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Homebuilder Confidence Reaches All-Time Low; New Sales Up while Used Sales Down
The National Association of Home Builders’ November housing market index, which gauges builders’ sentiments for home sales over the next six months, was 19. That matches October’s figure, the lowest reading since the index began in January 1995, and is 14 points lower than the same period last year. Readings above 50 indicate positive expectations. Additionally, building permits declined to their lowest levels in October since July 1993, according to the latest release from Hanley-Wood Market Intelligence. Meanwhile, new home sales took an upswing, while existing home sales continued their slide.
Building permits in October fell 6.6 percent to a seasonally adjusted annual pace of 1.178 million units, off 24.5 percent from a year ago and the slowest pace since July 1993. Single-family permit issuances decreased in October, dropping 7 percent from the September level to a seasonally adjusted level of 807,000 permits issued. The number of multifamily (5+ units) building permits issued held fairly steady during October, decreasing slightly to 330,000 units. Permit issuance for buildings with two to four units was down by 13 percent to 41,000 units permitted during October.
After three months of declines, new-home construction increased by 3 percent in October, the biggest rise since a 6 percent advance last February, the Commerce Department reported November 20. All of the strength, however, came from the apartment sector, which jumped 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.
New home sales rebounded in September while existing home sales continued to struggle. New home sales jumped 4.8 percent in September to a seasonally adjusted 770,000 homes, up from revised August figure of 735,000, when annualized new home sales were at their slowest pace since October 1996. At the current sales pace, there are 8.3 months of new homes supply on the market. The median price for a new home increased 2.5 percent from August levels to $238,000.
Seasonally adjusted sales of existing homes fell 8.0 percent in September to 5.04 million units, the lowest sales pace recorded since November 1998 and the seventh straight month that sales have declined. Sales of existing homes are down 19.1 percent from the 6.23 million units in September 2006. Median existing home prices dropped 5.66 percent from August levels to $211,700; the median price is at its lowest level since January 2007. Inventory of existing homes is at an all-time high, with a 10.5-month supply at the current sales pace,
Freddie Mac’s November 21 Primary Mortgage Market Survey showed that national average mortgage rates declined from the previous week to 6.20 percent, their lowest levels since May. In the week ending November 16, the MBA’s seasonally adjusted Purchase Index declined to 424.1 from 432.6 in the previous week. The latest figure reflects a 1.96 percent decline from last week but a 5.66 percent increase from the same time last year.
Source: Appraisal Institute
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