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The numbers are in for June’s Housing Starts Summary, and while both permits and starts are down that’s not the entire story. Housing starts are down overall 9.9% to 836,000,however, the bigger picture is that the bulk of this decline is due to the 26.7% drop in starts for buildings with five or more units, most likely apartment construction. Single-family home starts only dipped 0.8% in June’s Housing Starts Summary, and starts for both categories as a whole are still up 10.4% over this same time last year.

Permits are also down for June versus the prior month a decrease of 7.5%. The Housing Permits category mirrored the Housing Starts pattern, showing fall back the prior month but significant growth compared to the prior year. This June’s Housing Starts Summary reflected 911,000 total permits pulled, that’s 16.1% higher than June of 2012. The repeated year-to-year gains in both permitting and starts are a strong indicator that despite the inevitable peaks and valleys in the housing market, a recovery does appear to be underway. In fact, while permits for multifamily construction dipped 22.8% in this month’s Housing Starts Summary, permits for single-family homes were the highest since May 2008—at 624,000, up 0.6%.

The question for many may be, will demand for new homes continue? Many economists and builders believe the answer is yes. The July Housing Markets Index report, which gauges builder’s optimism, reflected an overall jump of 6 points to 57. Any score in the Housing Market Index over 50 indicates that most builders perceive conditions to be improving. There were gains in all three components of the HMI, meaning builders are seeing more buyer traffic, think the current conditions are improving, and expect good things for the next 6 months. Many permits pulled from previous months have yet to be used, so economists such as Avery Shenfeld of CIBC World Markets expect that recovery and construction starts will maintain momentum. Whereas monthly numbers in June’s Housing Starts Summary have dipped due to a slowdown in apartment building, single-family construction is on the rise, and the general outlook for both remains positive.

For more information on First Preston HT, visit our website at FirstPrestonHT.com. You can also find us on Facebook and Twitter.

Sources:
1)      http://www.marketwatch.com/story/home-construction-lowest-in-almost-a-year-2013-07-17?link=MW_pulse
2)      http://www.marketwatch.com/story/us-economy-creates-195000-jobs-in-june-2013-07-05
3)      http://www.nahb.org/news_details.aspx?sectionID=134&newsID=16373

The National Association of Home Builders (NAHB) and Wells Fargo released the monthly Housing Market Index for July, and the overall numbers are up 6 points. This is the highest total rating conveyed in the Housing Market Index since January of 2006. Market conditions remain on the upswing for builders. Many market areas or metros still have lower levels of available existing housing inventory; therefore, well-qualified buyers are flocking to new construction.

The Housing Market Index score is calculated by measuring three areas of growth by way of surveying homebuilders. All three of these areas showed gains in July. Potential buyer traffic climbed 5 points, while the assessment of builders’ sales expectations for the next 6 months rose 7 points resulting in the highest scores since late 2005 for buyer traffic and sales expectations. Meanwhile, the assessment of builders’ perception of the current sales conditions increased 5 points, also hitting the highest level since early 2006.

NAHB Chief Economist David Crowe cited low existing home inventory as one of the factors driving buyers toward new construction. He also noted an enhancement in the infrastructure that supplies home building, and stated that some costs for materials have stabilized or decreased as well. In addition to the positive gains in the three areas measured in the index, July’s Housing Market Index also indicated gains in the 3-month moving averages for all four regions of the U.S:

• The South rose 5 points
• The Northeast gained 4 points
• The Midwest jumped 8 points
• The West increased 3 points

Given those numbers, the outlook for recovery in the housing market continues to be bright. However, NAHB Chairman Rick Judson, a homebuilder in North Carolina, says there are still areas that builders are watching somewhat cautiously. He stated in this month’s Housing Market Index, “This positive momentum could be disrupted by threats on the policy side, particularly with regard to the mortgage interest deduction and federal support for the housing finance system.”

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The National Association of Home Builders (NAHB) released its Improving Markets Index for July and the latest Improving Markets Index includes 255 metros, that’s triple the number of metros which qualified a year ago. July results are down slightly versus prior month.

For the sixth consecutive month more than 70 percent of U.S. metros met the rigorous standards and qualified as improving markets. Given these positive figures, builders remain optimistic about the future. In fact, NAHB Chairman Rick Judson contends that July’s Improving Markets Index indicates a far-reaching recovery is taking place, saying it is “much more extensive than what we were looking at one year ago.”

