Sunday, June 23, 2019

May's reports on new home construction and existing home sales

The only widely watched reports that were released over the past week were the May report on New Residential Construction from the Census Bureau and the May report on existing home sales from the National Association of Realtors (NAR)....this week also saw the release of the first two Fed regional manufacturing reports for June: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell to -6.8, down from +17.8 in May, the largest monthly decrease on record, indicating a sudden contraction of First District manufacturing... meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions fell from +16.6 in May to +0.3 in June, its lowest reading since February, suggesting virtual stagnation in that region's manufacturing during the month....

New Housing Starts, Permits Little Changed in May

The May report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,269,000 in May, which was 0.9 percent (±12.9 percent)* below the revised April estimated annual rate of 1,281,000 housing units started, and was  4.7 percent (±8.9 percent)* below last May's rate of 1,332,000 housing starts a year...the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from April to May, or even from May of last year, with the figure in parenthesis the most likely range of the change indicated; in other words, May’s housing starts could have just as easily been up by 12.0% or down by 13.8% from those of April, with even larger revisions possible...in this report, the annual rate for April housing starts was revised from the 1,235,000 estimated last month to 1,281,000, while March housing starts, which were first reported at a 1,139,000 annual rate, were revised from last month's initial revised annualized figure of 1,168,000 up to 1,199,000 annually with this report....

The annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 118,700 housing units were started in May, up from the 117,900 units started in April and the 98,200 units started in March...of those housing units started in May, an estimated 78,300 were single family homes and 39,200 were units in structures with more than 5 units, down from the revised 83,100 single family starts in April, but up from the 32,900 units started in structures with more than 5 units at the same time...

The monthly data on new building permits, with a smaller margin of error and hence usually smaller revisions, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in May, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,294,000 housing units, which was 0.3 percent (±1.3 percent)* above the revised April permit rate of 1,290,000 but 0.5 percent (±1.4  percent)* below the rate of permit issuance in May a year earlier….the annual rate for housing permits issued in April was revised from the 1,296,000 reported a month ago to 1,290,000...quoting the report for the annualized figures on the types of permits:  “Single‐family authorizations in May were at a rate of 815,000; this is 3.7 percent (±1.2 percent) above the revised April figure of 786,000.  Authorizations of units in buildings with five units or more were at a rate of 442,000 in May.”

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 124,000 housing units were issued in May, up from the revised estimate of 118,700 new permits issued in April... that included permits for an estimated 81,200 single family units in May, up from 75,700 in April, and permits for 39,400 units in structures with more than 5 units, up from 38,900 in April….for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts at 1.269 Million Annual Rate in May and Comments on May Housing Starts...

Existing Home Sales Rose 2.5% in May; Median Price at a Record High

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose by 2.5% from April to May, projecting that 5.34 million homes would sell over an entire year if the May home sales pace were extrapolated over that year, a pace that was still 1.1% slower than the annual sales rate projected in May of a year ago...that came after an annual sales rate of 5.21 million homes in April, which was revised from the originally reported 5.19 million annual sales rate, and also an annual home sales rate of 5.21 million in March, thus revising the April report to unchanged from the previously reported 0.4% decrease...the NAR also reported that the median sales price for all existing-home types in May was $277,700, which topped the prior record median price of $273,800 set last June, and was 4.8% higher than in May a year earlier, which they report is "the 87th straight month of year-over-year gains"....the NAR press release, which is titled Existing-Home Sales Ascend 2.5% in May, 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 during the selling process…

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 data indicates that roughly 540,000 homes sold in May, up by 18.4% from the 456,000 homes that sold in April and 0.9% more than the 535,000 homes that sold in May of last year, so we can see the effect of the seasonal adjustment to correct for the typical large springtime increase in home sales...that same pdf indicates that the median home selling price for all housing types rose 4.0%, from a revised $266,900 in April to $277,700 in May, while the average home sales price was at $314,000, up 3.0% from the $305,000 average in April, and up 3.4% from the $303,700 average home sales price of May a year ago, with the regional average home sales prices ranging from a low of $248,200 in the Midwest to a high of $420,900 in the West...for additional details and long term graphs on this report, see "NAR: Existing-Home Sales Increased to 5.34 million in May" and "Comments on May 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 picked from the aforementioned GGO posts, contact me…)       

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