Posts Tagged ‘ Housing Market Index ’

Commentary: Truth… and Consequences

Commentary: Truth… and Consequences

09/06/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Like Diogenes’ quest for an honest man, seeking truth—or even consistency—in the monthly employment situation report may prove an endless task.

Friday’s report on the August employment situation at the same time confounded analysts twice with a less than robust 169,000 month-over-month increase in payrolls and a staggering 58,000 reduction in the initial report on payrolls for July.

For those who keep track, June payrolls were initially reported to have increased 195,000 but with Friday’s report have now been revised down twice: first to 188,000 and Friday to 172,000. Who knows how low the July (or the August) payroll numbers could go.

Payroll report revisions are, to be sure, nothing new. The Bureau of Labor Statistics (BLS) initially reported payrolls for March had increased by 88,000 in the release issued at the beginning of April. One month, later March payrolls were reported to have increased 138,000, and one month after that 142,000.

That said, the 58,000 downward revision is unusual. The initial payroll report hasn’t been reduced by that much since June 2010, when the initial payroll estimate of a loss of 125,000 was changed to a drop of 221,000 jobs and then, one month later, to a loss of 175,000 jobs—suggesting it’s no easier to count going down than it is going up.

BLS said 74.1 percent of payroll surveys were returned in time for the Employment Situation release with the first set of July numbers. The collection rate was lower for January (72.4 percent) and for August (also 72.4 percent). January’s report of 157,000 new payroll jobs was reduced to 119,000 in the first revision before settling at 148,000 in the final report.

The “final” report may not be final. BLS said it would release its annual “benchmark” revisions at the end of September, which will change the numbers yet again.

While it may not be easy to reconcile the numbers in the employment situation report with themselves, it is even more difficult to reconcile them with other economic indicators.

For example, builder confidence, according to the Housing Market Index of the National Association of Home Builders, has increased 34 percent in the last three months, vaulting into positive (above 50 on a scale of 1 to 100) territory in June for the first time since April 2006. In those same three months, residential construction employment is down 0.2 percent, a loss of about 1,100 jobs.

And, even though data on residential permits and starts show gains only in multifamily activity, jobs in the multifamily contractor sector are also down.

BLS numbers don’t seem to square with recent surges in sales of new and existing single-family homes. While new home sales are up on average better than 20 percent year-over-year and existing-home sales up about 12 percent, the number of mortgage brokers has increased just about 10 percent and appraisers just about 6 percent. The number of underwriters is up just 1.2 percent.

If those numbers aren’t enough to raise questions about the depth of the housing recovery, consider that in the last three months, payrolls have climbed an aggregate 445,000, while at the same time, the number of multiple jobholders has increased 147,000, which would mean the new payroll jobs themselves didn’t do as much to reduce unemployment.

Of the new jobs, about 221,000, almost 50 percent, were in the two lowest paying industry sectors—leisure and hospitality (83,000) and retail (138,000) with average weekly earnings of $352 and $523, respectively—numbers and earnings far from enough to support a housing recovery.

The August employment situation report wasn’t the first set of data to suggest trouble on the horizon for the housing recovery. The Case-Shiller home price index for June—the most recent—showed continuing, albeit slower, house price gains, pushing affordable homeownership still further from low paid workers.

That is, until the numbers change again.

2013
09/07
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July New Home Sales Plunge to 9-Month Low

July New Home Sales Plunge to 9-Month Low

08/23/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Despite improving builder confidence, sales of new single-family homes dropped to their lowest level since last October, the Census Bureau and HUD reported Friday.

The seasonally adjusted annual rate of sales dropped a stunning 13.4 percent to 394,000 in July. Economists surveyed by Bloomberg expected June sales to drop to 487,000 from June’s originally reported 497,000. June sales were revised to 455,000.

The median price of a new home, according to the Census/HUD report, slipped 0.5 percent in July to $257,200. June’s median price was revised to $258,500 from the originally reported $249,700.

The number of new homes for sale rose to 171,000 in July—the highest level since April 2011, and the months’ supply rose to 5.2—the highest since January 2012—from 4.3 in in June.

The month-over-month decline in sales was the largest percentage drop since sales fell 33.4 percent in May 2010 as the federal homebuyer tax credit ended.

