Photo credit: Garreth Wilcock
Home-buying reluctance is less of an issue as economy improves
The Department of Housing and Urban Development (HUD) and the U.S. Census Bureau jointly reported on new residential construction data for April 2015. This positive announcement includes important information on housing starts, building permits and housing completions.
“Some of the increase in the total and both sectors was due to poor readings in February and March due to particularly cold and snow-laden weather,” said David Crowe, SVP and chief economist at NAHB. “But the increases, particularly in the single-family market, are also indicative of the continued healing taking place.”
In a housing market which has been riddled with inventory challenges, especially homes in entry-level market price points, this increase in housing construction could also help awaken the home valuations sector, or even persuade millennials that they should trade in their urban rentals for spacious single-family homes.
Keys to the Data
Note that month-to-month changes in seasonally adjusted stats often show irregular movements. Underlying trends for building permit authorizations may not be established for two months, four months for total housing starts and six months for housing completions. These stats are estimated from sample surveys and are subject to sampling variances in addition to non-sampling error, which includes bias and variance from non-reporting, response and under-coverage. The plus/ minus percentages found in the parentheses immediately after the percentage change data indicates the likely range of the percentage change. For instance, the stat 10.1 percent (±2.2 percent) above, means the actual percentage increase can range from as low as 7.9 percent to as high as 12.3 percent. Preliminary seasonally-adjusted estimates of total building permits, housing starts and housing completions are revised an average of three percent or less.
The report shows that privately-owned housing units authorized by building permits increased 10.1 percent (±2.2 percent) to a seasonally-adjusted annual rate of 1,143,000 compared to March 2015’s revised rate of 1,038,000. April 2015’s numbers are 6.4 percent (±2.1 percent) above April 2014’s estimate of 1,074,000. Single-family authorizations saw a 3.7 percent jump (±0.9 percent) in April to a rate of 666,000 from March 2015’s revised 642,000. Buildings with five or more unites had an authorization rate of 444,000 units in April.
In April, privately-owned housing starts were at a seasonally-adjusted annual rate of 1,135,000, which is 20.2 percent (±14.4 percent) higher than the revised March estimate of 944,000 and 9.2 percent (±10.6 percent) higher than the April 2014 rate of 1,039,000. Single-family housing starts were at 733,000 in April, compared to March’s revised 628,000, a 16.7 percent (±10.0 percent) increase. In April, buildings with five or more units, had a rate 389,000 units.
Privately-owned housing completions for April were at a seasonally-adjusted annual rate of 986,000, at 20.4 percent (±14.1 percent) above the revised March estimate of 819,000 and 19.4 percent (±15.2 percent) higher than the April 2014 rate of 826,000. Single-family housing completions were at a rate of 688,000, 14.5 percent (±12.4 percent) higher than the revised March rate of 601,000. Buildings with five or more unites had an April rate of 288,000.
“Home buyers have been reluctant to buy until there is a clear sign that the economy, and more particularly their own future, is more positive,” Crowe said. “As employment grows and some wages increase and as home equity improves, some of those households break out of their concerns and are beginning to shop for a new home.”
MReport. “U.S. Census Bureau and HUD Find Residential Construction is Up”