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Archive for category Housing Starts

Single-Family Housing Starts Fade In July

Aug 18

Posted by Real Estate Agent Referral Service - Thurston County Washington in Daily Real Estate & Mortgage News, Housing Starts | No Comments

Housing starts August 2008 - July 2010Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth’s latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

  • US Housing Starts Make Modest Rebound (FT)
  • Housing Starts Rise Slightly (MoneyWatch)
  • Housing Starts Tick Higher In July (MarketWatch)

However, these stories are speaking in terms of all housing starts — not just the single-family ones. This is a major point of difference for home buyers in Tumwater because the most people don’t buy the multi-unit homes and apartment buildings that’s also a part of the Housing Starts data. 

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It’s not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead.  This may lead home prices to rise because home values are based on supply and demand.  For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.

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Housing Starts Ease 0.7 Percent In June — 7x Better Than The Headline Data

Jul 21

Posted by Real Estate Agent Referral Service - Thurston County Washington in Housing Starts | No Comments

Housing starts July 2008 - June 2010

Single-family Housing Starts eased lower last month, falling by 0.7 percent from May, or 3,000 units nationwide.

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

June’s Housing Starts data is somewhat soft and may partially explain why home builder confidence dropped to its lowest level since April 2009, but for buyers and sellers in Lacey , the Housing Starts report is not nearly as bad as headlines say.

This is because when the press reports on Housing Starts, it doesn’t single out single-family homes. The press lumps every type of home into a single, giant reading. As a result, news outlets are reporting Housing Starts down 5 percent — a somewhat misleading figure.

The 5 percent figure is actually a combination of 3 separate housing types:

  1. Single-Family Housing Starts
  2. Multi-Unit Housing Starts (2-4 Units)
  3. Apartment Building Housing Starts (5 or more units)

But, single-family homes are what most Americans purchase. This is why the single-family starts data is more relevant than the combined figure commonly reported by the press. 2-4 units and apartment buildings are a different realm of buyer.

That said, though, we can’t even be sure that June’s Single-Family Housing Starts report is accurate. As noted in the Department of Commerce’s press release, the data’s margin of error is 10.7 percent which means the reported results are of “no confidence”.

In other words, there is no statistical evidence to prove the actual change was different from zero.

If Housing Starts did, in fact, drop in June, it will help to reduce the Pierce County housing inventory, which will provide support for local home values. For home sellers, this could be good news. Fewer homes for sale means less competition for buyers.

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Sagging Homebuilder Confidence Opens The Door For Good Deals

Jul 20

Posted by Real Estate Agent Referral Service - Thurston County Washington in Home Values, Homebuilders, Housing Starts, New Home Sales, Real Estate Investing, Statistics | No Comments

NAHB Housing Market Index July 2008-2010Builder confidence in the housing market slipped this month, according to the National Association of Homebuilders’ monthly Housing Market Index.

The Housing Market Index is actually a weighted composite of 3 separate surveys. One measures current single-family sales; one measures projected single-family sales; and one measures traffic of prospective buyers.

All three surveys were down in July:

  • Single-Family Sales : From 17 (June) to 15 (July)
  • Single-Family Project : From 22 (June) to 21 (July)
  • Buyer Foot Traffic : From 13 (June) to 10 (July)

The HMI’s July reading of 14 puts confidence at its lowest point since April 2009.

For home buyers in Olympia , a drop in builder confidence could create an opportunity for negotiation.

Remember, it wasn’t too long ago that most builders were flush with home inventory, unable to find willing buyers. To help move product at that time, builders dropped prices and offered incentives including free upgrades. If confidence continues to sag going forward, home purchase deals of that nature may return — especially as the foreclosure market gets larger.

See, in the past, builders’ main competition for buyers were the existing home sellers.  Today, builders compete with the existing home sellers and the banks with REO. 

It’s a terrific time to be a home buyer, in other words — sellers are fighting for you. It’s no wonder sellers have little leverage anymore. Couple that with all-time low mortgage rates and affordability for homes is at an all-time high.

If you’re planning to buy a home later this year, you may want to consider moving up your time frame. The market looks ripe for good deals this summer.