The report came on the heels of a third consecutive monthly increase in the Housing Market Index compiled by the National Association of Home Builders (NAHB). The index, seen as a measure of builder confidence, has improved 34 percent in the last three months, registering above 50 (on a 100 point scale), which is considered a positive reading. The index had been below 50 for 85 straight months—more than seven years—from April 2006 until May 2013.

According to the NAHB survey, buyer traffic—one of the survey components—is up 46 percent in the last three months at 45, its highest reading since November 2005, when it was 46.

That traffic has not turned into sales, however. The Census/HUD report revised downward sales for April, May, and June, lopping off an average of 23,000 from the originally reported sales pace for each month.

The report for July showed a slight shift to higher-priced homes as houses priced at $500,000 or more accounted for 11 percent of July sales, up from 9 percent in June. Homes priced at $300,000 or less represented 62 percent of all July sales, down from 64 percent in June.

In the last three months, higher-priced homes represented an average of 9 percent of all sales, down from 13 percent in the previous three months. Sales of homes priced at $300,000 or less represented an average of 62 percent of all sales in the last three months, up from 60 percent in the previous three months.

The average price of a new home slipped $12,400 in June after falling $29,400 in May—the largest monthly decline since August 2008, when the average price fell $36,400. The average price has also dropped in three of the last four months.

The median price of a new home has fallen for three straight months and in all but two months this year. Nonetheless, the median price in July was $19,800 (or 8.3 percent) above the median price a year ago.

The average price in July, $322,700, was up $20,500 from June and $40,400 (14.3 percent) since July 2012.

The new home sales report tracks contracts for sale, not closings, and as such is comparable to the Pending Home Sales Index (PHSI) compiled by the National Association of Realtors (NAR). The NAR will release its July PHSI next Wednesday.

The surge in homes on the market came in the same month in which, according to a separate Census/HUDreport, builders completed 571,000 single family homes—177,000 more than they sold.

Regionally, sales fell month-over-month in all four Census regions in July. The sales pace fell to 213,000 in the South in July from 246,000 in June. In the West sales dropped to 94,000 —the slowest sales pace since March 2012—from 112,000 in June. The sales rate in the Midwest dropped to 54,000 in July from 62,000 in June, and in the Northeast, sales fell to 33,000 in July from 35,000 in June.

2013
08/24
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What Soaring Confidence? Builders Cut Back in June

What Soaring Confidence? Builders Cut Back in June

07/17/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Despite soaring builder confidence, new housing permits and starts fell in June, with new construction falling to the lowest level in 10 months, the Census Bureau and HUD reported Wednesday.

The seasonally adjusted annual rate of new housing permits tumbled 7.5 percent—the largest month-over-month decline since January 2011—while starts fell 9.9 percent, the second-largest drop since February 2011; starts fell 15.2 percent in April of this year.

Economists had expected builders to break ground on new homes at the rate of 951,000 instead of the reported 836,000, the lowest level since last August. Forecasts also predicted permits at a seasonally adjusted annual rate of 990,000 instead of the reported 911,000.

The government report came just one day after the National Association of  Home Builders reported its Housing Market Index, a statistical measure of builder confidence, rose six points in July after a seven-point increase in June, putting it above 50 for the second straight month. A reading of 50 or more is said to be a positive for builder confidence.

Builders apparently didn’t “walk the walk,” as measured by actual activity.

Offsetting the unexpected June drop in residential construction data, the report of May starts was revised up to 928,000 from the originally reported 914,000, and the report of new permits in May rose to 985,000, up from the originally reported 974,000.

Builders completed homes at an annual adjusted pace of 755,000 in June, 6.3 percent more than May’s 710,000. The May total was revised up from the initially reported 690,000 pace of completions.

Single-family starts fell in June to a pace of 591,000, 0.8 percent below May and the lowest level since March. Permits for new single-family construction rose 0.6 percent to a pace of 624,000, the highest level since May 2008.

One of the few positive signs in Wednesday’s report was a sharp increase in the share of single-family permits, 68.5 percent—up from 62.9 percent in May. The June single-family share was the largest since September 2011, far exceeding the average 63.3 percent share of the intervening 20 months. However, the increase in the single-family share of permits was more reflective of a drop in multifamily permits (down 78,000 in June following a 26,000 decline in May) than an industry shift.

