Tag Archives: Census Bureau

Single-Family Housing Starts Slip 0.2% In March

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Housing Starts Tuesday, the government released its March 2012 New Residential Construction report. 

The report is made up of three sections, each related to a phase of the “new home” market. The report’s first part is Building Permits; the second is Housing Starts; the third is Housing Completions.

Of the three sections, it’s Housing Starts that gets the most attention from the press — mostly because, of the triad, it’s the simplest for a layperson to understand. However, the manner in which Housing Starts data is reported can be misleading.

Today’s newspapers offer up an excellent example.

According to the Census Bureau, total Housing Starts fell by 6% in March as compared to the month prior. 654,000 units were started on a seasonally-adjusted annualized basis.

For Housing Starts, it’s the lowest reading in 5 months, a statistic suggesting that the housing market may have lost some momentum. Much of the press covered the story from a “housing is slowing” angle.

A few published headlines include : 

Although these headlines are accurate, they tell just half of the story.

Housing Starts did drop in March, but if we remove a subset of the data — structures with “5 or more units”; a grouping that includes condominiums and apartment buildings — we’re left with Housing Starts for single-family residences only. It’s this data that matters most to buyers in Collegeville and nationwide. 

Few home buyers buy entire apartment buildings. Most buy single-family homes. 

In March, single-family Housing Starts were down 0.2% from the month prior, or just 1,000 units on a seasonally-adjusted, annualized basis.

That’s hardly a drop at all.

New Home Sales Slip In February

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New Home SalesSales of “new homes” fell to the lowest levels in four months last month.

According to the Census Bureau’s monthly New Home Sales report, 313,000 new homes were sold in February 2012 on a seasonally-adjusted, annualized basis, representing a 1.6% drop from the month prior.

A “new home” is a home for which there has been no prior owner nor tenant.

At first glance, the data looks negative for the housing market; a suggestion that the well-publicized housing market recovery may be slowed. However, within February’s New Home Sales report are three important counter-statistics worth mentioning.

First, although annualized home sales volume slipped 5,000 units in February, this occurred as the number of homes for sale nationwide remained constant at 150,000. This is the fewest number of new homes for sale since at least 1993 — the first year that the Census Bureau tracked such data.

A small home supply promotes rising home values when buyer demand is rising and, in February, buyer demand held firm.

A second reason to remain optimistic on housing is that New Home Supply was 5.8 months in February. This means that, at the current pace of sales, the entire new home inventory will be “sold out” in 5.8 months.

Housing experts say that when home supplies fall below 6.0 months, it’s bullish for housing.

And, as a third reason to look past the New Home Sales headline figure, last month’s reporting Margin of Error was huge.

According to the government, the February New Home Sales data was published with a ±23.9% margin of error. This means that the actual New Home Sales sales volume may have dropped as much as -25.5%, or may have climbed by as much as +22.3%. 

Because the range of possible values includes both positive and negative numbers, the Census Bureau assigned its February data the “zero confidence” label.

It will be several months before February’s New Home Sales data is revised. Until then, buyers in Collegeville would do well to take cues from the real estate market-at-large which shows steady, gradual improvement. 

If your 2012 housing plans call for buying new construction, consider using February’s results as a window to “make a deal”. As the year progresses, great values in housing may be gone for good.

Building Permits On The Rise

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Building PermitsThe new construction housing market appears primed for growth this season.

According to the Census Bureau, the number of single-family building permits issued in February rose to 472,000 on a seasonally-adjusted, annual basis, marking the highest building permit tally since April 2010 — the last month of that year’s federal home buyer tax credit program.

Building permits are a pre-cursor to new home construction.

In 2011, from the date of permit-issuance to the date of “ground-breaking”, an average of 27 calendar days passed. February’s data, therefore, is a signal that the market for newly-built homes should be strong this year, an idea supported by the most recent homebuilder confidence survey.

As buyer foot traffic soars, homebuilders expect to make more sales in the next 6 months than at any time since the housing market’s collapse. Builder confidence is at a 5-year high.

Last month, however, single-family housing starts slipped.

As compared to January, February’s single-family housing starts fell by 50,000 units on a seasonally-adjusted, annualized basis. The 10% drop represents the largest one-month drop since February 2011. It’s a statistic that may suggest that this year’s results are simply seasonal.

