NAHB is encouraged by June housing data
Nationwide housing starts rose 14.6% to a seasonally adjusted annual rate of 629,000 units in June, according to the latest residential construction report from the U.S. Commerce Department. This was the highest pace of housing production since the beginning of the year, and was attributable to significant gains registered in both the single-family and multi-family segments, as well as every region of the country.
"Today’s numbers are an encouraging sign that builders are responding to improving consumer interest in new homes and apartments by gradually replenishing their extremely thin inventories in places where demand is evident," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, the lack of access to construction credit remains an impediment to starting new projects and getting building crews back to work in markets that are improving."
Single-family housing starts posted a 9.4% gain to a seasonally adjusted annual rate of 453,000 units in June, their best pace since November of 2010. Meanwhile, multi-family starts, which tend to display greater volatility on a month-to-month basis, gained a dramatic 30.4% to a rate of 176,000 units — their best pace since January.
"The latest housing production figures show broad-based gains on both the single-family side and in multi-family apartment construction, where we know that demand has been increasing due to the influx of renters in the market," said NAHB chief economist David Crowe. "Going forward, we expect to see a gradual upward trend in new-home production through the end of this year as consumers begin taking advantage of the buyers’ market, though not without some bumps along the way."
Builder confidence rises
Builder confidence in the market for newly built, single-family homes improved by two points in July to 15 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The gain largely offsets a three-point dip recorded in June, and marks the ninth time out of the past 10 months in which the index has held within the same three-point range.
"The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t quite as bleak as was feared in June," said National Association of Home Builders (NAHB) chairman Bob Nielsen and a home builder from Reno, Nev. "While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions."
"We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said NAHB chief economist David Crowe. "The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve."
The NAHB has been conducting its monthly builder confidence survey for more than 20 years, asking builders of single-family homes to rate their sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to gauge traffic of prospective buyers as "high to very high," "average" or "low to very low." The index is then calculated and seasonally adjusted. Any number over 50 indicates that more builders view sales conditions as good than poor.
Housing starts for June show improvement
Monthly housing starts for June rose above the 600,000 mark for the first time since January, according to data released today by the Commerce Department.
Housing starts increased to a seasonally adjusted annual rate of 629,000 in June, up 14.6% from the revised May estimate of 549,000. Single-family starts also showed a big improvement — up 9.4% to a rate of 453,000.
The 629,000 annual rate came in much higher than anticipated by most forecasts, which had called for a rate of about 570,000.
The June figures were heading in the right direction on a year-over-year basis, also. Total housing starts were up 16.7% over June 2010, and single-family starts were up a slight 0.4% compared with a year ago.
Looking at the four regions of the country, single-family construction showed the biggest growth in the Midwest, where starts increased more than 20% compared with last year and last month. The Northeast in June posted a 35.1% increase in total housing starts, compared with May.
Building permits in June were at a seasonally adjusted annual rate of 624,000, up 2.5% from May, and up 6.7% compared with June 2010.