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Housing starts are up 6.8 percent, according to the May National Association of Home Builders Housing Starts Summary.   Starts were bolstered by a large uptick in multi-unit construction and backed by an ever-growing demand. Single-family starts remained steady with 599,000 units in May, while production of apartments and other multi-family dwellings rose 21.6 percent for a combined total of 914,000 units.

While single-family home starts didn’t make a huge leap forward, the volume of permits requested by builders continues to demonstrate U.S. consumers’ desire to build and own new homes. The rainy season might also be a contributing factor in the lack of home starts. NAHB Chief Economist David Crowe mentioned weather might be slowing progress on the, however the strength of permits being issued and pulled for future use signals continued recovery in the housing market.

A 10 percent drop in multi-unit permits caused a drop in overall new permit activity of 3.1 percent. In May 974,000 starts were recorded, according to the May Housing Starts Summary. Single-family permits, however, had their strongest showing in five years with an increase of 1.3 percent, to 622,000 units.

The South and the West led the way in starts, with increases of 17.8 percent and 5.7 percent, respectively. Meanwhile the Housing Starts Summary reported a decline of 13.7 percent in the Midwest followed by the Northeast’s 9 percent dip in production.

Although regionally there were construction declines; inclement weather may have impacted new starts growth. The overall nationwide statistics in the Housing Starts Summary showed positive forward movement. The existing home inventory remains low in most of the country; therefore homebuyers continue to look for builders to fulfill their housing needs.  Current trends indicate that many buyers prefer the advantages of new home construction.

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Sources:
1)  http://www.nahb.org/news_details.aspx?newsID=16344
2) http://www.nahb.org/news_details.aspx?sectionID=122&newsID=16341

The Improving Markets Index for June added 29 new markets for a grand total of 263 markets. The overall numbers are three times higher than June 2012 Improving Markets Index findings, a sure indicator of momentum in the U.S. housing market. Twenty-four markets were dropped from the list but this is no cause for alarm.  NAHB Chief Economist David Crowe states “Marginal Seasonal adjustments are to be expected as the recovery expands.” This is the fifth consecutive month that more than 70% of metro areas in the U.S. were considered improving newly added markets included: 

• Mount Vernon, Washington
• Laredo, Texas
• Philadelphia, Pennsylvania
• Jacksonville, North Carolina
• Lexington, Kentucky
• Topeka, Kansas
• Chicago, Illinois

Some of the metros dropped from the Improving Markets Index list this month include:

• Mobile, Alabama
• Montgomery, Alabama
• Hartford, Connecticut
• New Haven, Connecticut
• Fayetteville, North Carolina
• Cincinnati, Ohio
• El Paso, Texas

The Improving Markets Index is a monthly report produced by the National Home Builders Association and Wells Fargo. In order to be selected, a metro must show gains in the areas of single-family housing permits, price appreciation and employment for six consecutive months.  The data is gathered from the U.S. Census Bureau, Freddie Mac and the Bureau of Labor Statistics.

Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, notes that homebuyers are continuing to take advantage of the record-low interest rates and affordability, as evidenced by the rising numbers in the index. As home values appreciate and more families take the plunge into ownership, a few bumps in the road to recovery remain. NAHB Chairman Rick Judson, a North Carolina homebuilder, points out, “While that’s a good sign that the housing recovery is on solid footing, we know that various challenges are slowing its progress—including continuing issues with credit availability for builders and buyers, as well as appraisals that aren’t keeping up with the rising cost of construction.”

For more information on First Preston HT, visit our website at FirstPrestonHT.com.

Sources:
1) http://www.nahb.org

The National Association of REALTORS® (NAR) reported twenty-one consecutive months of growth in pending contracts over the previous year according to the release of January’s Pending Home Sales Index. Consumer confidence is clearly on the rise, along with home values nationwide. The trend of rising prices and decreasing inventory has been a familiar pattern.

More than 70 percent of metropolitan areas qualified as improving markets according to the National Association of Home Builders latest Improving Markets Index. It’s notable that the last time the Pending Home Sales Index reached this level was in April 2010, prior to the expiration of the tax credit for home buyers. While the Pending Home Sales Index doesn’t reflect closed sales, the uptick in pending contracts indicates consumer willingness to invest in the real estate market. Investors and first-time homeowners alike are making moves and finally getting off the proverbial fence.

The NAR report noted that all regions across the country showed gains in pending sales.  NAR economists project 5 million existing home sales in 2013. Lawrence Yun, NAR chief economist , outlined key contributing factors Home affordability and job growth  have  combined to “unleash”  pent-up demand, the resulting  decreased housing inventory has shifted  us to a  to sellers  market in much of the country — creating the strongest price growth in seven years.

