Sunday, July 24, 2016

June’s new housing construction and existing home sales

it's been a slow week, with the June report on New Residential Construction from the Census Bureau and the June report on existing home sales from the National Association of Realtors (NAR) the only two reports with a broad following that were released this week....other reports released this week included Regional and State Employment and Unemployment for June from the BLS, and the Philadelphia Fed Manufacturing Survey for July, covering most of Pennsylvania, southern New Jersey, and Delaware, which reported its broadest diffusion index of manufacturing conditions fell from +4.7 in June to -2.9 in July, suggesting a return to the contraction in that region's manufacturing... in addition, this week also saw the release of the Chicago Fed National Activity Index (CFNAI) for June, a weighted composite index of 85 different economic metrics, which rose from a downwardly revised -0.56 in May to +0.16 in June...that still left the 3 month average of the index at –0.39, indicating national economic activity has been well below the historical trend during the 2nd quarter...

New Housing Construction Little Changed in June, New Permits Down YoY

the June report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started in June was at a seasonally adjusted annual rate of 1,189,000, which was 4.8 percent (±13.5%) above the revised May estimated annual rate of 1,136,000 housing units started, but which was still 2.0 percent (±12.9%) below last June's pace of 1,213,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month or even over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, June's housing starts could have been down by 8.7% or up by as much as 18.3% from those of May, with even larger revisions possible...in this report, the annual rate for May housing starts was revised from the 1,164,000 reported last month to 1,136,000, while April starts, which were first reported at a 1,172,000 annual rate, were revised down from last month's initial revised figure of 1,076,000 annually to 1,155,000 annually with this report....those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 111,600 housing units were started in June, up from the 106,200 units started in May...of those housing units started in June, an estimated 76,700 were single family homes and 33,300 were units in structures with more than 5 units, up from the revised 71,100 single family starts but down from the 34,700 units started in structures with more than 5 units in May...

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in June, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,153,000 housing units, which was 1.5 percent (±1.3%) above the revised May rate of 1,136,000 permits, but 13.6 percent (±0.6%) below the rate of building permit issuance in June a year earlier...the annual rate for housing permits issued in May was revised from 1,138,000 to 1,136,000....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 114,000 housing units were issued in June, up from the revised estimate of 107,700 new permits issued in May...the June permits included 74,400 permits for single family homes, up from 70,200 in May, and 36,600 permits for housing units in apartment buildings with 5 or more units, up from 34,900 such multifamily permits a month earlier... for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.189 Million Annual Rate in June and Comments on June Housing Starts...

Existing Home Sales Up 1.1% in June

the National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose 1.1% from May to June, projecting that 5.57 million homes would sell over an entire year if the June home sales pace were extrapolated over that year, a pace that was also 3.0% greater than the annual sales rate projected in June of a year ago, and the highest monthly annual rate since February 2007...that came after an annual sales rate of 5.51 million homes in May, which was revised from the originally reported 5.53 million annual sales rate, and an annual home sales rate of 5.43 million in April...the NAR also reported that the median sales price for all existing-home types in June was $247,700 in June, up from $238,900 in May and 4.8% higher than in June a year earlier, which they report as "the 52nd consecutive monthly year over year increase in home prices".....the NAR press release, which is titled "Existing-Home Sales Ascend Again in June, First-time Buyers Provide Spark", is in easy to read plain English, so if you're interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release...as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month...this unadjusted data indicates that roughly 583,000 homes sold in June, up by 11.0% from the 525,000 homes that sold in May, but just 1.9% more than the 572,000 homes that sold in June of last year, so we can see there was again a seasonal adjustment in the annualized published figures of over 10% to correct for the typical early summer increase in home sales...that same pdf indicates that the median home selling price for all housing types rose 3.8%, from a revised $238,900 in May to $247,700 in June, while the average home sales price was $292,100, up 4.0% from the $280,900 average in May, and up 4.2% from the $280,200 average home sales price of June a year ago, with the regional average home sales prices ranging from a low of $235,900 in the Midwest to a high of $379,900 in the West...for additional coverage with long term graphs on this report, see "Existing Home Sales increased in June to 5.57 million SAAR" and "A Few Comments on June Existing Home Sales" from Bill McBride at Calculated Risk...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)        

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