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Overall
construction
spending in the United
States SAAR )
of $900.8 billion. Advances of 1.3 and 0.6 percent in, respectively,
private non-residential and residential construction spending contributed to the spending increase.
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Total
housing starts rose by
5.9 percent in July (but remained 10.9 percent below March’s breach of the one
million unit mark), to 896,000 units (SAAR ), thanks
entirely to the strength of the ever-volatile multi-family component. Single-family
starts dropped by 7,000 units (2.2 percent) to 591,000 units, whereas multi-family
starts jumped by 68,000 units (26.0 percent) to 305,000 units.
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Changes
in the not-seasonally adjusted estimates paralleled those of their seasonally
adjusted counterparts. Total starts in July were 21.0 percent higher than year-earlier
levels.
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Sales
of new single-family homes retreated by 61,000 units (13.4 percent) to 591,000
(SAAR ). Meanwhile, the median price of new
homes sold edged lower by another $1,300 (0.5 percent), to $257,200; prices are
$22,100 (7.9 percent) below their April peak. With sales falling faster than
starts, the three-month average starts-to-sales ratio jumped to 1.40 in July.
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Single-unit
completions increased (by 14,000 units or 5.9 percent), while the inventory of
new single-family homes ticked higher in both absolute (+10,000 units) and months-of-sales
terms (0.9 months).
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Existing home sales
bolted higher (330,000 units or 6.5 percent) to 5.39 million units (SAAR ) in July; as a result, the share of total sales
comprised of new homes tumbled back to 6.8 percent. The median price of previously
owned homes sold in July edged lower (by $500 or 0.2 percent), to $213,500.
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The
continued rise in the median price of existing homes for sale ($11,100 or 5.5
percent in June) 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 both posted monthly gains of 2.2 percent in June (11.9 and 12.1
percent, respectively, relative to a year earlier).
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Builders’
rising confidence
in the residential market resulted in more permit applications during July.
Total permits rose to 943,000 units (+25,000 units or 2.7 percent). As with
starts, the increase originated in the multi-family component (+37,000 units or
12.6 percent, to 330,000 units); by contrast, single-family units shrank by 12,000
units (1.9 percent), to 613,000 units. Total permits were 17.5 percent higher
in July than a year earlier.
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Demand
for existing housing cooled in July, however. Pending sales
slipped by 1.4 percentage points in July, ostensibly because of higher mortgage
interest rates.
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.
