May’s reports on new home construction and existing home sales

the only widely watched reports released over the past week were the May report on New Residential Construction from the Census Bureau and the May report on existing home sales from the National Association of Realtors (NAR)….in addition, this week also saw the release of the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, which reported its broadest diffusion index of manufacturing conditions fell from +34.4 in May to +19.9 in June, still suggesting an ongoing expansion in that region’s manufacturing, but at a less robust pace… 

New Housing Construction Increases in May, Permits Lower

the May report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched number of new housing units started was at a seasonally adjusted annual rate of 1,350,000, which was 5.0 percent (±10.2 percent)* above the revised April estimated annual rate of 1,286,000 housing units started, and was 20.3 percent (±14.4 percent) above last May’s rate of 1,122,000 housing starts a year…the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell from April to May, with the figure in parenthesis the most likely range of the change indicated; in other words, May’s housing starts could have been down by 5.2% or up by as much as 15.2% from those of April, with even larger revisions possible…in this report, the annual rate for April housing starts was revised from the 1,278,000 estimated last month to 1,286,000, while March housing starts, which were first reported at a 1,319,000 annual rate, were revised from last month’s initial revised annualized figure of 1,336,000 down to 1,327,000 annually with this report….these annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 124,900 housing units were started in May, up from the 117,600 units started in April and the 107,200 started in March…of those housing units started in May, an estimated 88,300 were single family homes and 35,700 were units in structures with more than 5 units, up from the revised 85,100 single family starts and 30,700 units started in structures with more than 5 units in April…

the monthly data on new building permits, with a smaller margin of error and hence usually smaller revisions, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in May, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,301,000 housing units, which was 4.6 percent (±1.4 percent) below the revised April permit rate of 1,364,000 but 8.0 percent (±1.3 percent) above the rate of permit issuance in May a year earlier….the annual rate for housing permits issued in April was revised from 1,364,000 to 1,352,000…quoting the report on the types of permits:  “Single-family authorizations in May were at a rate of 844,000; this is 2.2 percent (±1.0 percent) below the revised April figure of 863,000. Authorizations of units in buildings with five units or more were at a rate of 421,000 in May...”  again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 124,900 housing units were issued in May, up from the revised estimate of 119,900 new permits issued in April… that included permits for an estimated 84,400 single family units in May, up from 79,100 in April, and permits for 37,300 units in structures with more than 5 units, down from 37,400 in April….for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.350 Million Annual Rate in May and Comments on May Housing Starts

Existing Home Sales Fell 0.4% in May; Median Price at a Record High

the National Association of Realtors (NAR) reported that seasonally adjusted existing home sales fell by 0.4% from April to May, projecting that 5.43 million homes would sell over an entire year if the May home sales pace were extrapolated over that year, a pace that was also 3.0% slower than the annual sales rate projected in May of a year ago…that came after an annual sales rate of 5.45 million homes in April, which was revised from the originally reported 5.46 million annual sales rate, and an annual home sales rate of 5.60 million in March…the NAR also reported that the median sales price for all existing-home types in May was $264,800, which topped the prior record $263,300 median price set last June, and was 4.9% higher than a year earlier, which they report is “the 75th straight month of year-over-year gains“……the NAR press release, which is titled Existing-Home Sales Backpedal, Decrease 0.4 Percent in May, 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 home 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 during the selling process…

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 536,000 homes sold in May, up by 16.5% from the 460,000 homes that sold in April but 3.4% less than the 555,000 homes that sold in May of last year, so we can see the effect of the seasonal adjustment to correct for the typical large springtime increase in home sales…that same pdf indicates that the median home selling price for all housing types rose 2.7%, from a revised $257,900 in April to $264,800 in May, while the average home sales price was $303,500, up 1.9% from the $297,800 average in April, and up 3.1% from the $294,300 average home sales price of May a year ago, with the regional average home sales prices ranging from a low of $238,400 in the Midwest to a high of $411,800 in the West…for additional details and long term graphs on this report, see “NAR: “Existing-Home Sales Backpedal, Decrease 0.4 Percent in May”” and “A Few Comments on May 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 picked from the aforementioned GGO posts, contact me…)    

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