Nationally: New-Home Sales May Be in Trouble

Nationally: New-Home Sales May Be in Trouble
National Association of Home Builders | July 26, 2018

House 1057Sales of newly built single-family homes plunged to an eight-month low last month at a time when sales should be at their highest points of the year. New single-family home sales dropped 5.3 percent month-over-month in June to a seasonally adjusted annual rate of 631,000, the Commerce Department reported Wednesday. This marks the lowest monthly annualized sales pace since October 2017.

Builders say ongoing supply constraints are being exacerbated by recent tariff disputes, which are raising the costs of building materials. In April 2017, the Trump administration imposed anti-subsidy duties on imports of Canadian softwood lumber. Builders have said that move has significantly raised the cost of building a new home.

“Uncertainty caused by tariffs and the talk of trade wars are making home buyers more cautious, and builders are taking note of this situation,” says Randy Noel, chairman of the National Association of Home Builders. “Not only are consumers and builders concerned about the current lumber tariffs but also the next round of proposed tariffs on a number of goods and services.”

The median sales price of new homes dropped to $302,100 in June, 4.2 percent lower than a year prior. “That prices were lower likely shows the dominance of homes sold in the South—where prices are lower—than a lack of demand,” Robert Frick, corporate economist for Navy Federal Credit Union in Vienna, Va., told Reuters.

While new-home sales underperformed in June, the builders’ trade group still sees “solid demand for new-home construction.” New-home sales were up in the first half of 2018 and remain 6.8 percent higher on a year-to-date basis compared to last year, says Robert Dietz, NAHB’s chief economist.

But a shortage of new construction persists. In June, the stock of new homes rose to a nine-year high of 301,000 units, but supply is still just over half of what it was at the peak of the housing boom in 2006.

Source: The National Association of Home Builders and “U.S. New Home Sales at Eight-Month Low, Housing Slowing,” Reuters (July 25, 2018); REALTOR® Magazine 072618

Nationally: New-Home Sales Jump to Highest Level of 2018

Nationally: New-Home Sales Jump to Highest Level of 2018
National Association of Home Builders | June 26, 2018

The month of May saw a record number of new-home purchases. Sales of newly built single-family homes increased 6.7 percent in May to a seasonally adjusted annual rate of 689,000 units, the Commerce Department reported Monday. It marks the highest number of new-home sales of the year and the second highest in sales since the Great Recession.

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“Sales numbers continue to grow, spurred on by rising home equity, job growth, and reports of a greater number of millennials entering the single-family housing market,” says Randy Noel, chairman of the National Association of Home Builders.

The inventory of new homes for sale was 299,000 in May—a 5.2-month supply at the current sales pace. The median sales price for a new home last month was $313,000.

“We saw a shift to more moderately priced home sales this month, which is an encouraging sign for newcomers to the market,” says Michael Neal, the NAHB’s senior economist. “Since the end of the Great Recession, inventory has tracked the pace of sales growth. While we expect continued gains in single-family housing production, inventory may be partially constrained by ongoing price increases for lumber and other construction materials.”

New-home sales posted the largest increase in the South last month, rising 17.9 percent month over month and reaching a post-recession high. Sales remained unchanged in the Midwest, while sales fell 10 percent in the Northeast and 8.7 percent in the West.

Source: National Association of Home Builders; REALTOR® Magazine Online 062618

Nationally: New-Home Construction Surges to Highest Level in Decade

Nationally: New-Home Construction Surges to Highest Level in Decade
National Association of Home Builders | June 20, 2018

House 1052More new homes entered the pipeline in May than any other month since the end of the Great Recession. Total housing starts increased 5 percent in May to a seasonally adjusted annual rate pace of 1.35 million units, the Commerce Department reported Tuesday. That marks the highest housing starts since July 2007.

Broken out, single-family starts rose 3.9 percent to 939,000 units in May—the second-highest reading since the Great Recession. The multifamily sector increased 7.5 percent to 414,000 units. Single-family and multifamily production are now 9.8 percent and 13.6 percent higher, respectively, than a year ago.

“New-home construction activity soared to its highest level in over a decade, which is fantastic news as more housing inventory will be available as the year proceeds,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Moreover, construction and real estate industry jobs are being created and boosting the economy. [As a result,] GDP growth of 4 percent to 5 percent is possible in the second quarter.”

The Midwest saw the biggest jump in housing production last month, with combined single-family and multifamily housing starts rising 62.2 percent. Meanwhile, starts fell 0.9 percent in the South, by 4.1 percent in the West, and by 15 percent in the Northeast.

“The Midwest region experienced the biggest gain and hence the region will remain more affordable,” Yun notes. “The more unaffordable West region will continue to experience an intense housing shortage, as both housing permits and housing starts fell in that region. For the country as a whole, an additional 20 percent to 25 percent gain in home construction is needed to make the market more balanced.”

Housing starts will likely hit a snag in the coming weeks. Permits—a gauge of future activity—fell 4.6 percent in May to 1.3 million units. The biggest drop in permits was in the multifamily sector, which saw permits tumble 8.7 percent to 457,000. Single-family permits dropped 2.2 percent to 844,000.

“Ongoing job creation, positive demographics, and tight existing home inventory should spur more single-family production in the months ahead,” says Robert Dietz, the National Association of Home Builders’ chief economist. “However, the softening of single-family permits is consistent with our reports showing that builders are concerned over mounting construction costs, including the highly elevated prices of softwood lumber.”

Source: National Association of Home Builders; REALTOR® Mag Online, 062018