May 2012 U.S. Construction

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Overall construction spending in the United States increased by 0.9 percent during May, to a seasonally adjusted and annualized rate (SAAR) of $830.0 billion. Only the public category retreated relative to April ($1.0 billion or 1.1 percent).
 

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Total housing starts fell by 4.8 percent in May, to 708,000 units (SAAR). Single-family starts increased to 516,000 units (by +16,000 units or 3.2 percent) relative to April; multi-family starts pulled the overall average lower, however, when retreating to 192,000 units (-52,000 units or 21.3 percent).
 

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New-home sales advanced by 7.6 percent in May, to 369,000 (SAAR). The median price of new homes sold ticked down, by 0.6 percent, to $234,500. Although single-unit sales (+26,000) exceeded starts (+11,000 units), the three-month average starts-to-sales ratio bumped up to 1.43 in May.
 

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Single-unit completions fell by 6.3 percent; the inventory of new single-family homes increased in absolute terms (+1,000), but months of inventory decreased by 0.3 month. Inventory stood at 145,000 units and 4.7 months.
 

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Existing home sales dropped by 70,000 (1.5 percent) in May, to 4.55 million units (SAAR). The share of total sales comprised of new homes rose from 6.9 to 7.5 percent.
 

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The median price of existing homes sold in April jumped by $12,900 (7.8 percent), to $178,600, causing housing affordability to plummet 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 seven consecutive monthly declines by each rising 1.3 percent in April.

“With April 2012 data, we finally saw some rising home prices,” said David Blitzer, chair of the Index Committee at S&P Indices. “On a monthly basis, 19 of the 20 metropolitan statistical areas (MSAs) and both Composites rose in April over March. Detroit was the only city that saw prices fall, down 3.6 percent… It has been a long time since we enjoyed such broad-based gains. While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign. The 10-City and 20-City Composites each rose by 1.3 percent for the month and posted annual rates of return of -2.2 percent and -1.9 percent compared to April 2011….

“We were hoping to see some improvement in April. First, changes in home prices are very seasonal, with the spring and early summer being the most active buying months. Second, while not as strong and we believe less reliable, the seasonally adjusted data were also largely positive, a possible sign that the increase in prices may be due to more than just the expected surge in spring sales. Additionally, the last few months have seen increased sales and housing starts amidst a lot of talk of better housing markets, so some price gains were anticipated….”