Housing Market Index
The housing market index remains unchanged for the third straight month in April. It continues to signal solid confidence among home builders at a level of 58. Present sales continue to lead the way though they did dip 2 points to a reading of 63. Expectations for 6-month sales follow closely behind up 1 point to a level of 62. Traffic continues to lag in the current report up 1 point to a still low level of 44. Regional composite data continues to show the West far out in front at an unchanged level of 67, an important region for the nation’s new home sector. The South comes in second at a level of 59 and the Midwest following close behind at 56. The Northeast trails in the distance at 44. The availability of jobs together with very low mortgage rates are solid pluses for the new housing outlook. A negative in the report, however, is the low traffic reflecting lack of participation from first time buyers who continue to rent.
Housing starts fell a sharp 8.8 percent in March to a 1.089 million annualized rate which is well below the prediction of 1.167 million and below the low end estimate of 1.120 million. Permits are showing weakness as well, down 7.7 percent at 1.086 million rate which is below both the estimates. Weakness in starts is split between single-family and multi-family components with weakness in permits concentrated in multi-family homes. There is strength in the year on year rates at plus 14.2 percent for starts and plus 4.6 percent for permits. Regional data show declines throughout except for starts in the Northeast with ongoing work tied to a rush last year in permits. The Midwest is showing the most strength with permits with a 24.2 percent year-on-year gain followed by the South at 11.3 percent. There is weakness in the West, however, a key region for new housing. Permits are down from a year ago by 6.1 percent. A positive in this report is strength in total completion up 3.5 percent in the month for 31.6 percent yearly gain. However, most of the report delivers negative news.
Purchase applications for home mortgages in the week of April 15th fell 1.0 percent, while refinancing applications rose 3.0 percent from the previous week. While still 17 percent higher than last year, the purchase index has retreated from the 30 plus percent yearly gains seen in March. The low mortgage rates increased in the week, up on average 1 basis point for a 30-year mortgage for conforming loans.
Existing Home Sales
Existing home sales rose more than expected in March, up 5.1 percent to a 5.330 million annualized rate. This, however, does not offset the downwardly revised 7.3 percent drop in February. The year on year rate is weak at only 1.5 percent. Looking at the first quarter as a whole, existing home sales are up a much more respectable 4.8 percent. March’s gain is led by the most important component, single-family homes, which increased to 5.5 percent in the month to 4.760 million. Year on year, single-family homes are up 2.6 percent. Condos showings are less impressive up only 1.8 percent in the month for a yearly decline of 6.6 percent. Prices in the report are up a monthly 5.0 percent for the median, and a yearly increase of 5.7 percent. The median home price for an existing home is $222,700, the best of the recovery, besides last year’s spring selling season when the median peaked above $230,000. Higher prices help pull in more homes into the market, at 1.980 million in March for a sharp 5.9 percent gain from February. The year on year supply is still weak down 1.5 percent from last year. Supply relative to sales is at 4.5 months, slightly higher than February’s 4.4 months and down slightly from 4.6 months in March of last year. Regional data is positive with all four regions showing monthly gains led by the Northeast at an 11.1 percent gain. The Northeast also led in yearly gains up 7.7 percent, the West brought up the rear with a decline of 2.5 percent.
Home sellers in March sold their home for an average 17 percent gain or $30,500 more than the purchase price. This is the highest average monthly price gain for home sellers since December of 2007. The increasing home prices are stalling the market; increased home prices have caused a slower start to the spring homebuying season, with a decrease of 4.7% in home sales from March 2015 in California. About 36% of markets reached all time price peaks in the past 15 months.