November 23, 2016
Sales of new single-family houses in October 2016 were at a seasonally adjusted annual rate of 563,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.9% below the revised September rate of 574,000. That said, the number is 17.8% above the October 2015 estimate of 478,000.
Digging deeper into the data, below this basically “flat” top-line 1.9% change, we see fairly steep declines in the east, south, and midwest. The West region is the only one that showed an increase in today’s data. So, for market participants outside the west, today’s data reading is somewhat negative.
On a positive note, purchase mortgage applications are up 19% in the latest week, as concern about continued increases in mortgage rates spurs more people who are (were) on the fence to move ahead with a home purchase. Mortgage rates (30-year fixed) are up to 4.16%, up from the mid-3s before the election. Inventories of existing homes for sale remain tight (and tightened further in the most recent data), driving more home buyers into the new-home market.
As we posted previously, the data on housing starts showed a 25.5% increase in the month of October. Although most of the improvement was due to a 74.5% increase in multifamily construction, single-family starts increased as well (up 10.7%).
Builder sentiment remains fairly strong, and suggests continued increases in starts in the future as homeownership rates gradually improve. Data from the National Association of Home Builders show that builder confidence held steady in November at a level of 63 (a number over 50 means that more builders view conditions as good than poor).