July Sees Expanded Housing Starts

 The housing industry and the residential construction industry is still the catalyst for a rebounding economy. Single-family permits and starts gained ground in July. Low-interest rates and the importance of homes due to COVID-19 have fueled the buyer’s market.

According to the NAHB/Wells Fargo Housing Market Index (HMI), single-family permits rose 17% in July. So far in 2020, the total permits for single-family homes on year-to-date bases are up around 6% higher than the first seven months of 2019.

The HMI is based on data collected from the NAHB’s monthly survey which the National Association of Home Builders has been conducting for 30 years. It measures builder’s perceptions of the current single-family home sales and expectations of sales for the next six months. Builders will rate their perception as good, fair or poor.

There are signs that more gains for single-family starts are on the horizon. This can be determined by the fast pace of permits and the renewal of builder confidence. The graph shows that single-family construction has been on the rise since it hit a low in April from the pandemic. April had a 679,000 annual pace while July saw a 940,000 seasonally adjusted annual rate.

Per region single-family starts are up and down depending on the region. In the Northeast single-family starts are down on a year-to-date basis 1%, in the South, they are up 0.7%, in the Midwest they are up 3.4% and in the West, they are also in the positive at 0.5%.

So far the housing market has remained strong during these unprecedented times. The count of single-family homes in various stages of construction is still on the rise. Now is a good time to sell or purchase a home.

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Single-Family Home Sales Increase in 2nd Quarter

Single-family home sales increased by almost 24% compared to new home sales in 2015 in April.  Compared to March, 2016’s home sales, single-family home sales increased by almost 17%.  Finally, sales went up to 619,000, an eight-year high during the month of April as well.
Home buyers are taking advantage of the availability of new homes because the inventory of new homes for sale on the market has decreased to a 4.7 month’s supply – a total of 243,000 new homes for sale with only 56,000 completed, move-in ready homes available. Demand will require that builders increase their production of new homes for sale in order to keep up with the buyers.

Single-Family Home Builders

April’s sales numbers go hand-in-hand with the reported new, single-family home starts which increased by 3.3% at the beginning of April.  Builder confidence held steady for the 4th month in a row since February, 2016, which contributed to new construction starts and inventory on the ground.  Single-family home permits in the beginning of April were already up year-over-year by 8.4%, so construction of new homes should continue to escalate over the next few months.

While first-time home buyers are finding it difficult to find new homes for sale in their price range, the sales of homes priced from $150,000 – $200,000 increased to 10,000 sales in April.  For existing home sales, the first-time home buyer sales accounted for 32% of these sales, opening up the market, once again for homes priced affordably.

Good News for Resale Market

Existing home sale closings increased by 6% year-over-year and by 1.7% compared to March’s sales.  It is definitely a seller’s market right now as existing home inventory also stands at a 4.7 month supply like single-family new homes.

The 2nd quarter of 2016 shows good news for the housing market after a slow 1st quarter start.  New, single-family home starts and permits indicate an increase in new home inventory moving forward in the 3rd quarter.  Sellers should be able to “take their pick” of home buyers as supply currently is lagging behind demand.

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