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Economic News March 2013
Home prices are increasing due to a falling supply and increasing demand, and while new-home construction has climbed back to 2008 levels, the industry is far from healthy levels of production and employment. Predictions for future growth are rosy, but builder confidence in the future of the housing market, which peaked in November and has remained stable since, dropped one point to 46 in February.

PCA expects the accelerated cement consumption predicted during 2013 to continue into the following years, with an 8.3 percent increase in 2014 and annual growth as high as 9.2 percent through 2017. Cement consumption is dictated by the level of construction activity and by the amount of cement used per job.

Cement, Construction Forecasts Up Through 2013 & Beyond

The Portland Cement Association (PCA) is predicting strong growth rates and an increase in cement consumption within the construction industry in 2013. The PCA forecast expects an 8.1 percent growth in cement consumption in 2013, significantly higher than the sluggish growth projected in the association's previous report. The January report marked 2012 consumption at 78.5 million tons, an 8.9 percent increase on the 2011 figure.

"Growth in 2013 cement consumption will be largely driven by gains in residential construction," said PCA chief economist Ed Sullivan. "Housing starts should reach nearly 950,000 units, with single-family construction near 700,000 starts during 2013. We should see starts hitting the one million mark in 2014 or 2015."

Sullivan cautioned, however, that early 2013 would show declines compared to the same period in 2012. "This potential decline in first quarter growth rates does not signal a weakening in market fundamentals, but rather a hangover from favorable 2012 weather conditions. Stronger gains in cement consumption growth are expected during the second quarter."

New Home Construction, January

new housing starts, seasonally adjusted annual rate (SA)

new building permits, seasonally adjusted annual rate (SA)

housing starts rate change since December 2012 (SA)

building permits rate change since December 2012 (SA)

housing starts annual rate peak (millions), January 2006

building permits annual rate peak (millions), September 2005

New housing starts slowed in January due to a 24.1 percent drop in multi-unit construction to a 260,000-unit annual rate (seasonally adjusted), down from a 301,000-unit pace in December. Single-family home starts, a more stable market indicator, increased 0.8 percent, to a 613,000-unit annual rate. January's decline followed 15.8 percent growth in December to a combined 973,000-unit rate, the best month for new home starts since June 2008. Building permits also improved for the third consecutive month to mid-2008 levels.
Credit: U.S. Commerce Department

This Month in Numbers: 259
Number of metropolitan housing markets on the Improving Markets Index in February, which identifies areas that have improved for at least six consecutive months from their lowest points in housing permits, employment and home prices. The figure represents more than 70 percent of the 361 markets surveyed, and all 50 states for the first time since the index's inception. The index began in September 2011 with just 12 markets listed.
Source: National Association of Home Builders

Home Prices Up As Foreclosures Fall
A report from the National Association of Realtors (NAR) showed median sales prices rising from a year earlier in 133 of 152 metropolitan areas measured. In the third quarter, 120 areas had gains. U.S. foreclosure filings also fell 28 percent in January from a year earlier to the lowest level since April 2007.

Prices for single-family homes climbed in almost 88 percent of U.S. cities in the fourth quarter of 2012 as the housing recovery broadened.

Phoenix performed best, with a 34 percent year-over-year price increase, followed by Detroit and San Francisco. Western states climbed 20 percent to a median $245,200, the biggest gain of any area, according to the Realtors group.

A drop in foreclosure filings is helping the housing recovery by limiting the supply of houses for sale, which increases prices. Filings fell seven percent across the nation to 150,864 in December, with one in 869 U.S. households receiving a notice, according to RealtyTrac, which follows default data from counties representing 90 percent of the U.S. population.

New homeowner protections enacted in California played a principal role in the nationwide decrease, as default notices slid 62 percent from a year earlier to an 87-month low.

The median price of a Southern California property jumped almost 24 percent from a year earlier to $321,000, research firm DataQuick reported.

"The U.S. foreclosure landscape in January was profoundly altered by the effects of new legislation that took effect in California on the first of the year," said Daren Blomquist, RealtyTrac vice president. "In the short-term, the new law will probably prop up prices by restricting inventory, but it's artificially holding back supply that would otherwise be listed for sale."

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