In the last 12 months, single-family permits averaged 63.2 percent of total permits, down from 64.8 percent in the 12 months ending June 2012 and 70.3 percent in the 12 months ending June 2011.

Starts also reflected an increase in the single-family share to 70.7 percent in June—the largest since last August. The share of single-family starts has averaged 67.7 percent in the last 12 months, down from 69.3 percent in the 12 months ended June 2012 and 75.2 percent in the 12 months ended June 2011.

Builders, according to the Census/HUD report, completed single-family homes at an annual rate of 554,000 in June, down 1.1 percent from the 560,000 pace in May. May completions exceeded the sales rate by 84,000, adding to the inventory of new homes for sale. June sales data will be released July 24.

The pace of total starts fell in June in all four Census regions, led by a drop of 58,000 in the South to 424,000. The pace of starts declined 13,000 in the Northeast to 94,000; 11,000 in the West to 192,000; and 10,000 in the Midwest to 126,000. Single-family construction picked up in three regions, increasing by 5,000 in the West to 131,000; by 2,000 in the Midwest to 93,000; and by 1,000 in the Northeast to 48,000. Single-family start activity fell 13,000 in the South to 319,000.

The annualized rate of all permits authorized rose 6,000 in the Northeast to 107,000 but fell 57,000 in the South to 453,000; 16,000 in the West to 205,000; and 7,000 in the Midwest to 146,000. The annualized rate of single-family permits rose in three Census regions, up 3,000 in the West to 137,000; 2,000 in the Midwest to 103,000; and 1,000 in the Northeast to 53,000. The rate of single-family permit activity dropped 2,000 in the South to 331,000.

 

2013
07/18
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New Home Sales Up, Price Slips in May

New Home Sales Up, Price Slips in May

06/25/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

The price of a new single-family home dropped 3.2 percent in May, but sales increased 2.1 percent to 476,000, the highest level in almost five years, the Census Bureau and Department of HUD reported Tuesday. Economists surveyed by Bloomberg expected April sales to increase to 460,000 from April’s originally reported 454,000. April sales were revised to 466,000.

The median price of a new home, according to the Census-HUD report, dropped $8,700 to $263,900. April’s median price was revised up to $272,600—the highest price on record from the originally reported $271,600.

The inventory of new homes for sale rose to 161,000 in May—the highest level since September 2011 from 157,000 in April. The months’ supply rose to 4.1 from 4.0 in April.

The Census-HUD homes sales report showed a decided shift to lower priced homes: 13 percent of homes sold in May were priced at $150,000 or less compared with 7 percent in April, and 18 percent were priced at $400,000 or more in May, down from 22 percent in April.

The average price of a new home tumbled $23,500 in May after skyrocketing $36,500 in April. The average price in May was 9.6 percent above May 2012.

The median price in May, despite the month-over-month decline, was up 10.3 percent over May 2012. The median price has been up a staggering $44,100 in April, or 15.4

percent, to $330,800, the ninth time in the last 10 months the median price has shown a double-digit percentage annual gain.

New home sales have increased for three straight months for the first time since July-September last year. May sales were up 29.0 percent over a year ago.

The increase came in the same month in which the Housing Market Index, the monthly confidence survey conducted by the National Association of Home Builders,rose three points to 44, largely on the strength of an improved assessment of then-current sales prospects. TheHMI jumped eight points in June to 52, the first positive—over 50—reading since April 2006. In June, builders’ assessment of “buyer traffic” improved to its highest index level since March 2006.

The new home sales report tracks contracts for sale, not closings, and as such is comparable to the Pending Home Sales Index (PHSI) compiled by the National Association of Realtors (NAR). The NAR will release its May PHSI Thursday.

The Census-HUD report for May also included data revisions back to February, which showed higher levels of sales in February and March in addition to April.

In May, builders completed 546,000 single-family homes (seasonally adjusted annual rate), up from 524,000 in April. The gap between the pace of sales and completions was 70,000 in May, up from 58,000 in April, but down from the average of 124,000 in the previous 12 months, suggesting builders are likely to increase construction efforts to meet what may be an increase in demand.

