Housing Market: Housing Starts & Home Sales

Economic Forecasts

Single-family Construction Continues Upward Momentum

Kiplinger's latest forecast on housing starts and home sales

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GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
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Housing 3.5% price growth by year-end ’19 More »
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Total housing starts slowed in September, but the rebound in single-family construction continues. Total starts fell 9.4% to a seasonally adjusted rate of 1.256 million. The decrease was driven by multifamily construction. Single-family starts rose 0.3%, while multifamily starts plummeted 28.2%. Despite the slowdown last month, total starts are still up 1.6% from a year ago. Single-family permits rose 0.8% in September and have risen since May, indicating that single-family construction will gain momentum in coming months.

New-home sales ticked lower in September. They fell 0.7% from August but are running 15.5% ahead of their level one year ago. In spite of the small monthly decline, sales remain close to the high end of their range during the current economic expansion. The median sales price decreased 7.9% year-over-year in August to $299,400. The improving pace of sales is helping builders clear inventory. There were 321,000 homes for sale in September — a 0.6% decline from August and a 5.5-month supply at the current sales pace. Sales continue to outpace inventory growth and have inched down the months of supply over the past year.

See Also: A Housing Shortage Looms as Builders Can't Keep Up

The sharp drop in mortgage rates since last year, combined with slower growth in home prices, is providing a lift to existing-home sales. These sales declined 2.2% to a seasonally adjusted rate of 5.38 million. Despite the decline, existing-home sales have performed well this year. Compared with a year earlier, they’re up 2.6%. Listings didn’t keep up with sales last month, with the inventory-to-sales ratio for single-family homes declining to four months’ worth. On a year-over-year basis, total inventory was down 2.7%, the fourth consecutive decline. Slowing price gains are helping homes to sell more quickly. The National Association of Realtors reported that 49% of homes sold in August were on the market for less than one month.

Home-price growth ticked up in August, amid slow price appreciation in major cities. The S&P CoreLogic Case-Shiller National Home Price Index rose 3.2% in August from a year ago, up from 3.1% in July. This is the first time in 16 months that the national index has risen. Price appreciation has slowed significantly since the middle of last year. Phoenix, Charlotte and Tampa reported the highest year-over-year gains. Price growth in major cities, such as New York, Chicago, Los Angeles and San Francisco, is leveling off. Prices barely increased in these cities, rising only about 1%.

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