surge in apartment construction, the Commerce Department reported Thursday.

Housing starts in January reached a seasonally annual rate of 699,000 units, reaching its highest level since October 2008.

The main reason for the January increase was due to a 14.4 percent rise in groundbreaking on rental properties or buildings with five units or more.

However, while multifamily units saw a rise in January, the construction of single-family homes had a modest drop of 1 percent for the month. The January decrease follows a strong 12 percent gain in single-family construction in December.

While single-family home construction has made strides over the last few months, construction still remains low and is at about half the rate that is considered healthy for the sector.

Still, more builders are feeling encouraged about the signs of a gradual recovery in the new-home market. Building permits in January, a future gauge to construction, ticked up 0.7 percent. Also, a recent index showed that builder sentiment was at its highest level in nearly five years.

Source: “Single-Family Homes Cool off After December Jump; Apartments Rebound as Starts Rise 1.5%,” Associated Press (Feb. 16, 2012) and “Housing Starts Climb More Than Expected in January,” Reuters (Feb. 16, 2012); Daily Real Estate News (February 17, 2012) | Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, located in Nashville, Tennessee

Construction Spending Rises for 5th Straight Month

Article by: Associated Press, Washington Post, Daily Real Estate News

Construction Spending Rises for 5th Straight Month

The worst year for home building on record was 2011, but the year ended with a surge in construction spending, as the new-home sector heads into 2012 on a brighter note.

For the fifth straight month, builders spent more on homes and projects, the Commerce Department reported Wednesday. Construction projects increased 1.5 percent in December to a seasonally adjusted annual rate of $816.4 billion — the highest level in nearly two years.

“The gains coincide with other signs that show the troubled housing industry may be improving,” the Associated Press reports. “Builders are more confident after seeing more interest in homes, and single-family home construction rose in the final three months of last year.”

Source: “Manufacturing Growth Fastest Since June; Construction Spending Up for Fifth Straight Month,” Associated Press (Feb. 1, 2012); Washington Post; Daily Real Estate News (February 2, 2012) | Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

New-Home Construction Bounces Back, Soars 9.3%

New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.

Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.

Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.

November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.

Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.

Builders Feeling More Confident

Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.

While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.

“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”

Source: Daily Real Estate News; “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders; Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

New-Home Building Soars 15% in September

Last month, home building was at its fastest pace in 17 months, rising 15 percent from August and posting the new-home sector’s best pace since April 2010, the Commerce Department reported Wednesday.

In September, single-family home building increased 1.7 percent, while apartment building jumped 53.4 percent.

Builders began work on a seasonally adjusted 658,000 homes in September. While that marks a big improvement, the level still remains only about half of the 1.2 million pace that economists consider healthy for the new-home sector.

Builders are continuing to struggle to compete against heavily discounted foreclosures and short sales that are plaguing many markets.

Building permits, which serve as a measure of future building, dropped 5 percent in September, the Commerce Department reported.

Yet, builders seem to be getting more optimistic that the new-home market is showing signs of improvement. The National Association of Home Builders reported on Tuesday that industry sentiment rose in October to 18, the highest level in over a year. However, overall sentiment about the industry remains low–any reading below 50 indicates negative sentiment about the housing market (a level that hasn’t been reached since April 2006).

Source: “September Home Building Rose 15%, But Permits for Future Homes Fell 5%” Associated Press (Oct. 19, 2011); Daily Real Estate News; Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

New-Home Sales Get a Boost

More people bought new homes last month with new-home sales rising 7.3 percent, the Commerce Department reported on Tuesday. It was the second straight month that new-home sales were up.

New-home sales rose to a seasonally adjusted annual rate of 323,000 homes in April, which is its highest level since December.

However, overall sales for the year still remain well below what economists consider a 700,000 healthy pace for the new-home sector.

The new-home market for the last five years has faced declines. It continues to battle against a glut of foreclosures across the country at ultra-low prices that have made competing a challenge.

Builders are keeping inventories low: A record low of 175,000 new homes were available for sale last month.

Meanwhile, the median price of a new home rose more than 2 percent in April, compared to the previous month, to $217,900. New-home prices are more than 30 percent higher than the median price of existing homes.

Source: “New-home Sales Up 7.3 Pct. in April After Sluggish Start to Year,” The Associated Press (May 24, 2011) and “U.S. April New Home Sales at 4-Month High,” Reuters News (May 24, 2011); Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

Market Comment for Week of May 23, 2011…

MARKET COMMENT   Mortgage bond prices rose last week pushing mortgage interest rates slightly lower. We started the week positive while stocks struggled. Housing starts, industrial production, and capacity use data all were weaker than expected which helped rates improve Tuesday. Lower than expected weekly jobless claims caused rates to initially spike higher Thursday morning. Fortunately the leading economics indicators data and decent 10Y TIPS auction helped stem that weakness. Mortgage bonds ended the week better by about 1/8 to 1/4 of a discount point.

The PCE core inflation data will be one of the more significant releases this week. Any indication of inflation would not bode well for lower rates.

LOOKING AHEAD

• New Home Sales; May 24; Consensus Estimate 288k; Important. An indication of economic strength and credit demand. A decrease may lead to lower rates.
• 2-year Treasury Note Auction; May 24; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
• Durable Goods Orders; May 25; Consensus Estimate Up 3.2%; Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
• 5-year Treasury Note Auction; May 25; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
• Q1 Revised GDP; May 26; Consensus Estimate Up 1.8%; Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
• Weekly Jobless Claims; May 26; Consensus Estimate 415k; Important. An indication of employment. Higher claims may result in lower rates.
• 7-year Treasury Note Auction; May 26; Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
• Personal Income and Outlays; May 27; Consensus Estimate Up 0.3%, Up 0.4%; Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
• PCE Core Inflation; May 27; Consensus Estimate Up 0.1%; Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
• U of Michigan Consumer Sentiment; May 27; Consensus Estimate 72; Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

PCE The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures excluding food and energy. As of July 2009 the figure now includes food services in the figure.

The report is significant in that the Fed uses the PCE in determining inflation as opposed to the prior use of the consumer price index. The reports vary in that the CPI in that the PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers.

Source: Todd Kabel, F&M Mortgage; Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

Housing Starts Jump 14.6% in January

Housing starts in January reached their highest rate in four months, increasing more than analysts expected, the Commerce Department reports. Housing starts jumped 14.6 percent to a seasonally adjusted annual rate of 596,000 units. 

Housing starts in January were helped by a 77.7 percent jump in multi-family homes. Single-family home construction, on the other hand, fell 1 percent.

Meanwhile, new home completions dropped to a record low of 512,000 units in January, falling 9.5 percent from the previous month. 

And after housing permits surged in December by 15.3 percent, housing permits for future housing projects sank in January. New building permits dropped 10.4 percent to a 562,000-unit pace in January–mostly pulled down by a drop in multi-family and single-family unit permits. 

Source: “U.S. Housing Starts Surge in Jan., Permits Tumble,” Reuters News (Feb. 16, 2011); Blog distribution provided by Kenneth Bargers and Bargers Solutions residential real estate services located in Nashville, Tennessee