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Good News For Sellers : Housing Starts Fall To 1-Year Low In May 2010

Jun 17

Posted by Real Estate Agent Referral Service - Thurston County Washington in Daily Real Estate & Mortgage News, Housing Starts | No Comments

Housing starts June 2008 - May 2010Single-family housing starts plummeted to a one-year low in May, just 30 days after soaring to a 20-month high.  It’s no wonder home builders are confused.

Against a revised April figure, Housing Starts fell 97,000 units in May, a figure representing almost one-fifth of the total market size.

It’s the worst showing for Housing Starts since May 2009, a surprise to builders and economists alike.

Furthermore, single-family Building Permits plunged in May, too — down 10 percent from April. A permit is a certification from local government that authorizes home construction.

Housing permits are a precursor to Housing Starts with 82% of homes starting construction within 60 days of permit-issuance. Fewer permits, therefore, directly reduces the number of new homes coming to market in the coming months.

For home buyers in Lacey , this should create a sense of urgency.

Home prices are based on supply and demand and supply appears to be falling about the same time that economists predict a surge in home demand.  It could spell rising home prices and a complete loss of negotiation power with home sellers.

For now, though, home affordability remains high with properties cheap and mortgage rates near all-time lows. If you plan to buy a home later this year, the May 2010 Housing Starts data may be a reason to move up your timeframe a bit.

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Housing Starts Rise In April, Exerting Downward Pressure On Home Prices

May 19

Posted by Real Estate Agent Referral Service - Thurston County Washington in Housing Starts | No Comments

Housing starts May 2008 - April 2010

Single-family Housing Starts rose by 55,000 last month, suggesting ample housing stock from which Tumwater can choose this summer.

The report is a slightly larger read than what economists had expected.

Furthermore, for the first time since June 2009, Housing Starts appears to have broken away from its half-million unit plateau. 593,000 new homes were started in April.

Ordinarily, both Wall Street and Main Street would celebrate a strong housing sector report like this, but the Department of Commerce’s press release also held two cautionary notes.

The first point of caution is a mathematical one.  Although single-family starts increased by 10.2 percent, the survey had a Margin of Error of 10.7 percent. This means that Housing Starts may have fallen by 0.5 percent and the report is statistically worthless.

The second point of caution is tied to Building Permits, a complementary data point in the same Department of Commerce report.  In April, Building Permits fell by almost 11 percent with a tiny Margin of Error of less than 2%.  This tells us that builders are pulling back — a sign of low housing market confidence

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Housing Starts, therefore, should ease though June and July.

Home prices are based on housing’s supply and demand.  For the next few months, supply should elevate, helping prices remain suppressed, after which, supply should dwindle. 

The best time to buy a home, therefore, may be now.  As the summer months come to close, we may find that buyers vastly outweigh sellers.

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The Headlines Were Overly Rosy On February’s Case-Shiller Index

Apr 30

Posted by Real Estate Agent Referral Service - Thurston County Washington in Case-Shiller Index, Existing Home Sales, Home Price Index, Home Values, Housing Starts, New Home Sales | No Comments

Case-Shiller Change In Home Values Jan-Feb 2010

Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas. 

Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase.  The other 19 markets averaged a 1.23 percent decline between January and February.

However, that’s not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.

Unfortunately for active home buyers and sellers, year-over-year data isn’t all that helpful when making a real estate decisions. It’s the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.

The rosier, annualized data published this past week just doesn’t capture the reality of what was the February 2010 market.  And even then, the data is somewhat useless because it’s from February and May will be upon us next week.

Case-Shiller is on a 2-month lag — hardly reflective of the “right now” of real estate in Tumwater.

When you’re looking for real estate data that actionable, consider using sources that are more “real-time”. A real estate agent may be the right place to start.  Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.

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Housing Starts Data Hints That Housing Will Expand Even After The Tax Credit Expires

Apr 20

Posted by Real Estate Agent Referral Service - Thurston County Washington in Housing Starts | No Comments

Housing Starts Apr 2008-Mar 2010After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It’s yet another signal that the housing market in Olympia and nationwide is stabilized.

A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts.  According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.

