The U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported This Week in Real Estate that total housing starts in May surged 21.7% with single-family starts reaching an 11-month high, increasing 18.5%. Just 10 months over the course of more than a decade realized more housing starts. In every month through the first half of 2023, homebuilders have become more optimistic about the market for new homes. Builder confidence rose for the sixth-straight month in June as homebuilders increase their output to take advantage of the undersupply of existing home inventory. Below are a few newsworthy events from the third week of June that influence our business:
US Home Construction Surged in May by The Fastest Pace in More Than a Year. US home building surged in May, climbing 21.7% from April, as low inventory in the existing home market continued to boost interest in new homes. Housing starts, a measure of new home construction, came in far beyond expectations that they would decline by 0.1%, according to data released Tuesday by the Census Bureau. The number of units rose in May to a seasonally adjusted annual rate of 1.631 million, above expectations for 1.40 million and above the revised April estimate of 1.34 million. Building permits, which track the number of new housing units granted permits, also rose in May. A separate survey released on Monday from the National Association of Home Builders revealed that the lack of inventory in the existing home market continues to boost home builder sentiment. The National Association of Home Builders/Wells Fargo Housing Market Index rose again in June, marking the sixth-straight month that builder confidence has increased and the first time that sentiment levels have surpassed the midpoint of 50 since July 2022.
Mortgage Rates Tick Down For The Third Week in a Row. Mortgage rates ticked lower for the third week in a row as investors absorbed strong signals from the housing industry and last week’s pause on rate hikes by the Federal Reserve after 10 consecutive hikes. The 30-year fixed-rate mortgage averaged 6.67% in the week ending June 22, down from 6.69% the week before, according to data from Freddie Mac released Thursday. “Potential home buyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer,” said Sam Khater, Freddie Mac’s chief economist.
Existing-Home Sales Edged Higher by 0.2% in May. Existing-home sales marginally increased in May, according to the National Association of REALTORS. Total existing homes rose 0.2% from April to a seasonally adjusted annual rate of 4.30 million in May. “Mortgage rates heavily influence the direction of home sales,” said NAR Chief Economist Lawrence Yun. “Relatively steady rates have led to several consecutive months of consistent home sales.” Total housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6.1% from one year ago. “Available inventory strongly impacts home sales, too,” Yun added. “Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019.” Properties typically remained on the market for 18 days in May, down from 22 days in April. Seventy-four percent of homes sold in May were on the market for less than a month.