Regionally, sales improved month-over-month in May in three of the four Census regions, falling only in the South, where the sales rate dropped to 243,000 from 267,000 in April. In the Midwest, the sales rate was up 24,000 to 83,000; in the Northeast, up 6,000 to 35,000; and in the West, up 4,000 to 115,000.

2013
06/26
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Commentary: Real World Experiments

Commentary: Real World Experiments

05/17/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Economists usually do it with models, so it’s rare in economics to be able to conduct a laboratory experiment. Currently, though, we’re watching two experiments in different corners of the world that support the idea that stimulus works to repair a troubled economy and austerity doesn’t.

Japan and the Eurozone are, through their actions, demonstrating how economies can move in opposite directions with Japan’s stimulus plan succeeding and the eurozone’s austerity program failing.

To revive his nation’s dormant economy, Japanese Prime Minister Shinzo Abe argued strongly during his election campaign last year for the Bank of Japan to expand the country’s money supply and, once in office, increased government spending. The result for the first quarter was the Japanese economy grew at a 3.5 percent annualized rate, much faster than the 2.7 percent growth rate expected by analysts.

If that scenario sounds familiar, we have only to look at the actions of the Federal Reserve—both in lowering the target Fed Funds rate to near zero and then adopting two further “quantitative easing” programs. The Fed is now pumping $85 billion a month into the economy through its purchase of agency mortgage-backed securities and its reinvestment of maturing investments into Treasury securities.

While first-quarter GDP results here were positive (despite a cutback in government spending) longer-term trends show slower growth as government spending drops.

While the Fed’s action did not produce the feared inflation doomsayers predicted, Abe understood that the combination of increased government spending in Japan and the expanded money supply could push up prices with the additional benefit of ending the years of deflation that paralyzed Japan’s economy.

The first-quarter results in Japan, while encouraging, still have further to go. Wages in Japan are flat, and other economic indicators have yet to match overall growth, though markets have improved and corporate Japan is forecasting higher profits.

Abe’s program is not done. The third leg of his economic stool—structural reforms—could be the most challenging, but over the long run perhaps the most important. Those reforms, among other things, would make Japan’s labor market more flexible and encourage immigration.

Half a world away, the eurozone, after preaching and embracing austerity, reported output contracted 0.2 percent in the first quarter, showing the region remains in recession. The results were worse than expected, leaving GDP down 1.0 percent from a year ago. Output has been negative for six consecutive quarters—a recession by anyone’s definition.

The only nation in the Eurozone that showed positive results in the quarter was Germany, where GDP grew 0.1 percent for the quarter but was still down 0.3 percent year-over-year.

The outlook isn’t bright either. The European Commission forecast annual GDP would drop 0.4 percent for the year and that growth in 2014 would be a meager 1.2 percent. Whether the contraction would cross the Atlantic remains to be seen.

While the Fed has brought interest rates down as far as possible in the United States, the European Central Bank (ECB) earlier in May brought its main policy rate to 0.5 percent from 0.75 percent. With the GDP results, the ECBis under increasing pressure to act again when it meets next month.

The lessons from across the Atlantic and Pacific seem clear… if Congress and the president read and heed them.

The two key housing numbers for the upcoming week will be reports Wednesday on existing-home sales for April and Thursday on new home sales for the same month. Existing-home sales are expected to show improvement, though forecasters are not as optimistic about new home sales. Of the two, the new home sales report is the more significant. (Because the existing-home sales report tracks closings, it really reflects the economy two months ago.)

Indeed, forecasts notwithstanding, existing-home sales could show a decline because the pending home sales index two months ago was essentially flat to the prior month. Home sales dipped 0.6 percent in March. Sales in recent months have tracked prices, falling as prices increased. The recent price trend, combined with flat incomes and even flatter rates, suggests analysts and forecasters could be surprised.

New home sales improved 1.5 percent in March, but the percentage change can be deceiving. By the numbers, sales rose just 6,000 to an annual rate of 417,000. Sales have increased in five of the last seven months, and the March increase was the weakest since last August. While homebuilders’ optimism increased in the National Association of Home Builder’s latest Housing Market Index, they may have overlooked the link between sales volume and prices, which has been demonstrating the same relationship as existing-home sales.

