Two monthly reports were recently released
last week containing informing about the health of the
home construction industry. MortgageNewsDaily.com
submitted an article, “Housing Bubble Watch: Building
Stats Slip As Does Builder Confidence,” which explains
the findings of the report.
The U.S. Census
Bureau and U.S. Department of Housing and Urban
Development released information for the June housing
starts and the National Association of Home Builders
published their monthly Housing
Market Index (HMI) for July.
“The Census
Bureau report ‘New Residential Construction in June
2006’ covers building permits issued during the month,
housing starts, and housing completions. In only the
last category was there any improvement over May or over
the same month in 2005.”
“There were 1,862,000
(seasonally adjusted) permits issued for privately owned
housing units of all sizes. This is a 4.3 percent
decrease from the revised May figure of 1,946,000 and
14.9 percent lower than the June 2005 estimate of
2,188,000. Single family resident permits were issued at
an annual rate of 1,395,000, 6.3 percent lower than the
May figure of 1,488,000.”
Only the Northeast had
an increase in permitting (6.1 percent) over the last
month. This increase was largely attributed to
multi-family construction, though, while single-family
permits were down almost 4 percent.
“At the end
of June there were 233,000 outstanding permits for which
construction had not commenced. This was an increase of
1.6 percent since May. More than half of these currently
unused permits (118,400) were located in the
South.”
“Builders started construction at an
annualized rate of 1,850,000 units in June; a decrease
of 5.3 percent since May. Single family starts were down
6.5 percent from May and 11.0 percent from June 2005.
The Northeast fell off the previous month's rate by 11.5
percent but single unit construction was down 32.8
percent. The year-over-year decrease in single family
starts was 37.8 percent.”
The HMI is a survey
which asks home
builders about single-family
home sales and there expectations for the next six
months in terms of “good,” “fair” or “poor.” Home
builders are also asked to rate buyer traffic from very
low to very high. As score over 50 indicates that
conditions are viewed as good rather than
poor.
In June 2005, the HMI was 72. The July 2006
rating was down three points from May, to 39. “All three
of the survey components slipped but most notable was
the decline in the index for sales expectations over the
next six months which fell five points to 46. The index
gauging current sales was down four points to 43 and the
index gauging traffic of prospective buyers dropped from
29 to 27.”
The National Association of Home
Builders Chief Economist, David Seiders said home
builders were concerned with the affordability of home ownership and
with investors pulling out of the
marketplace.
These two reports indicate that home
builders are frustrated and worried about the future. It
may be a while before home builders experience a
flourish like they did the past couple of years. |
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