Housing Figures: New Home Sales Up Again, While Home Prices Hold Steady
November 2, 2021
Housing Figures is our monthly round-up of the top news stories related to residential new construction spending and the latest market numbers.
New home sales rose again in September due to strong demand, and though housing starts overall declined, single-family starts held steady for the same month. We also look at home price and mortgage rate trends, which markets are growing the fastest in permit growth and the increased difficulty in obtaining developed lots.
New and existing home sales rise again
Sales of new single-family homes rose in September. New home sales of single-family homes rose 14% in September thanks to strong demand, continued low inventory and possible buyer anticipation of higher mortgage rates in the future. That brings new home sales to a seasonally adjusted annual rate of 800,000. Median new home sale prices are also up 18.7% year-over-year, while only 21% of current sales are below $300,000. That compares to a 35% share a year ago. [NAHB Now]
Zonda’s New Home PSI rose month-over-month. Zonda’s New Home Pending Sales Index rose 6.9% from August to September, though the index marks a 9.5% decline from September 2020. (Still, the index is 31.2% higher than in September 2019.) Buyers are showing resilience according to Ali Wolf, Zonda’s chief economist. One component of the index related to new-home orders fell 24% year-over-year, while the average sales rate per community, the other component of the index, fell 7% year-over-year. [Builder]
Sales of existing homes also rose in September. Sales of previously owned homes increased 7% in September, which represents a seasonally adjusted annual rate of 6.29 million units. The rise is likely to due to a temporary decline in mortgage rates, according to NAR’s chief economist, Lawrence Yun. The average rate on the 30-year fixed fell below 3% before rising again. Sales were 2.3% lower year-over-year, and first-time buyers made up only 28% of sales, which is the lowest level since 2015. [CNBC]
Overall starts decline, but permits show specific market growth
Single-family starts held steady in September. Single-family housing starts were flat in September, coming in at an adjusted rate of 1.08 million units. However, single-family starts are up 20.5% year-to-date. Multifamily starts declined by 5%, leading to an overall 1.6% decline in housing starts for September. That represents a pace of 475,000 multifamily starts and 1.56 million overall starts. Nevertheless, builder confidence improved in October, which confirms stabilization of home construction at current levels, according to NAHB Chief Economist Robert Dietz. [NAHB Now]
A permit analysis shows the fastest growing housing markets. Permit data from the Census Bureau shows increased building activity for both single-family and multifamily housing over the past decade. Single-family permits rose 134% from 2011 to 2020, while multifamily permits rose 139% in 2020 over 2011. The top markets for growth in the single-family sector include Houston and its surrounding suburbs, Dallas-Fort Worth and Atlanta. For multifamily, New York/New Jersey, Dallas-Fort Worth and Los Angeles were the top growth markets. [NAHB Now]
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Home prices still at record levels, but hold steady in August
Home price growth stayed at elevated levels, though year-over-year growth didn’t rise. Though home prices are still at elevated levels, price growth remained steady in August, according to the latest S&P CoreLogic Case-Shiller National Home Price Index. The index showed a 19.8% year-over-year increase, which is unchanged from July. Phoenix continued to post the highest year-over-year home price increase at 33.3%, while prices remained strongest in the Southwest. HousingWire
Does the latest data hint at a possible market cooling? CNBC suggests the recent Case Shiller data could show cooling in price growth. August’s data shows the first month where annual gain hasn’t increased since early last year, while the index’s 10-city composite annual increase was at 18.6%, down from 19.2% in July. Prices are unlikely to cool significantly, however, as demand remains high among both buyers and investors. [CNBC]
The upward trend in mortgage rates is likely to continue. In the latest count, the 30-year fixed rate came in at 3.09% for the week ending Oct. 21. This time last year, the rates were at 2.8%. According to Freddie Mac, rates continued to rise thanks to both the trajectory of the economy and the pandemic. [Yahoo! Finance]
Obtaining lots a woe for builders
A recent survey found lots are harder to obtain than ever. NAHB found, in a survey to home builders, that obtaining lots has been an additional challenge for builders. According to the survey, 76% of respondents said that the overall supply of developed lots was low to very low, which is an all-time record for NAHB. The previous record was 65% in 2018. [Eye on Housing
Demand continues to normalize for builders
Home builders reported decreased sales and traffic trends. In the latest State of the Industry Report, compiled with BTIG, home builders reported that sales and traffic trends decreased in September, particularly as builder continued to purposefully limit sales. Builders also reported taking a more cautious approach to pricing compared to the start of the year. [HomeSphere]
