March new home construction and existing home sales reports

there were just two widely watched reports released this week: the March report on New Residential Construction from the Census Bureau, and the March report on existing home sales from the National Association of Realtors (NAR)….this week also saw the release of the Chicago Fed National Activity Index (CFNAI) for March, a weighted composite index of 85 different economic metrics, constructed such that a zero value indicates economic growth at the historical trend rate…the CFNAI fell from a downwardly revised –0.38 in February to –0.44 in March, which left the 3 month average of the index at –0.18 in March, indicating national economic activity has been slower than the historical trend during the 1st quarter….in addition, the Philadelphia Fed reported on its Manufacturing Outlook Survey for April, which covers most of Pennsylvania, southern New Jersey, and Delaware…the Philly Fed indicated its broadest diffusion index of current manufacturing conditions decreased from 12.4 in March to -1.6 in April, its seventh negative reading in 8 months, suggesting a return to contraction for the region’s manufacturing…

March Housing Starts Still Ahead of Last Year’s Pace; Permits Down 7.7%

the March report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing units started was at a seasonally adjusted annual rate of 1,089,000, which was 8.8 percent (±11.1%)* below the revised February estimated seasonally adjusted annual rate of 1,194,000 housing units started, but which was still 14.2 percent (±11.7%) above last March’s rate of 954,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month, with the figure in parenthesis the most likely range of the change indicated; in other words, March housing starts could have been up by 2.3% or down by as much as 19.9% from those of February, with even larger revisions subsequently possible…in this report, the annual rate for February housing starts was revised from the 1,178,000 reported last month to 1,194,000, while January starts, which were first reported at a 1,099,000 annual rate, were revised from last month’s initial revised figure of 1,120,000 annually down to 1,117,000 annually with this report….

those annual rates of starts indicated by the headline count were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, which estimated that 88,700 housing units were started in March, actually up from the 82,700 units started in February…of those housing units started in March, an estimated 63,000 were single family homes and 24,800 were units in structures with more than 5 units, up from the revised 57,800 single family starts and 24,100 units started in structures with more than 5 units in February….the unadjusted estimates also show that housing starts increased in all regions of the country, although none by such a margin as to be within a 90% range of certainty…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in March, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,086,000 housing units, which was 7.7 percent (±1.2%) below the revised February annual rate of 1,177,000 permits, but 4.6 percent (±0.9%) above the rate of permit issuance in March a year earlier…the annual rate for housing permits issued in February was revised from 1,167,000 to 1,177,000….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates, which showed permits for 98,500 housing units were issued in March, again actually up from the estimated 84.500 new permits issued in February…those March permits included 67,700 permits for single family homes, up from a revised 53,000 single family permits in February, and 27,800 permits for housing units in apartment buildings with 5 or more units, down from 29,100 such multifamily permits a month earlier… 

Existing Home Sales Rise 5.1% in March

the National Association of Realtors (NAR) reported that seasonally adjusted existing home sales rose 5.1% in March, projecting that 5.33 million homes would sell over an entire year if the March home sales pace were extrapolated over that year, which was also 1.5% greater than the annual sales rate projected in March of a year ago…that came after an annual sales rate of 5.07 homes in February, which was revised from the originally reported 5.08 million annual sales rate, and an annual home sales rate of 5.47 million in January…the NAR also reported that the median sales price for all existing-home types in March was $222,700, which was 5.7% higher than a year earlier, which they promote as “the 49th consecutive monthly year over year increase in home prices” although monthly price changes are quite volatile…the NAR press release, which is titled Existing-Home Sales Spring Ahead in March, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this data indicates that roughly 420,000 homes sold in March, up by 33.8% from the 314,000 homes that sold in February and 3.7% more than the 405,000 homes that sold in March of last year, so we can see there was a large seasonal adjustment to correct for the typically large jump in spring home sales…that same pdf indicates that the median home selling price for all housing types rose 5.0% from a revised $212,100 in February to $222,700 in March, while the average home sales price was $265,200, up 3.9% from the $255,300 average in February, and up 3.5% from the $256,300 average home sales price of March a year ago, with the regional average home sales prices ranging from a low of $205,200 in the Midwest to a high of $355,400 in the West…for additional coverage with long term graphs on this report, see “Existing Home Sales increased in March to 5.33 million SAAR” and “A Few Comments on March Existing Home Sales” from Bill McBride at Calculated Risk…


(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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