St Louis Real Estate News

The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for June 2010 showing a decrease in building permits and a decrease in new home starts from May.

The report shows the following:

• Building permits issued for single-family residences in June were at an annual rate of 421,000 which is 3.4 percent below the revised May rate of 4216,000 and a decrease of 6.7 percent from a year ago when the rate was 451,000.
• Housing starts for single-family residences in June were at an annual rate of 454,000 which is a decrease of 0.7 percent from the revised rate for May of 457,000 and an decrease of 4.6 percent from a year ago.
• Homes completed in June were at a rate of 676,000 homes, an increase of 31.3 percent from May’s revised rate of 515,000 homes and an increase of 32.5 percent from a year ago.

As I say every month, we need to remember that all the numbers above are “seasonally adjusted” annual rates and the year over year comparisons are just comparing the numbers for June 2010 versus June 2009. Another way I like to look at where things stand is to simply look at the year to date data; actual numbers, not seasonally adjusted, compared to last years ytd numbers at this same time. I think this may give a little better comparison so those numbers are below:

• Through June 2010 there have been 245,100 permits issued for new homes compared with 203,000 this time last year for an increase of 20.7 percent.
  • In June there were 42,900 permits issued, an increase from May’s 42,100 permits.
• Through June 2010 there have been 256,400 new homes started compared with 202,100 this time last year for an increase of 26.9 percent.
  • In June there were 45,500 new homes started, an increase from May’s 43,300 new starts.
• There have been 243,800 new homes completed through June 2010, pretty much the same as this time last year when there were 243,600 homes completed.
  • In June there were 60,000 new homes completed, an increase from May’s 42,600 completions.

Let’s do one of my favorite things and look at the raw numbers and not seasonally-adjusted numbers to compare construction activity to sales:

• Through the end of May, 2010 (the most recent period sales data is available for) there have been 159,000 new homes sold and there have been 183,800 new homes completed, outpacing sales by 15.6 percent.
  • For the 12-month period June 2009 through May 2010 there were 383,000 new homes sold and there were 504,800 new homes completed, outpacing sales by 31.8 percent.
• Through the end of May there have been 210,900 new homes started outpacing the new ytd home sales activity through May by 32.6 percent.

As expected, building permits and starts have dropped after the temporary spike upward which was the result of home-buyers rushing tobeat the tax-credit deadline of April 30th. A concern of mine however is that new home starts and permits continue to outpace new home sales in both YTD numbers as well as in the prior 12 month period as I have shown above. Replenishing inventory of new homes would make sense if the underlying real estate market was showing some solid signs of recovery and growth but unfortunately it is not so I’m afraid if this trend continues it is going to lead to an over-supply of new homes again which will not be good.

The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for March 2010 showing an increase in building permits and a decrease in new home starts from February.

The report shows the following:

• Building permits issued for single-family residences in March were at an annual rate of 543,000 which is 5.6 percent above the revised February rate of 514,000 and an increase of 50.8 percent from a year ago when the rate was 360,000.
• Housing starts for single-family residences in March were at an annual rate of 531,000 which is a decrease of 0.9 percent from February’s revised rate of 536,000 and an increase of 47.1 percent from a year ago.
• Homes completed in March were at a rate of 486,000 homes, up 5.9 percent from February’s rate of 459,000 homes and a decrease of 11.2 percent from a year ago when the rate was 547,000 homes.

As I say every month, we need to remember that all the numbers above are “seasonally adjusted” annual rates and the year over year comparisons are just comparing the numbers for March 2010 versus March 2009. Another way I like to look at where things stand is to simply look at the year to date data; actual numbers, not seasonally adjusted, compared to last years ytd numbers at this same time. I think this may give a little better comparison so those numbers are below:

• Through March 2010 there have been 116,400 permits issued for new homes compared with 80,100 this time last year for an increase of 45.4 percent.
  • In March there were 50,600 permits issued, an increase from February’s 35,000 permits.
• Through March 2010 there have been 114,300 new homes started compared with 78,300 this time last year for an increase of 46.0 percent.
  • In March there were 46,900 new homes started, an increase from February’s 35,700 new starts.
• There have been 98,600 new homes completed through March 2010, compared with 116,800 this time last year for a decline of 15.6 percent.
  • In March there were 37,600 new homes completed, an increase from February’s 31,000 completions.

Let’s do one of my favorite things and look at the raw numbers and not seasonally-adjusted numbers to compare construction activity to sales:

• Through the end of February, 2010 there have been 46,000 new homes sold and there have been 61,000 new homes completed, outpacing sales by 32.6 percent.
• Through the end of February there have been 67,400 new homes started outpacing the new ytd home sales activity through February by over 46.5 percent.