Hear Mark Lieberman on P.O.T.U.S. (SiriusXM 124) on Friday at 6:20 a.m. Eastern.

 

 

2013
05/18
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New Home Sales Post Strongest Increase in 20 Years

New Home Sales Post Strongest Increase in 20 Years

02/26/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

New home sales jumped 15.6 percent in January—the strongest gain in 20 years—to a seasonally adjusted annual rate of 437,000, the Census Bureau and HUD reported Tuesday. Economists surveyed by Bloomberg expected the report to show a much smaller sales pace: 381,000.

January’s rate of sales was the highest since July 2008.

At the same time, the months’ supply of new homes for sale dropped to its lowest level since March 2005.

The median price of a new home, according to the Census/HUD report, plunged $23,400 in the month to $226,400, up 2.1 percent from January 2012 and the lowest level in a year. The month-over-month price drop was the steepest percentage decline—9.4 percent—since the median price fell 10.4 percent in October 2010.

The average price of a new home fell $15,200, or 5.0 percent, in January, the largest drop in both dollar and percentage terms since January 2011.

The sharp increase in sales combined with steep price drops suggests builders are taking aggressive actions to pare inventories. Housing completions (as reported separately by Census and HUD) routinely exceed new home sales, and the gap between completions and sales has been widening.

Sales reports for November and December were revised, with November sales increasing from the initial report and December sales decreasing.

The new home sales report—unlike the report on existing home sales—is based on contract signings and reflects economic conditions of the month of the report. Homebuyers had been restrained in December because of negotiations regarding the “fiscal cliff” which, according to some reports, might have restricted or eliminated the mortgage interest tax deduction. With that threat put aside, buyers returned (as reflected by the buyer traffic component of the National Association of Home Builders’ Housing Market Index, which in January was at its highest level since April 2006).

The government report on new homes came on the heels of the report last week from the National Association of Realtors (NAR) that existing home sale closings rose 0.4 percent in January. The NAR’s Pending Home Sales Index, which parallels the new home sales report, will be released Wednesday.

The NAR sales report also showed a sharp drop in the months’ supply of homes for sale.

The new home sales report covered the same month in which Census and HUD said builders completed 565,000 single-family homes, the highest level since June 2010, when the government attempted to boost sales with a homebuyer tax credit.

Homes with price tags under $300,000 represented 71 percent of January sales, up from 58 percent in December. Homes priced below $150,000 represented 16 percent of January sales compared with 10 percent in December. While the changing price points encourage home sales, they could discourage construction activity. Homes prices at $400,000 or more represented 15 percent of January sales, down from 20 percent in December.

Regionally, sales increased in all four Census regions: Sales were up 39,000 in the West to 125,000 (the highest level since April 2008); 8,000 in the Northeast to 37,000; 7,000 in the South to 225,000 (the highest level since September 2008); and 5,000 in the Midwest to 50,000.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 a.m. and again at 9:40 a.m. EST.

 

2013
02/27
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Commentary: Filling The Void

Commentary: Filling The Void

01/11/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

President Obama opened a big hole in his White House by tapping Jack Lew to replace Timothy Geithner as Secretary of the Treasury, leaving empty—for the moment—the role of chief of staff.

The president eschewed the progressive choice of  New York Times columnist and Nobel economic laureate Paul Krugman to replace Geithner with yet another in-house appointee. Lew himself, in addition to swapping desks to become (assuming Senate confirmation) Treasury Secretary, had been switched from head of the Office of Management and Budget to the chief of staff role.

It’s not the first time the president has looked to change nameplates of those who already worked for him: Think Leon Panetta moving from the CIA to Defense or even David Petraeus moving from the military (yes, the military works for the president) to CIA.

Strong managers, according to Harvard Business School theory, can move from one discipline to another without specific expertise, and Harvard Law alum Obama apparently picked up something beyond a law degree while in Cambridge.

That’s not to say Lew doesn’t have the background to handle Treasury. In addition to his two government jobs for the president, he was COO for Citigroup from 2006 to 2009. While working in the White House, he was integral to the 2011 debt limit negotiations, where his stridency irked many Republicans, which might make confirmation difficult. In the end, he should get through in time to head this year’s debt limit talks—if there are any. (The president has said repeatedly he won’t negotiate over the debt ceiling.)