While a comprehensive housing recovery may certainly be underway, challenges remain for homebuilders. NAHB Chief Economist David Crowe reemphasized the need for more readily available building materials, credit, and buildable lots for construction of homes, as these hurdles continue to hinder homebuilder efforts. He noted the uptrend in home values is another contributing factor supporting the recovery of the U.S. housing market. The National Association of REALTORS® (NAR) reported recently in their Pending Home Sales Index that they are upgrading median price growth projections to 10 percent in 2013. Positive job growth figures re-enforce builder confidence.

The Improving Markets Index measures three key areas.  A metro must show improvement for a minimum of 6 months to gain inclusion in the report. Those three areas are:

• Employment, as reported by the Bureau of Labor Statistics
• Housing permits pulled, as reported by the U.S. Census Bureau
• House price appreciation, as reported by Freddie Mac

Six metros were added to the July Improving Markets Index:

1. Olympia, WA.
2.  Farmington, NM.
3. Cumberland, MD.
4.  Saginaw, MI.
5. Kingston, NY.
6.  Las Cruces, NM.

Fourteen metros were dropped from the list, including Huntsville, AL.; Albany, GA.; Dayton, OH; Allentown, PA.; Sherman, TX; and Spokane, WA.

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The National Association of Realtors® released monthly Pending Home Sales Index results for May, reporting improved levels of pending sales growth not seen since December 2006. Pending contracts showed 25 consecutive months of growth with latest figures up 6.7 percent over prior month, and 12.1 percent above results for the prior year. Buyers are encouraged to take advantage of record low interest rates. Lawrence Yun, NAR’s chief economist reports that there are fewer housing choices available in many markets. The May Pending Home Sales Index was released after Freddie Mac reported that the Federal Reserve might reduce its stimulus program; this action prompted one of the largest weekly increases in mortgage rates ever seen.

The rising rates don’t seem to be dampening buyers’ enthusiasm, as evidenced by the uptick in homes under contract in the Pending Homes Sales Index. In fact, Yun is upgrading NAR predictions calling for a 10 percent increase in the median sales price of existing homes.  That would mean a median home price of $195,000. The market hasn’t seen escalations in median prices like this since the beginning of the boom back in 2005. With most markets experiencing high buyer affordability, Yun said we are experiencing some “fence jumping”—i.e.: proverbial fence sitters are finally making a buying move after taking stock of the rising rates and prices. This is good news for the sellers; as increased values mean fewer under-water mortgages.

The latest Pending Home Sales Index shows an increase in sales in the South region of 2.8 percent for the month, a rise of 12.3 percent versus prior year. Pending contracts in the Midwest rose 10.2 percent from April and are 22.2 percent higher than in May 2012. The West and Northeast didn’t fare as well in this month’s Pending Home Sales Index; however, industry leaders at NAR believe this can be attributed to the lower available housing inventory levels. The West region experienced a month-to-month gain of 16.0 percent, but the increase only translated to a 1.1 percent increase over the preceding year. The Northeast pending sales volume is up 14.3 percent year-over-year, however pending sales remained flat  as compared to prior month results.

For more information on First Preston HT, visit our website at FirstPrestonHT.com. You can also find us on Facebook.

Sources:
1)       http://www.realtor.org/news-releases/2013/06/may-pending-home-sales-reach-highest-level-in-over-six-years
2)       http://www.inman.com/wire/mortgage-rates-post-largest-weekly-increase-in-25-years/
3)       http://www.inman.com/wire/pending-home-sales-hit-highest-level-in-over-6-years/

The National Association of Home Builders Housing Market Index report for June boasted the largest monthly increase in in overall builder confidence seen since September 2002, an 8 point jump to a total score of 52.

When it comes to the NAHB/Wells Fargo monthly Housing Market Index, any score above 50 means more builders than not are optimistic about the current and future market conditions. The report is created with data mined from interviewing the nation’s home builders about their thoughts on three areas: current sales conditions, future sales climate, and the traffic of potential home buyers.

The section of the Housing Market Index where builders are asked to gauge current sales conditions jumped 8 points to 56, while the indexes for future sales conditions and current buyer traffic were up 9 and 7 points, to 61 and 40, respectively. It’s also noteworthy that the component measuring future sales conditions reached its highest mark since March 2006.

In the June Housing Market Index ,NAHB Chief Economist David Crowe pointed out that this month’s findings are in line with their projections of a 29 percent increase in housing starts for 2013, he noted that  that it would be the first time since 2007 that housing starts have surpassed the one million mark.

The NAHB has been conducting the Housing Market Index survey for 25 years, and it has been a great way for builders to convey their expectations and market experiences. Clearly the builder’s expectations for the remainder of 2013 are high, and lower resale inventory of residential homes is one of the reasons for this confidence. NAHB Chairman Rick Judson, a homebuilder in North Carolina, said, “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”

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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.

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

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.

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