Sunday, July 25, 2021

June’s new home construction and existing home sales

There were just two widely watched reports released this past week: 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 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 fell from a downwardly revised +0.26 in May to +0.09 in June, which left the 3 month average of the index at +0.06 in June, down from +0.80 in May, a reading near zero which indicates national economic activity has averaged near the historical trend during the 2nd quarter...

This week also saw the release of another regional Fed manufacturing survey for July: the Kansas City Fed manufacturing survey for July, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index rose to +30 in July, up from readings of +27 in June and +26 in May, indicating an ongoing broad based expansion among that region's manufacturers...

New Housing Starts Reported Higher in June, Building Permits 5.3% Lower

The June 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 1,643,000 in June, which was 6.3 percent (±11.5 percent)* above the revised May estimated annual rate of 1,546000 units started, and was 29.1 percent (±11.2 percent) above last June's pace of 1,235,000 housing starts a year...the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from May, 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 5.2% or up by as much as 17.8% from those of May, with revisions outside of that range eventually possible...with this report, the annual rate for May housing starts was revised from the 1,572,000 units reported last month to 1,546,000, while April starts, which were first reported at a 1,569,000 annual rate, were revised from last month's initial revised annual figure of 1,517,000 annually down to 1,514,000 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 Census field agents, which estimated that 152,600 housing units were started in June, up from the 140,400 units started in May and up from the 118,800 units started in June of a year ago...of those housing units started in June, an estimated 111,100 were single family homes and 40,800 were units in structures with more than 5 units, up from the revised 99,800 single family starts in May, and up from the the 39,600 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 broadly revised housing starts data...in June, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,598,000 housing units, which was 5.1 percent (±1.1 percent) below the revised May rate of 1,683,000 permits, but was 23.3 percent (±0.9 percent) above the rate of building permit issuance in June a year earlier...the annual rate of housing permits issued in May was revised from the 1,681,000 reported last month to 1,683,000....

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 155,000 housing units were issued in June, up from the revised estimate of 142,300 new permits issued in May...the June permits included 104,900 permits for single family homes, up from 142,300 in May, and 45,200 permits for housing units in apartment buildings with 5 or more units, up from 38,500 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 1.643 Million Annual Rate in June and Comments on June Housing Starts...

Existing Home Sales Rose by 1.4% in June; Sales Prices at a Record High

The National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose by 1.4% from May to June, their first increase in five months, projecting that 5.86 million homes would sell over an entire year if the June home sales pace were extrapolated over that year, a pace that was also 22.9% above the annual sales rate projected for June of a year ago...the June home sales increase came after home sales fell to a 5.78 million annual rate in May, a ten month low, which was revised from the 5.80 million rate indicated by last month's report...that came after homes sold at an annual sales rate of 5.85 million in April, an annual home sales rate of 6.01 million in March, and an annual home sales rate of 6.24 million in February.....the NAR also reported that the median sales price for all existing-home types was at a record high $363,300 in June, up 23.4% from the median $294,400 sales price in June a year earlier, which they report "marks 112 straight months of year-over-year gains".....the NAR press release, which is titled "Existing-Home Sales Expand 1.4% in June", 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 brokerage, 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 of the actual number of homes that sold each month...this unadjusted data indicates that roughly 614,000 homes sold in June, up by 16.3% from the 528,000 homes that sold in May, and up by 21.1% from the 507,000 homes that sold in June of last year...that same pdf indicates that the median home selling price for all housing types rose 3.7%, from a revised $350,400 in May to a record $363,300 in June, while the average home sales price was also at a record $381,800, up 2.7% from the $371,700 average price in May, and 16.1% higher than the $328,900 average home sales price of June a year ago, as the regional average home sales prices ranged from a low of $305,400 in the Midwest to a high of $498,900 in the West, both of which were also record highs...for additional coverage with long term graphs on this report, see "NAR: Existing-Home Sales Increased to 5.86 million in June" and "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 of which are picked from the aforementioned GGO posts, contact me…)  

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