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Single-Family Housing Starts Hold Steady For The 8th Straight Month

Mar 18

Posted by Real Estate Agent Referral Service - Thurston County Washington in Daily Real Estate & Mortgage News, Existing Home Sales, Home Price Index, Housing Starts, New Home Sales, Pending Home Sales | No Comments

Housing Starts Mar 2008-Feb 2010Single-family Housing Starts idled last month, dropping just 3,000 units from the month prior, or 0.2%.

According to the Commerce Department’s report, February marked the 8th straight month in which Housing Starts straddled the half-million marker, dating back to June 2009.

This is a different slant on the Housing Starts story as told by the press.

Most publications are reporting that Housing Starts fell 5.9 percent in February. Technically, this is true.  Housing Starts did fall 5.9 percent last month.  However, the Housing Starts data is comprised of three parts:

  1. Single-Family Housing Starts
  2. 2-4 Unit Housing Starts
  3. “Apartment Building” Housing Starts (i.e. 5 or more units)

The press tends to lump all 3 together but that’s not relevant for everyday homeowners and buyers. 

2-4 unit homes, and apartments and condos are a different housing class as compared to single-family homes and are notoriously volatile, too.  Single-family starts are more steady and better reflect the country’s housing stock.

Single-family housing starts are up 32 percent over the last 12 months. 

Meanwhile, the pace of new buyers has not kept up with the pace of new housing stock. Therefore, because home prices are based on supply-and-demand, the price for a newly-built home was down, on average, 7 percent nationwide in January.

With the federal home buyer tax credit expiring soon, home buyers in Olympia will likely create new demand for homes. And with Housing Starts holding steady near 500,000, that should push prices higher through the spring months.

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Pending Home Sales Drag In January, But Should Rebound For Spring

Mar 5

Posted by Real Estate Agent Referral Service - Thurston County Washington in Existing Home Sales, Home Price Index, Housing Starts, New Home Sales, Pending Home Sales, Real Estate Investing, Statistics | No Comments

Pending Home Sales (July 2008-Jan 2010)

Fewer homes went under contract in January as the housing market continues to limp through the winter months.

According to the National Association of Realtors®, the Pending Home Sales Index fell to its lowest level in 3 quarters this January. By contrast, in October 2009, the index had touched a 3-year high.

The Pending Home Sales Index measures the number of homes that have gone under contract to sell, but have yet to close nationwide. It’s compiled using data from more than 100 regional listing services and 60-plus brokerages  — the sample set encompasses 20 percent of all home resales in a given month.

Economists have come to rely on the Pending Home Sales Index because of its high correlation to actual home sales. 80% of all home marked “pending” close within 60 days. Many of the rest close within 120.

Therefore, when we see Pending Home Sales show weakness like it did in January, we can infer that home resales will remain weak through the spring.

But will they really?

  1. Fewer sales should drag down home prices, bringing more buyers into the market
  2. Mortgage rates are still very low, but are poised to rise in just a few weeks
  3. The home buyer tax credit requires buyers to be in contract by April 30, 2010

In other words, there’s a confluence of factors that could lead to a rush of sales in Lacey and around the country over the next two months, reversing the housing market’s recent momentum.

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As The Supply Of New Homes Grows, So Does The Opportunity For A “Good Deal”

Feb 25

Posted by Real Estate Agent Referral Service - Thurston County Washington in Home Price Index, Housing Starts, New Home Sales, Pending Home Sales | No Comments

New Homes Supply Jan 2009-Jan 2010

The housing recovery showed particular weakness in the New Homes Sales category last month — good news for homebuyers in King County and around the country.

A “new home” is a home for which there’s no previous owner.

New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 — the year the government first started tracking New Home Sales data.

Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009’s pace.

The reasons for the spike in supply are varied:

  • The original home buyer tax credit expired in November
  • Weather conditions were awful in most of the country in January
  • Weak employment and consumer confidence continue to hinder big ticket sales

Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it’s a welcome turn of events. Home prices are based on supply and demand, after all.

As a result, this season’s home buyers may be treated to “free” upgrades from home builders, plus seller concessions and lower sales prices overall.

It’s all a matter of timing, of course.  New Home Sales reports on a 1-month lag so it’s not necessarily reflective of the current, post-Super Bowl home buying season.  And from market to market, sales activity varies.

That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It’s a favorable time to buy a new home.

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