April 2012 U.S. Construction

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Overall construction spending in the United States increased by 0.3 percent during April, to a seasonally adjusted and annualized rate (SAAR) of $820.7 billion. Only the private residential category advanced relative to March ($7.0 billion and 2.8 percent).
 

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Total housing starts rose by 2.6 percent in April, to 717,000 units (SAAR). Single-family starts increased to 492,000 units (by +11,000 units or 2.3 percent); multi-family starts put in a somewhat smaller showing, rising to 225,000 units (+7,000 units or 3.2 percent).
 

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New-home sales advanced by 3.3 percent in April, to 343,000 (SAAR). The median price of new homes sold ticked up by 0.7 percent, to $235,700. Although single-unit starts and sales were equal (+11,000), the three-month average starts-to-sales ratio bumped up to 1.44 in April.
 

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Single-unit completions jumped by 11.4 percent; the inventory of new single-family homes increased in absolute terms, but months of inventory decreased by 0.1 month. Inventory stood at 146,000 units and 5.1 months.
 

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Existing home sales more than recouped March’s drop-off in April, rising by 1500,000 units (SAAR); the percentage change for existing homes (+3.4 percent) was on par with the percentage change in new home sales (+3.3 percent). The share of total sales comprised of new homes was stable at 6.9 percent.
 

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The median price of existing homes sold in March jumped by $7,500 (4.8 percent), to $163,600, causing housing affordability to retreat slightly from its all-time high in February.

Simultaneously, the not seasonally adjusted 10- and 20-city S&P/Case-Shiller home price indices broke a string of five consecutive monthly declines by remaining essentially unchanged in March.

“While there has been improvement in some regions, housing prices have not turned,” said David Blitzer, chair of the Index Committee at S&P Indices. “This month’s report saw all three composites and five cities hit new lows. However, with last month’s report nine cities hit new lows. Further, about half as many cities, seven, experienced falling prices this month compared to 16 last time.

“The National Composite fell by 2.0 percent in the first quarter alone, and is down 35.1 percent from its 2Q2006 peak, in addition to recording a new record low. The 10- and 20-City Composite mimic these results; also down about 35 percent from their relative peaks and hit new lows.

“There are some better numbers: Only three cities – Atlanta, Chicago and Detroit – saw annual rates of change worsen in March. The other 17 cities and both composites saw improvement in this statistic, even though most are still showing a negative trend. Moreover, there are now seven cities -- Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix -- where the annual rates of change are positive. This is what we need for a sustained recovery; monthly increases coupled with improving annual rates of change. Once we see this on a broader level we will be able to say the market has turned around.

“The regions showed mixed results for March. Twelve of the cities saw average home prices rise in March over February, seven saw prices fall and one -- Las Vegas -- was flat. The Composites were largely unchanged with the 10-City down only 0.1 percent and the 20-City unchanged. After close to six consecutive months of price declines across most cities, this is relatively good news. We just need to see it happen in more of the cities and for many months in a row. Since we are entering a seasonal buying period, it becomes very important to look at both monthly and annual rates of change in home prices in order to understand the broader trend going forward.”