Archive for Housing Starts
Single-Family Housing Starts Fade In July
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Sometimes, 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 Dallas 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.
Housing Starts Ease 0.7 Percent In June — 7x Better Than The Headline Data
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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 San Antonio , 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:
- Single-Family Housing Starts
- Multi-Unit Housing Starts (2-4 Units)
- 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 Plano 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.
Good News For Sellers : Housing Starts Fall To 1-Year Low In May 2010
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Single-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 Austin , 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.
Housing Starts Rise In April, Exerting Downward Pressure On Home Prices
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Single-family Housing Starts rose by 55,000 last month, suggesting ample housing stock from which Dallas 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.