For buyers of new construction, the news is mixed.

Rising permits and builder confidence may mean that Phoenixville homebuilders will be less willing to negotiate with today’s buyer on upgrades and/or home prices. However, as more new home supply is set to come online, excess housing stock could help keep home prices low. 

If you’re planning to buy new construction in Pennsylvania this year, be sure to ask your real estate agent about the local home supply, and how the market is currently trending. With mortgage rates low and the summer buying season approaching, you may find some of your best deals of the year available in just the next few weeks.

Mortgage Rates Climb Sharply After Retail Sales Report

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Retail Sales 2010-2012The U.S. economy is expanding, fueled by a renewed consumer optimism and increased consumer spending.

As reported by the Census Bureau, Retail Sales in February, excluding cars and auto parts, rose 1 percent to $335 billion as 11 of 13 retail sectors showed improvement last month.

February markets the 19th time in twenty months that U.S. Retail Sales increased on a month-over-month basis.

Unfortunately, what’s good for the economy may be bad for Phoenixville home buyers and mortgage rate shoppers. Home affordability is expected to worsen as the U.S. economy improves.

The connection between Retail Sales and home affordability is indirect, but noteworthy — especially given today’s broader market conditions.

First, let’s talk about affordability.

Last week, the National Association of REALTORS® released its monthly Housing Affordability Index, showing that homes are more affordable to everyday home buyers than at any time in recorded history. For buyers with median earnings buying median-priced homes, monthly payments now comprise just 12.1% of the monthly household income.

The real estate trade group considers 25% to be the benchmark for home affordability. Today’s payment levels are less than half of that.

The reasons why today’s homes are so affordable are three-fold :

  1. Home prices remain relatively low as compared to peak pricing
  2. Fixed- and adjustable-rate mortgage rates remain near all-time lows
  3. Average earnings are increasing nationwide

Rising Retail Sales, however, can derail the trend. This is because Retail Sales measures consumer spending and consumer spending accounts for roughly 70 percent of the U.S. economy. As the economy expands, the forces that combined to raise home affordability so high begin to wane. 

First, in a recovering economy, mortgage rates tend to rise and, throughout 2012 and 2013, home prices are expected do the same. Second, as average earnings increase, it can spur inflation which is bad for mortgage rates, too. 

Home affordability is at all-time highs today. But, in part because of February’s Retail Sales data, we should not expect these levels to last. Mortgage rates are higher by 1/4 percent since the Retail Sales data was released — roughly $16 per $100,000 borrowed — and are expected to rise more throughout the spring home purchase season.

Retail Sales are up 6 percent from a year ago.

New Home Supply Falls To 5.6 Months

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New Home Supply 2010-2012

The new construction market rolls on.

As foreshadowed by February’s Homebuilder Confidence survey, which rose to a 4-year high, the Census Bureau reports new homes are selling more quickly than builders have built them, lowering the national “home supply” to levels not seen since 2006.

A “new home” is a home that is considered new construction and, at the current pace of sales, the nation’s entire new home inventory of 151,000 homes would be sold in 5.6 months.

Anything less than 6.0-month supply is thought to connote a “sellers’ market”.

321,000 new homes were sold last month on a seasonally-adjusted, annualized basis. 7 of 10 new homes sold for less than $300,000. 

The South Region continues to account for the majority of new construction sales, posting a 59% market share in January. South Region sales were up 9 percent as compared to December. The other 3 regions turned in mixed results. 

  • Northeast Region : +11.1% from December 2011 
  • Midwest Region : -24.5% from December 2011 
  • West Region : -10.6% from December 2011 

Unfortunately, the Census Bureau’s New Home Sales data could be wrong.

Although New Home Sales were said to fall by about one percent nationally from December to January, the government’s monthly report was footnoted with a ±16.6% margin of error. This means that the actual New Home Sales reading may have been as high as +15%, or as low as -18%. 

Because the range of values includes positive and negative values, the January New Home Sales data is of “zero confidence”. However, that’s not to say that it should be ignored. The aforementioned homebuilder confidence survey shows builders optimistic for the future, and a bevy of home sale data since October 2011 suggests a market in recovery.

