Housing Market: Housing Starts & Home Sales

Economic Forecasts

Lower Mortgage Rates Are Lifting Housing Market

Kiplinger's latest forecast on housing starts and home sales

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GDP 2.6% growth in '19 More »
Jobs Job gains about 160,000 per month in '19 More »
Interest rates 10-year T-notes at 2.8% by end ’19 More »
Inflation Up 2.2% in ’19 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $60 to $65 per barrel in August More »
Housing 5.35 million existing-home sales in ’19, up 0.2% More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Housing starts and building permits bounced back in April. Total housing starts rose 5.7% in April, to a seasonally adjusted annual rate of 1.235 million. Single-family starts rose a solid 6.2%, while multifamily starts increased 4.7%. The data for previous months were also revised upward, turning March’s decline into an increase. Despite lower mortgage rates and strengthening new-home sales, both single and multifamily starts are running below the levels seen during the same period last year. Lower prices for construction materials should help builders this year. Lumber prices, for instance, have come down after surging in 2018. Lower material prices will help builders counter the rising costs of skilled labor.

New-home sales slid in April, but in the longer term, they’re still rising at a steady pace. New-home sales fell 6.9% in April but are up 7% from a year ago. Sales of lower-priced new homes continue to strengthen. During April, more than one-third of sales were priced below $300,000. Over the last couple of years, builders have been making an effort to build smaller homes with cheaper materials, and this seems to be paying off for them.

Existing-home sales fell slightly in April, but they will rebound over the summer. Sales of existing homes declined 0.4% in April, to a seasonally adjusted rate of 5.19 million. Existing sales are struggling to gain some momentum because of declining affordability. It seems, however, that buyers will get some relief later this year because of a combination of the Federal Reserve’s pause on short-term interest hikes and slowing home-price growth. Another tailwind for existing-home sales is that more folks are putting their homes on the market. On a year-over-year basis, total inventory was up 1.9% in April.

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

Home-price growth continues to weaken. The S&P CoreLogic Case-Shiller National Home Price Index rose 3.7% in March from a year ago, down from 3.9% in the previous month. Home-price growth has declined on a year-over-year basis for 12 consecutive months. Double-digit price gains have vanished. The largest annual gain for a particular housing market was 8.2% in Las Vegas.

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