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Overall
construction
spending in the United States SAAR ) of $883.9 billion, thanks to, respectively, 0.9 and
1.1 percent declines in private residential and public construction spending.
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Total
housing starts retreated
by 9.9 percent in June (-16.8 percent from March’s breach of the one million unit
mark), to 836,000 units (SAAR ), mainly on weakness in the multi-family component. Single-family
starts dropped by a modest 5,000 units (0.8 percent) to 591,000 units, whereas
the fallback in multi-family starts was much more dramatic: -87,000 units, or 26.2
percent, to 245,000 units.
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June’s
drop in starts wasn’t the fault of questionable seasonal adjustments, as not-seasonally
adjusted estimates also declined (especially multi-family starts, at -30.0
percent). Total starts were just 7.6 percent higher than year-earlier levels.
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Sales
of new single-family homes advanced by 38,000 units (8.3 percent) to 497,000 (SAAR )
-- the highest rate since May 2008. Meanwhile, the median price of new homes
sold fell by $13,100 (5.0 percent), to $249,700. With sales advancing in the
face of retreating starts, the three-month average starts-to-sales ratio dropped
to 1.27 in June.
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Single-unit
completions followed starts lower (by -6,000 units or 1.1 percent), while the
inventory of new single-family homes ticked higher in absolute terms (+2,000
units) but months-of-sales slid to 3.9 months.
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Existing home sales
retreated (-60,000 units or 1.2 percent) to 4.97 million units (SAAR )
in June; as a result, the share of total sales comprised of new homes ticked up
to 8.9 percent. The median price of previously owned homes sold in June pushed upward
(by $11,100 or 5.5 percent), to $214,200
the highest price since June 2008.
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The
continued rise in the median price of existing homes for sale ($16,600 or 8.6
percent in May) is adversely impacting housing
affordability. Concurrently, Standard & Poor’s
reported that the 10- and 20-City Composites in the S&P/Case-Shiller Home
Price indices posted respective monthly gains of 2.5 and 2.4 percent in May (11.8
and 12.2 percent, respectively, relative to a year earlier).
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Despite
builders’ rising confidence
in the residential market, the number of permits applied for settled lower in June.
Total permits fell to 911,000 units (-74,000 units or 7.5 percent). The drop resulted
primarily because of weakness in the multi-family component (-78,000 units or 21.4
percent, to 287,000 units); by contrast, single-family units rose by a modest 4,000
units (0.6 percent), to 624,000 units. Total permits were 9.7 percent higher in
June than a year earlier.
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The foregoing comments represent the
general economic views and analysis of Delphi Advisors,
and are provided solely for the purpose of information, instruction and
discourse. They do not constitute a solicitation or recommendation regarding
any investment.
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