The Week Ahead: Low Construction’s Impact on Sales

On Tuesday, at 10 a.m. EST, the U.S. Census Bureau along with the Department of Housing and Urban Development (HUD) will release the New Residential Sales Report for April 2017.

Last month’s release showed growth in new sales, with sales of new single-family houses in March 2017 at a seasonally adjusted annual rate of 621,000. This is 5.8 percent above the revised February rate of 587,000 and is 15.6 percent above the March 2016 estimate of 537,000.

Recently, the Census Bureau and HUD released their joint residential construction report. The report found that new privately-owned residential construction permits fell 2.5 percent between March and April, falling from 1,260,000 to 1,229,000. This could mean equally slow new home sales for the month.

Privately owned housing starts fell as well, by 2.6 percent, falling from 1,203,000 in March to 1,172,000 in April. Housing completions saw a more dramatic fall of -8.6 percent. This could mean further losses in new home sales. However, HUD notes that completions are still 15.1 percent higher than the previous year.

New home sales are needed to help alleviate the ongoing inventory problem. “The lack of inventory of homes for sale is one of the most pressing challenges in the housing market today, and new homes are the source of supply that increases the total stock of housing to meet our nation’s growing demand,” said First American Chief Economist Mark Fleming. “Yet, many builders have noted the challenge of increasing production with constrained labor supply.”

 

This Week’s Schedule

Chicago Fed National Activity Index, Monday, 8:30 a.m. EST

FHFA Home Price Index, Wednesday, 9 a.m. EST

MBA Mortgage Applications, Wednesday, 7 a.m. EST

University of Michigan Final Consumer Sentiment Survey, Friday, 10 a.m. EST