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October 2016 Economic News

Sales of existing homes fell 0.9% in August, and follows a 3.2% drop in July, both on a month-over-month basis, the National Association of Realtors reports. They said a lack of housing inventory is to blame. According to Zillow, inventory has contracted in five of the previous six months and declined year-over-year for the past 14 months. Sales of new single-family homes fell 7.6% in August, but are +20.6% year-over-year, and +13.3% year-to-date.

Dodge Data and Analytics' Momentum Index, a monthly measure of the first report of nonresidential building projects in planning, climbed 1.3% in August to 134.9. Broad-based gains in the commercial and institutional sectors moved the index to its highest level since late 2008. The Momentum Index typically leads nonresidential construction spending by a full year.

The latest quarterly data shows U.S homeownership has fallen to its lowest level, 62.9%, in more than 50 years according to Bloomberg and the U.S. Census Bureau. "The drop extends a years-long decline from the last housing boom, in part because of tight credit and a shift toward renting in the aftermath of the crash," Bloomberg said. The homeownership rate reached a peak of 69.2% in June 2004.

New construction starts jumped 21% from July to August, a significant turnaround from July, Dodge Data and Analytics reports. Nonresidential building activity soared 42%, with commercial rising 31% and institutional climbing 24%. However, new residential starts were up only 5%.

Combined housing starts, which jumped nearly 5% in June and climbed another 2.1% in July, shed 5.8% in August. The setback is simply a "one-month blip," said the National Association of Home Builders.

The AIA's Architecture Billings Index, which reflects the approximate nine to twelve month lead-time between architecture billings and construction spending fell below 50 in August (49.7) for only the second time this year. Any score below 50 indicates a decrease in billings.

From 2014-2015, the metros with the largest homeownership rate increases, according to Zillow: Baton Rouge, La. (+3.9%); Springfield, Mass. (+2.4%); Fort Myers, Fla. (+2.3%). The metros with the largest declines: Colorado Springs, Colo., and Knoxville, Tenn. (-2.0%); Tulsa, Okla. (-1.5%); Lakeland, Fla. (-1.4%); Spokane, Wash. (-1.3%).

There is a "dire" need for new single-family homes in 80% of metro areas, the National Association of Realtors said. New York City is number one on the list, followed by (in order) Dallas, San Francisco, Miami, Chicago, Atlanta, Seattle, San Jose, Denver and San Diego.

In the greater metro area of Minneapolis/St. Paul, Minn., building permits for single-family homes hit their highest September total in a decade, according to the Star Tribune. Overall 526 building permits were issued -- a 36% increase -- and more than 500 single-family homes will be built from them, which is a hike of nearly 40% year-over-year.

The Miami Association of Realtors has reported an 8.7% jump in single-family home sales in August, year-over-year. There were 1,239 single-family homes sold, breaking the previous record for homes sold that month (1,232 sales in August 1994).

ANOMALIES (National percentages in parentheses)
Combined starts (+0.9)
Northeast: +24.8%

New Home Sales (+20.6)
Northeast: -25.8%
Midwest: +39.7%

Combined completions (+8.3)
Northeast: +57.9%
West: -12.8%

Combined completions (-3.4)
Northeast: +30.4%
West: -20.7%

New Home Sales (-7.6)
Northeast: -34.3%
West: +8.0%

Combined permits (-0.8)
Northeast: -38.7%

New Home Sales (+13.3)
Northeast: +35.4%

Consumers upgrading their homes should be adding a substantial increase to the revenue of renovation companies including landscapers in 2016. Remodeling Magazine is forecasting a 17.3% jump, compared to the previous year. And according to the National Association of Home Builders, home improvements ($147.5 billion in July) account for a nice chunk of the total private sector construction spending ($875.0 billion in July).

Flipping of homes and condos increased in the second quarter 14%, compared to Q2 of 2015, according to ATTOM Data Solution's latest U.S. Home Flipping Report. A total of 51,434 transactions were flips, the most since Q2 of 2010.

Apartment rents are soaring, but developers may have found a way to skirt this issue, according to Construction Dive. They are increasingly focusing on "micro housing" units that range from 350-550 square feet and are more affordable.

As seen in LC/DBM magazine, October 2016.

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June 18, 2019, 8:46 am PDT

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