November 2011 U.S. Construction

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Overall construction spending in the United States increased by 1.2 percent during November, to a seasonally adjusted and annualized rate (SAAR) of $807.1 billion. All except the private non-residential category posted increases; the private residential category exhibited the largest advance in both absolute and percentage terms.
 

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Total housing starts rose by 9.3 percent in November, to 685,000 units (SAAR) – nearly 25 percent over year-earlier levels. Single-family starts rose to 447,000 units (10,000 units or 2.3 percent), but remained 1.5 percent lower than a year ago; multi-family starts, by contrast, jumped to 238,000 units (by 48,000 units or 25.3 percent), 145.4 percent above year earlier levels.
 

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New-home sales also advanced in November, by 1.6 percent, to 315,000 (SAAR). The median price of new homes sold dropped by 3.8 percent, however, to $214,100. Because single-unit starts rose more quickly than sales (respectively, 10,000 and 5,000), the three-month average starts-to-sales ratio ticked above 1.4 in November.
 

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Single-unit completions fell by 0.7 percent, and the inventory of new single-family homes shrank in both absolute terms (2,000 units) and months of inventory (0.2 month). Inventory stood at 158,000 units and 6.0 months. Once again, the number of new homes for sale was its lowest since such records began in January 1963.
 

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Existing home sales fared better than their new-home counterparts in November, rising by 170,000 units (SAAR) or 4.0 percent. The share of total sales comprised of new homes ticked down by 0.1 percentage point, to 6.7 percent. The impact of the National Association of Realtors’ recent home sales rebenchmarking exercise can be seen in the steep drop in the existing sales index between December 2006 and January 2007 (red line in the graph above).
 

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With the median price of existing homes sold rising by $3,000 (1.9 percent), to $164,100, housing affordability retreated slightly from its record high set in October. This followed on the heels of slight decreases in the not seasonally adjusted 10- and 20-city S&P/Case-Shiller home price indices during October (respectively, -1.1 and -1.2 percent).

“There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September,” said David Blitzer, chair of the Index Committee at S&P Indices. “Eleven of the cities and both composites fell by 1.0 percent or more during the month. And even though some of the annual rates are improving, 18 cities and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.0 percent and the 20-City is down 3.4 percent compared to October 2010.

“In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve. The crisis low for the 10-City Composite was back in April 2009; whereas it was a more recent March 2011 for the 20-City Composite. The 10-City Composite is about 2.4 percent above its relative low, and the 20-City Composite is about 1.9 percent.
 

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“Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness. Atlanta was down 5.0 percent over the month, after having fallen by 5.9 percent in September. It also has the weakest annual return, down 11.7 percent. Chicago, Cleveland Detroit and Minneapolis all posted monthly declines of 1.0 percent or more in October. These markets were some of the strongest during the spring/summer buying season. However, Detroit is the healthiest when viewed on an annual basis. It is up 2.5 percent versus October 2010. Atlanta, Cleveland, Detroit and Las Vegas are four markets where average prices are below their January 2000 levels; and Atlanta and Las Vegas posted new lows in October.

“Some of the other housing statistics posted relatively healthy figures for November, but it seems that most of the good news was confined to the multi-family sector. Existing home sales rose in November, but are still at a low annual rate of about 4.0 million. Single family housing starts also rose, but remain close to record lows and are still down about 1.5 percent versus October 2010.”
 

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