The Pending Home Sales Index indicated regional growth, led by the Northeast with an 8.2 percent increase, followed by the South, Midwest and West, each presenting increases in pending sales of 5.9 percent, 4.5 percent, and 0.1 percent, respectively. The trend of rising home prices and pending contracts is expected to continue but at a slower pace in comparison to the growth experienced in 2012. Inventory shortages are the key culprit according to the Pending Home Sales Index.  Low inventories of available housing continue to restrain sales in low performing regions.

If the shortage of inventory persists as expected, Yun anticipates an overall increase in price growth of 7 percent this year. With consistent price gains and pending contracts on the rise, real estate professionals and consumers alike are optimistic about the housing market’s immediate future.

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The U.S. Department of Commerce released its Housing Starts Summary for April this week, and while the short-term story reflects a dip in production, the trend of recovery continues.

First, the bad news. Construction for dwellings with five or more units took a hit, and was down 37.8% from March. Single-family home production made a much smaller decline at 2.1% month-to-month with many experts pointing to lack of supply of materials and available land as the culprit. The bigger picture in April’s Housing Starts Summary is that permits, a major indicator for future construction, are up 35.8% from April 2012, and housing starts for single-family homes are up 13.1% from last year.

Builder confidence was also up 3 points in the National Association of Home Builder’s latest Housing Market Index, reinforcing the housing industry’s general feeling of well-being. The Housing Starts Summary shows that while there may be bottlenecks in meeting buyer demand for new homes and apartments, gains are still being made. Also bolstering consumer confidence and new home demand are low interest rates and improving employment conditions, as noted by Ksenia Bushmeneva, at economist at TD Economics. Insiders believe this drop in starts is temporary and not part of a bigger trend, as evidenced by growth in permits according to the Housing Starts Summary.

Not only are builders more confident because they are experiencing higher traffic. The module measuring buyer traffic for new homes increased 3 points in this months HMI to 33.  NAHB Chairman Rick Judson stated: “Builders are noting an increased sense of urgency among potential buyers. This is definitely an encouraging sign.” Indeed, affordability is up as 73.7% of homes sold from January to March were within means of U.S. families earning the median income of $64,400.

While the month-to-month starts may have experienced a temporary slowdown, the future depicted in this month’s Housing Starts Summary is encouraging due to substantial year over year growth since 2012. Economists and homebuilders agree that the growth is likely to continue.

For more information on First Preston HT, visit our website at FirstPrestonHT.com.

Sources

1)     http://www.census.gov/construction/nrc/pdf/newresconst.pdf
2)     http://www.marketwatch.com/story/april-home-construction-falls-to-six-month-low-2013-05-16

The Housing Market Index for May was released this week, posting a 3-point increase in builder confidence over April. Furthermore, the component of the Housing Market Index, which gauges builder’s expectations for future sales, was 53, the highest number since February 2007. The Housing Market Index ranks builder outlook using a three-part system. Builders are asked to describe their current buyer traffic as well as their current sales and expectations for the next six months.

May’s report also showed a 4-point increase in the current sales department for a score of 48. Driving builder outlook is the surge of buyer demand. Diminishing inventories of resale homes across the country continues to be a problem for many future homeowners.   Buyers often find themselves competing in bidding wars to secure the home of their dreams while interest rates remain at record lows.  In light of such fierce competition and low interest rates, home buyers are increasingly turning to new construction. As evidenced in the May Housing Market Index, builders are indeed seeing more and more consumers come through their doors driving the builder traffic score, which increased 3 points to 33.

National Association of Home Builders Chairman Rick Judson, a North Carolina builder, stated: “Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates, and strengthening local economies. This is definitely an encouraging sign.” Judson echoed previous Housing Market Index reports, repeating that the main challenges for builders are availability of lots for building, labor shortages, and high costs of building materials. NAHB Chief Economist David Crowe acknowledged those concerns, remarking that it will take time to reestablish chains of supply on those areas and despite those factors builders and consumers alike remain confident.

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The NAHB/First American Improving Markets Index for May reported 258 improving metros which included a metro from each state in the nation. Four new markets were added this month, and 19 dropped from the list. Builders, real estate pros and economists alike remain positive regarding the U.S. housing market, and continue to cite limited availability of credit, lack of supply and limited lots for building as ongoing obstacles. Rick Judson, NAHB Chairman and a homebuilder based in North Carolina, pointed out that more than 70 percent of metropolitan areas surveyed have maintained a presence on the Improving Markets Index, and that’s a good sign.

