Weekly Economic Report

Weekly Economic Report 5.23.17

KEY MARKET INDICATORS as of May 23, 2017

Key Market Indicators 5.23.17

April Housing Starts, New Home Sales

Housing Starts – Housing starts slowed in April to a seasonally adjusted annual rate (SAAR) of 1.17 million units, a 2.6% decrease from March. The decrease was due to lower starts in the apartment housing segment, which was down by 9.6%. The single-family segment increased 0.4% m/m to 835,000 units (SAAR). Compared to a year ago, single-family housing starts were up 7.6% in April, and up 7% for
the year to date. Regionally, the Northeast reported a very large pullback in housing starts in both the single-family and the apartment segment.

New Home Sales – New-home sales decreased 11.4% m/m to 569,000 units (SAAR) in April. This was a sharp drop from March, and also represented the lowest level for the year so far. Compared to 12 months ago, new home sales were down 2% in April. There are two ways to look at April’s weak new home sales in April. Regionally, this was largely driven by a sharp decline in sales in the West, which fell by 26% from March. By price-tier, the weakness was largely in the category of homes priced at $300,000 and above. Homebuilders have relied on this price-tier over the past two years. Between 2014 and 2016, sales of new homes priced between $300-$400,000 were up 50%, and sales of new homes priced above $400,000 were up 61%. In contrast, sales of new homes priced between $150-$300,000 were only up 8% over the same period. It will be difficult for homebuilders to see the same growth at the higher price-tiers going forward, and it will be interesting to see if they can build more homes in the $200-$300,000 range. New homes priced between $200-$300,000 was the only pricetier to show significant growth in April. Sales in this price-tier also made a new post-2007 high. This is the price-tier most popular with today’s first-time homebuyers. By switching production to this price-tier, homebuilders would tap into a growing market segment.

Weekly Economic Report Graph 5.23.17

* FHFA Purchase-Only Home Price Index

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