While I like to see the optimism from builders about the market, and have to have hope that they see market demand that maybe isn’t showing up in the numbers yet, I still have to say I think builders are being too optimistic about the housing market and are perhaps seeing a recovery and demand that is not here yet. Granted, we are going into spring, typically a good sales season, although we are also going to say goodbye to any stimulus received by the homebuyer tax credit at the end of this month. If new home sales jumps significantly over the next couple of months maybe supply and demand will come back in line. Time will tell..

New home construction is on the rise in November…. WHY??? They aren’t selling as fast as they are being built…didn’t we learn our lesson?

The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for November 2009 showing an increase in new home construction activity from October.

The report shows the following:

• Building permits issued for single-family residences in November were at an annual rate of 473,000 which is 5.3 percent above the revised October rate of 449,000 and down 12.1 percent from a year ago.
  • For the third consecutive month the Northeast region had the best numbers of the regions with an increase in permits of 6.4 percent from the prior month, and an increase of the same amount from a year ago. The other three regions also saw an increase in building activity in November from October, the south was up 6.0 percent, the west 5.3 percent and the midwest 2.7 percent. The largest increase from a year ago was the West at 16.3 percent, then the South at 15.3 percent and the Midwest at 1.4 percent.
• Housing starts for single-family residences in November were at an annual rate of 482,000 which is 2.1 percent above the revised October rate of 472,000 and 5.5 percent above a year ago.
  • The west and south regions had increases in building starts from October at 5.4 percent and 4.4 percent respectively. The midwest and northeast both had decreases in building starts from October at 6.2 percent and 2.1 percent respectively. The midwest is the only region that has a decrease in housing starts from a year ago (13.6 percent) the south had an increase of 12.9 percent, the northeast and increase of 12.2 percent and the west an increase of 2.1 percent from a year prior.
• Single-family homes completed in November were at a rate of 524,000, even with the revised rate for October of 524,000.
  • The midwest saw a 13.0 percent increase in completions followed by the west region with a 2.3 percent increase. The south and northeast saw declines of 0.8 percent and 18.3 percent respectively. All regions are down significantly in completions from a year ago. The south is down 35.3 percent, the midwest down 28.7 percent and the northeast and west are both down 25.8 percent.

Something to remember is all the numbers above are “seasonally adjusted” annual rates and the year over year comparisons are just comparing the numbers for November 2009 versus November 2008. Another way I like to look at where things stand is to simply look at the year to date data; actual numbers, not seasonally adjusted, compared to last years ytd numbers at this same time. I think this may give a little better comparison so those numbers are below:

• Through November 2009 there have been 401,000 permits issued for new homes compared with 545,000 this time last year for a decline of 26.4 percent (October YTD numbers were down 29.0 percent).
• Through November 2009 there have been 414,400 new homes started compared with 595,900 this time last year for a decline of 30.5 percent (October YTD numbers were down 32.5 percent).
• There have been 467,900 new homes completed through November 2009, compared with 752,500 this time last year for a decline of 37.8 percent (October YTD numbers were down 38.5 percent)

OK, last month I said it was good to see new home permits and sales drop as I don’t think we need to increase inventory yet. Obviously no one listened to me and everything was up this month. Granted, these “up” numbers are seasonally-adjusted rates, and you know how I feel about that, but they are up none the less.

The problem is, new home permits, starts and completions are still outpacing new home sales even when we use all the seasonally-adjusted annual rates. The new home “seasonally-adjusted” sales rate in October was 430,000 homes….however, as I have reported here, new home permits, starts and completions are still out-pacing sales, and by a pretty signifcant margin.

Let’s do one of my favorite things and look at the raw numbers and not seasonally-adjusted numbers to compare construction activity to sales:

Through the end of October there have been 328,000 homes sold and there have been 467,900 new homes completed, outpacing sales by 42.6 percent. At the end of October there were 240,000 new homes for sale, a 6.7 month supply based upon the October seasonally adjusted sales rate. October added 68,800 completed new homes to inventory and it is very unlikely (I’ll even say impossible) that we will see that many sales in November so we are going to see inventory increase. This is the same statement I made last month when there were 49,000 new homes completed…I ended up being right, there were only 35,000 new homes sold in October (btw, my projections called for 32,000 new homes sold…not bad for an amateur).

I do realize that once we truly get into a recovery of the housing market we will, at some point, need to see the rate of new home construction increase to meet demand but I don’t think the time is now. I also feel the recovery is going to be VERY gradual when it comes and we are not going to see a big, and rapid spike, in sales necessitating the same in home starts, but instead a slow, gradual increase in sales which will sustain a slow, gradual increase in new home construction.