The Real on Real Estate September 2016
U.S. Home Construction Climbed to A 6-Month High in July
Apartment construction in the Northeast fueled a jump in home building in July as the pace of housing starts nationwide reached the strongest pace in six months.
The rate of overall construction rose 2.1 percent to a seasonally adjusted annual rate of 1.21 million from 1.19 million in June, the Commerce Department reported. That was the highest level since February. Most of the gain came from an 8.3 percent acceleration in the construction of multi-family buildings. Construction of single-family houses edged up just 0.3 percent.
Construction climbed 15.3 percent in the Northeast. The Midwest and South reported smaller gains, while starts slipped in the West. Still, future gains may be limited because current housing starts are outpacing permits to build in the future. Authorized permits slipped 0.1 percent in July to an annual rate of 1.15 million.
For now, more Americans are upgrading to newly-built single-family houses. Ground breakings for houses have shot up 10.6 percent year-to-date, while starts for apartment buildings have dipped after a torrid pace in recent years to accommodate an increase in renters.
Housing starts remain below their recent 25-year average of roughly 1.3 million, even after having rebounded from the depths of the housing crash that triggered the Great Recession nearly nine years ago.
Optimism abounds for many builders as well. The National Association of Home Builders/Wells Fargo builder sentiment index for August rose two points to 60 following a downwardly revised reading of 58 in July. Readings above 50 indicate more builders view sales conditions as good rather than poor.
If trends continue in this direction, newly-built homes could become the new focus for realtors.
New-Home Sales Reach Best Level since Late 2007
Americans stepped up their purchases of new homes in July to the fastest pace in nearly nine years, the latest sign that low mortgage rates and a solid job market are helping support the residential real estate market.
New-home sales jumped 12.4 percent in July to a seasonally adjusted rate of 654,000 annual units, the strongest level since October 2007, the Commerce Department said recently. The demand has eclipsed the pace of construction. Just 4.3 months' supply of new homes is available on the market, down from 5.2 months a year ago.
Construction of single-family houses has picked up this year as the market has extended its recovery from the drop-off caused by the housing meltdown that began nearly a decade ago. Sales in July roughly matched the long-standing pace of 650,000 new homes selling each year. As the job market has strengthened and mortgage rates have settled near all-time lows, more buyers have been drawn to new developments and properties.
The improved sales of both new and existing homes has supported the broader U.S. economy, which is still hampered by a global slowdown and weak worker productivity. Existing-home sales reached a seasonally adjusted annual rate of 5.57 million in June, the best performance since early 2007.
Construction companies have added 215,000 jobs over the past 12 months. Over the same period, sales have risen 3.5 percent at building materials stores and 4.3 percent at furnishing stores, according to the government.
July's median sales price dipped 0.5 percent from a year ago to $294,600, a possible reflection of the regional sales mix. So far this year, new-home sales have climbed 12.4 percent to 352,000.
Overall, the outlook for the real estate market remains positive at this time
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