With Lew moving, the president is still short a chief of staff but has an opportunity to turn to someone who has already proven himself to be s skilled—if somewhat blunt—negotiator, one of the key roles of a chief of staff. He has someone on his team with long relationships with members of Congress who knows his way around Capitol Hill and is not afraid to take on tough issues. That he has another job should not be an obstacle if Obama turns to Vice President Joe Biden to fill the chief of staff role.

The chief of staff is the first person the president sees when he begins work and the last person before he ends his working day, an individual with unfettered access who is supposed to know what he knows and present a unified face for the administration. Biden—his sole constitutional responsibility notwithstanding—fills those requirements. In slotting Biden to be chief of staff as well as vice president, Obama would assure Biden is fully and completely prepared to step in as president should that become necessary and at the same time achieve calculable budget savings.

Before the idea is dismissed out of hand, it has some historical support.

Recent vice presidents have assumed increasingly important roles, a far cry from when President Dwight Eisenhower was asked in 1960 what important programs or suggestions his vice president (and then presidential candidate) Richard Nixon had been responsible for. Eisenhower replied by saying if he had a week to think about it he might come up with one.

Jimmy Carter elevated the role of the vice presidency with Walter Mondale, as did Bill Clinton with Al Gore. It was elevated even more—perhaps over the top—under Vice President Dick Cheney. Obama, though, has increasingly turned to Biden.

In 1980, Ronald Reagan considered the suggestion from former president Gerald Ford, whom he had defeated for the Republican nomination for president. It was seen—at least by Ford—as a way to complement Reagan, providing him with someone who could attend to the details Reagan abhorred. When it became clear to Reagan that Ford wanted not to be vice president but co-president, with a specific portfolio, Reagan turned instead to George H.W. Bush as his running mate.

That Biden ran, albeit briefly, against Obama in 2008 should not be a deal-breaker. Obama not only selected him to be vice president, but also tapped Hillary Clinton as secretary of state, cementing his team-of-rivals approach to governing.

Obama could do worse.

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It may take a while before the impact of the long-awaited Consumer Financial Protection Bureau’s (CFPB) rules on qualified mortgages will be felt.

The CFPB heard the pleas of lenders and housing advocates to avoid taking steps to slow the incipient housing recovery.

In their lobbying efforts, banks apparently warned that too-strict regulations would stop the housing recovery in its tracks, and indeed, the bureau cited the “fragile state” of the housing market in allowing a seven year phase-in period for the strict rules.

That concession will have implications “qualified mortgages,” which are expected to be the most common. The phase-in period will allow banks to make “qualified” loans with higher debt-to-income ratios if the loans meet standards set by Fannie Mae and Freddie Mac. Those agencies—burned themselves by the mortgage crisis—have set new, reasonably high standards, but the higher debt burden is a loophole banks could exploit.

The absence of any down payment standards is also potentially perilous but a concession to housing groups who argued it was burdensome to the poor in what was perhaps circular reasoning.

In any case, don’t look for any quick bump to housing when the new rules take hold in January 2014.

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New housing and housing related data due next week will reflect the mixed and slow nature of the ongoing recovery.

The retail sales report (Tuesday) is expected to show no change from the 0.3 percent increase in retail activity in November. Some important points to watch will be sales at furniture stores as well as garden and building supply stores. An important point to remember is that retail sales are based on the dollar amount of sales, so last-minute markdowns on holiday items—even if they generated traffic to stores—could have driven cash register receipts down.

The National Association of Home Builders’ housing market index (Wednesday) is expected to show a slight increase to 48 from December’s reading of 47, remaining below the tipping point of 50 for the 81st straight month.

Total housing starts were pulled down in November by a drop off in single-family starts but are expected, in the report out Thursday, to show a rebound in December. Permits, which in November reached their highest level since July 2008, are expected to show another increase.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 a.m. and again at 9:40 a.m. Eastern time.

2013
01/12
CATEGORY
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Housing Starts Up in October, Completions Soar

Housing Starts Up in October, Completions Soar

11/20/2012 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Housing starts rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000—the highest level since July 2008—but permits for new residential construction fell, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday.