If you’re in the market for new construction in Collegeville , therefore, consider going into contract sooner rather than later. Home prices remain low and mortgage rates do, too — a terrific combination for today’s buyers.

In a few months, the landscape may look different.

Housing Starts Stay Strong; Building Permits Rise.

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Single-family housing starts

The housing market has carried forward its year-end momentum. 

According to the Census Bureau, on a seasonally-adjusted, annualized basis, January’s Single-Family Housing Starts crossed the half-million unit marker for the second straight month.

This hasn’t happened in close to 2 years and is the latest in a series of strong data that suggests the beleaguered housing market has turned a corner — both nationally and locally in King of Prussia.  

Although single-family starts slipped 1 percent from December, January’s annualized 508,000 figure represents a 16% spike from January 2011 and is the second-highest reading since April 2010 — the last month of 2010’s federal home buyer tax credit program.

A “housing start” is a new home on which construction has started.

The strength of January’s Housing Starts data surprised Wall Street analysts and is partially responsible for Thursday’s unexpected mortgage rate spike. 

In hindsight, though, we should have seen this coming.

Earlier in the week, the National Association of Homebuilders announced that homebuilder confidence had climbed to its highest point since 2007 amid builder reports of rising sales volume and the most foot traffic from buyers in more than 4 years.

In addition, builders expect to sell more homes in 2012 than in 2011.

Builders are building and buyers are buying.

Meanwhile, as another sign of housing market strength, the Census Bureau reports that, in January, Building Permits moved to a multi-year high as well. Permits issued for single-family homes in January rose 1 percent from December, a statistic that suggests housing will continue its run through the spring season, at least.

86 percent of homes break ground within one month of permit issuance.

It’s a good time to be a home buyer. Mortgage rates and home prices are low. Housing market momentum, however, is building. If you’re on the fence about whether to buy a home , ask your real estate agent for additional market information.

The cost of home-ownership may never be as low as it is today.

Supply Of New Homes At 6.1 Months Nationwide

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New Home Supply 2010-2011

New Home Sales slowed into the New Year but the market for newly-built homes remains strong. For home buyers in Pennsylvania and nationwide, December’s New Home Sales report is yet one more signal that the housing market recovery may be underway.

According to the Census Bureau, the number of new homes sold in December 2011 slipped 2 percent to 307,000 units on a seasonally-adjusted, annualized basis nationwide.

A “new home” is a home that is considered new construction; a home for which the buyer will be the first owner and tenant.

As compared to December 2010, last months’ sales volume fell seven percent. It’s a statistic that suggests housing market weakness. However, in looking at a different component of the New Home Sales report — the supply of homes for sale — we’re forced to reconsider.

At the current pace of sales, every new home for sale nationwide would be “sold” in a matter of 6.1 months. 

Economists believe that a 6.0-month supply defines a market in balance — anything quicker is termed a “seller’s market”. Statistics like that are enough to create urgency among today’s King of Prussia home buyers. 

Unfortunately, the Census Bureau’s data may be wrong.

Although December’s New Home Sales report shows sales down 2 percent, the government’s data was published with a ±13.2% margin of error. This means that the actual New Home Sales figure may have been as low as -15.2 percent, or as high as +11.2 percent. And, because the range of possible values includes both positive and negative numbers, the Census Bureau had no choice but to assign its December data “Zero Confidence”.

It will be a few months before final revisions are made to December New Home Sales data. Until then, therefore, buyers should take cues from the market-at-large and the market-at-large hints at recovery. One example of this is homebuilders showing more confidence in their product than at any time in the last 5 years.

If your plans for 2012 call for buying new construction, therefore, consider using this lull to “make a deal”. As the year progresses, the great values in housing may be gone.

New Home Sales Approach Bull Market Territory

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New Home Supply 2010-2011New home inventory is approaching bull market territory.

According to the Census Bureau, the number of new homes sold rose 2 percent in November. On a seasonally-adjusted, annualized basis, home buyers bought 315,000 newly-built homes last month.

November’s New Home Sales data marks the 4th straight month of rising sales volume, lifting the housing-market metric to a 7-month high, and adding to the housing market’s recent show of strength. 