Indeed, for a metropolitan area to be included in the  Improving Markets Index it must experience growth in three areas—single family housing permits, jobs and price appreciation of local homes—for at least 6 consecutive months.  While 19 metros were removed from the list this month, this change might be a result of seasonal factors. Some markets experience a seasonal downturn in home buying and construction during winter months, so this is not unusual.

In other positive news, for the third consecutive month every state in the nation has at least one metro included in the Improving Markets Index, and this is the eighth month in a row where new markets joined the list.  Kurt Pfotenhauer, vice chairman of First American Title Insurance, reminds consumers to focus on “the big picture,” which is that most markets are experiencing rising home values. There are more jobs available and permits for new home construction are on the uptick.  While the Improving Markets Index shows a slight drop in the total number of metros, the National Association of Realtors® reported a month-to-month increase of 1.5 percent in pending contracts, an indication that buyer demand is emerging.

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The National Association of Realtors (NAR) released its Pending Home Sales Index report for February 2013 on Thursday the 27^th, and the future looks bright. Although this most recent Pending Home Sales Index reflected a slip in the number of residential contracts, the number is still higher than it has been in almost three years. The numbers are also up 8.4% over February 2012’s Pending Home Sales Index figures. The Pending Home Sales Index reports sales contracts and not home sales and is used by industry professionals as an indicator of future housing trends.

A familiar obstacle, low inventory remains the chief concern for home builders, prospective buyers and Realtors alike, with some agents complaining there just aren’t enough homes in their respective markets to show customers. NAR Chief Economist Lawrence Yun states that “housing starts need to rise at least 50% from current levels” to relieve the current inventory shortage. Yun also indicated that clearer regulatory rules allowing small banks and credit unions to do more construction loans would help shift housing starts in the right direction. The good news is consumer demand for homes remains high, a trend that has been steady over the past two years.

Another positive indicator mentioned in the Pending Home Sales Index was the NAR projection  of  7 percent growth  in existing home sales  in 2013 to 5 million. The median home price for existing homes is also expected to surge 7 percent this year. The bottom line? Despite a minor decline in pending contracts due to low inventory, buyer interest and home values will continue to climb in 2013.

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The National Association of Home Builders (NAHB) released its monthly Housing Markets Index on April 15. The Housing Markets Index dipped two points to 42 this month, but the numbers don’t tell the entire story. The fact remains that more buyers are looking to build their dream homes and demand for new construction remains strong.

Complementing the high demand for new housing are historically low interest rates that continue to hover near 3 percent. Buyers want to buy and now have the means to do so. Today’s builders  face challenges  of supply, financing, and personnel. Supplies of materials and land are the primary concern. NAHBChairman Rick Judson stated , “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values.”

The Housing Markets Index gauge derives its score from a three-pronged approach. Builders are asked to rate traffic from buyers, their current sales, and sales in the coming six months. These components are averaged and a total greater than 50 indicates most builders feel the market conditions are good.  While the overall score in this month’s Housing Markets Index is 42, builder expectations for sales in the next six months increased three points from last month, to 53. Overall traffic was down four points to 30 and current sales expectations dipped two points to 45.  NAHB Chief Economist David Crowe expressed confidence, stating that with time the chain of supply as well as the work force will be able to reestablish itself and catch up to the demand.

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As buyer demand continues to ramp up, more consumers are deciding to build new versus shopping the resale market, as evidenced by the March Housing Starts Summary. Housing starts are up 47 percent from last year and 7 percent versus prior month, according to the U.S. census bureau. Buyers are frustrated with the lack of inventory and looking into new construction and other options. Many metro areas continue to experience a high level of distressed homes for sale in their markets, including short sales. Short sales can take several months to close. Buyers, who can afford to, opt to build in order to customize every detail. NAR Chief Economist Lawrence Yun has said that the lack of available inventory is holding the market back. Yun also indicated only new home construction can relieve this demand and that a 50 percent increase in production appears to be needed.

The March Housing Starts Summary recorded that housing starts rose to an annual rate of 1.03 million units. Single family starts declined 4.8 percent to 619,000 from February’s rate of 650,000.

Building permits were down in March’s Housing Starts Summary, 3.9 percent from February with 902,000 permits filed. The news is still favorable for the market in that the number of permits pulled was up 17.3 percent from March of 2012. Home Completions were another bright spot in the March Housing Starts Summary, up 11 percent over February and 36.3 percent over last year with 800,000 units completed. The March Housing Starts Summary reveals the largest increase in new home construction in almost 5 years. Smaller builders continue to struggle with rising material costs and limited financing availability for their projects. Noted estate experts agree that new home starts will maintain a growth trend throughout 2013.

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