Housing completions soared in October, up 14.5 percent during the month to 772,000, the highest level since June 2010. The increase in completions was led by a 5.3 percent jump in multifamily completions. Single-family completions in October reached their highest level since June 2010, increasing to 542,000.

Permits and starts for September were revised lower, making the month-over-month percentage growth for starts stronger. Permits in October were down 2.7 percent from September to 866,000.

The report showed no impact of Hurricane Sandy, which ravaged the East Coast in the last few days of the month. The storm’s impact is more likely to be felt in the report for November starts.

Economists had expected starts to drop to 836,000 from the originally reported September rate of 872,000 and permits to slip to 865,000 from September’s 894,000.

Both total permits and starts showed strong yearly gains in October, with permits up 29.8 percent from last October and starts up 41.9 percent. Single-family permits are up 26.6 percent from October 2011, and single-family starts are up 35.3 percent.

The month-over-month improvement in starts came in the multi-family sector, as single-family starts were essentially flat at 594,000 in October (compared with September’s revised 595,000).

The October jump in completions and starts supported the increase in builder confidence for that month as reported in the National Association of Home Builders’ Housing Market Index. The index gained one point in October and added another five points in November.

Starts continue to show long term improvement, averaging 783,000 per month in the last six months compared with 606,000 for the same six months last year. Despite the slight dip in October, single-family starts remain on an upward trajectory, averaging 546,000 per month in the last six months compared with 427,000 per month in the same six-month period a year ago.

Permits too have surged, averaging 819,000 per month for the last six months compared with 635,000 for the same six months in 2011. Permits for single-family construction have averaged 519,000 per month in the last six months compared with 424,000 per month for the same period a year ago.

Multifamily starts rose in October to 300,000, the highest level since July 2008, while multifamily permits fell to 304,000 after hitting a four-year high at 340,000 in September.

The surge in completions—the strongest monthly gain since February 2011—could be the cause or reflection of builder optimism, though completions continue to outpace new home sales. Total completions have averaged 671,000 for the last six months, up from 592,000 in the same six months in 2011. Single-family completions averaged 495,000 in the last six months compared with 454,000 in the same period a year ago.

New home sales averaged 370,000 per month in the most recent six-month period, up from 303,000 per month in the same six months last year, so the gap between completions and sales—151,000 a year ago and 125,000 this year—is shrinking.

Single-family permits represented 64.9 percent of all permits in October, up from61.8 percent in September but down from 66.6 percent in October 2011. Single-family starts were 66.4 percent of all starts in October, down from 68.9 percent in September and 69.7 percent a year ago.

Total starts rose in two of the four census regions, improving 34,000 in the West to 232,000 and 13,000 in the Midwest to 159,000 while dropping 11,000 in the South to 431,000 and 5,000 in the Northeast to 72,000. Single-family starts also improved in the West and Midwest while falling in the South and Northeast.

Total permits rose month-over-month in the Midwest and South while falling in the Northeast and West, as did single-family permits.

2012
11/24
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Housing Market
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Housing Starts Up in October, Completions Soar

Housing Starts Up in October, Completions Soar

11/20/2012 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Housing starts rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000—the highest level since July 2008—but permits for new residential construction fell, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday.

Housing completions soared in October, up 14.5 percent during the month to 772,000, the highest level since June 2010. The increase in completions was led by a 5.3 percent jump in multifamily completions. Single-family completions in October reached their highest level since June 2010, increasing to 542,000.

Permits and starts for September were revised lower, making the month-over-month percentage growth for starts stronger. Permits in October were down 2.7 percent from September to 866,000.

The report showed no impact of Hurricane Sandy, which ravaged the East Coast in the last few days of the month. The storm’s impact is more likely to be felt in the report for November starts.

Economists had expected starts to drop to 836,000 from the originally reported September rate of 872,000 and permits to slip to 865,000 from September’s 894,000.

Both total permits and starts showed strong yearly gains in October, with permits up 29.8 percent from last October and starts up 41.9 percent. Single-family permits are up 26.6 percent from October 2011, and single-family starts are up 35.3 percent.

The month-over-month improvement in starts came in the multi-family sector, as single-family starts were essentially flat at 594,000 in October (compared with September’s revised 595,000).

The October jump in completions and starts supported the increase in builder confidence for that month as reported in the National Association of Home Builders’ Housing Market Index. The index gained one point in October and added another five points in November.