Last week, we learned that Existing Home Sales also climbed in November.

The big story in the New Home Sales report, though, is the remaining new home supply nationwide.

With just 158,000 homes “on the market” and the pace of home sales hastening, the complete, national inventory of “new homes” would now be sold in just 6.0 months, a 0.2-month improvement from October. This is the quickest home sales pace in nearly 6 years for the new construction market. 

It’s even faster than in April 2010 — the buyer-deadline month of last year’s federal home buyer tax credit.

Home builders expect the trend to continue, too. Buyer foot traffic is on the rise and builders have a strong outlook for the next 6 months.

It’s an unsettling series of developments for today’s Phoenixville home buyers. As home supplies drop and builders gain confidence, the ability of an buyer to negotiate for price reduction and/or upgrades shrinks.

If you’re a home buyer in search of new construction, therefore, consider that the best new construction “deals” of the next 12 months may be the ones you find today.

Housing Starts Show Strength In Housing

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Housing Starts 2007-2011

The new construction housing market continues to show strength across the country.

According to the U.S. Census Bureau, Single-Family Housing Starts rose to 447,000 units on a seasonally-adjusted, annualized basis in November — a 2 percent increase from October.

A “Housing Start” is defined as breaking ground on new home construction.

November’s figures mark the third straight month of Single-Family Housing Starts gains. The new construction metric is now 15 percent above its all-time low, set in February of this year.

None of this should be a surprise to new home buyers in Collegeville.

Housing data has been trending better since September with sales volumes rising and home inventories falling. Basic economics tells us that home prices should soon rise.

The good news is that low mortgage rates should keep homes affordable.

Since mid-November, the average, conventional 30-year fixed rate mortgage has hovered near 4.000% nationwide with an accompanying 0.7 discount points plus closing costs. 1 discount point equals one percent of your loan size. This is down from near 4.500% six months ago, and the drop has made a big impact on home affordability. 

  • June 2011 : $200,000 mortgage costs $1,013.37 per month
  • December 2011 : $200,000 mortgage costs $954.83 per month

This represents $700 in savings per year. It’s no wonder home builders report the highest buyer foot traffic in 3 years. 

Meanwhile, the market shows little signs of slowing down. Building Permits are on the rise, too.

Permits for single-family homes rose to their highest levels of year in November and 89 percent of those homes will start construction within 60 days. This means that Single-Family Housing Starts should stay strong through the early part of 2012, and into the spring.

If you’re planning to buy new construction in Pennsylvania , therefore, talk to your real estate agent soon and consider moving up your time frame. With mortgage rates low and next year’s buying season approaching, you may find that the best “deals” will come within the next few weeks only.

Housing Starts Rising; New Construction Turns The Corner?

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Housing Starts (2009-2011)Another day, another signal that the market for newly-built homes is improving.

Single-Family Housing Starts rose to a seasonally-adjusted, annualized 430,000 units in October — a 4 percent increase from September and the highest reading in 3 months.

A “Housing Start” is a home on which ground has been broken.

The increase in surprised Wall Street analysts, although it shouldn’t have.  

Earlier this week, the National Association of Homebuilders showed that Homebuilder Confidence is at its highest point since May 2010, the effect of better market conditions and more sold units. Rising housing starts amid a lift in builder confidence is to be expected — the two metrics have moved with loose correlation since mid-2000.

However, as with everything in real estate, Single-Family Housing Starts volume varied by location. The nation’s 4 regions posted wide-ranging results :

  • Northeast Region : + 10.0% from September
  • Midwest Region : -4.1% from September
  • South Region : +11.3% from September
  • West Region : -10.2% from September

Buyers of new construction in King of Prussia can infer two key points from last month’s data.

First, with more homes will being built, home supply should rise, thereby softening pressure on rising home prices. This should help keep homes affordable.

However, the second point is that, with builder confidence rising, buyers are less likely to win price concessions and “free upgrades” in negotiations.

The last 6 weeks of 2011 may be your optimal time to buy new construction. Home prices remain affordable and mortgage rates are rock-bottom. In addition, because there are typically fewer active home buyers during the holidays, you’ll be more likely to locate one of the few remaining new construction “deals”.

Talk to your real estate agent about local trends and new construction.