Starts continue to show long term improvement, averaging 783,000 per month in the last six months compared with 606,000 for the same six months last year. Despite the slight dip in October, single-family starts remain on an upward trajectory, averaging 546,000 per month in the last six months compared with 427,000 per month in the same six-month period a year ago.

Permits too have surged, averaging 819,000 per month for the last six months compared with 635,000 for the same six months in 2011. Permits for single-family construction have averaged 519,000 per month in the last six months compared with 424,000 per month for the same period a year ago.

Multifamily starts rose in October to 300,000, the highest level since July 2008, while multifamily permits fell to 304,000 after hitting a four-year high at 340,000 in September.

The surge in completions—the strongest monthly gain since February 2011—could be the cause or reflection of builder optimism, though completions continue to outpace new home sales. Total completions have averaged 671,000 for the last six months, up from 592,000 in the same six months in 2011. Single-family completions averaged 495,000 in the last six months compared with 454,000 in the same period a year ago.

New home sales averaged 370,000 per month in the most recent six-month period, up from 303,000 per month in the same six months last year, so the gap between completions and sales—151,000 a year ago and 125,000 this year—is shrinking.

Single-family permits represented 64.9 percent of all permits in October, up from61.8 percent in September but down from 66.6 percent in October 2011. Single-family starts were 66.4 percent of all starts in October, down from 68.9 percent in September and 69.7 percent a year ago.

Total starts rose in two of the four census regions, improving 34,000 in the West to 232,000 and 13,000 in the Midwest to 159,000 while dropping 11,000 in the South to 431,000 and 5,000 in the Northeast to 72,000. Single-family starts also improved in the West and Midwest while falling in the South and Northeast.

Total permits rose month-over-month in the Midwest and South while falling in the Northeast and West, as did single-family permits.

2012
11/21
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Housing Market
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September New Home Sales at 30-Month High

September New Home Sales at 30-Month High

10/24/2012  BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

New home sales jumped 5.7 percent in September to a seasonally adjusted average annualized rate of 389,000, the highest rate since April 2010, the Census Bureau and HUD reported Wednesday. Economists surveyed by Bloomberg expected the report to show a sales pace of 385,000. Sales for August were revised down to 368,000 from the originally reported 373,000.

The month-to-month sales improvement was the strongest since February, when sales improved 27,000, or 8.0 percent.

While sales numbers improved, both the median and average sales price of a new home dropped month-to-month. Sales were still up 27.1 percent from September 2011, the strongest year-over-year gain since February.

The home sales report—based on contracts, not closings—supported the sharp increase in the buyer traffic index reported by the National Association of Home Builders in its most recent Housing Market Index. Though that report was labeled for October, it was based on a survey of home builders early in the month and reflected activity in the previous month.

New home sales were boosted in April 2010 by the second federal home buyer tax credit program. Excluding those programs, the September new home sales pace was the fastest since November 2008.

The inventory of new homes for sale at the end of the month was 145,000, ups slightly from 143,000 in August. With the faster sales rate, the months’ supply of new homes dipped to 4.5 months, the lowest since October 2005. The shrinking supply should put upward pressure on prices, perhaps enough to lead to a surge in building.

Indeed, housing starts and permits jumped in Septemberto their highest levels since July 2008, the Census Bureau and HUD reported last week. Housing starts jumped 15.0 percent, while permits improved 11.6 percent.

The month-month dip in prices was the first since February. Almost 65 percent of the homes sold in September were priced below $300,000, up from 62 percent in August.

Despite the slight month-month decline, the median price of a new home is up 11.7 percent from a year ago and the average price is up 14.5 percent, each showing a double-digit year-year percentage gain for the second straight month. The percentage increase in the average price was the strongest since January 2010.

The increase in sales was fueled by a surge in the South, where sales improved to 215,000 from August’s 184,000. Sales increased as well in the Northeast (5,000) and the West (2,000) while dropping 19,000 in the Midwest.

Even with the September increase, the new home sales pace is still 72.0 percent of its July 2005 peak of 1.39 million.

Sales also failed to keep pace with single family completions. According to a separate Census/HUD report, builders completed 524,000 new single family homes in September.

2012
10/25
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Home sales
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