New York Fed: Housing Starts, Permits are ‘Anemic’

Merriam Webster's Dictionary defines anemic as: “lacking force, vitality, or spirit.”

The Federal Reserve Bank of New York felt that is an appropriate depiction of the current housing market, as it called housing starts and permits “anemic” in its August report on the economy. 

According to the report, total housing starts fell 1% in June to 1.25 million units, which follows a 0.4% decline in June. Compared to June 2018, total housing starts were up 6.2%. 

Single-family housing starts rose 3.6% in June to 850,000 and is a decline from 5.1% in June. The report adds that mortgage interest rates have fallen nearly 100 basis points since the beginning of the year, with the bank adding, “we expect to see some improvement in single-family starts in the months ahead.” 

Existing home sales fell 1.5% in June to 4.69 million units, and are 1.7% below 2018’s figures. New home sales rose 7% with a year-over-year increase of 4.5%. 

The New York Fed called home sales, “lackluster.” 

“Following a robust increase in the first quarter, the pace of new-home sales has slowed modestly in 2019Q2,” the report said. 

Additionally, Redfin reported that the supply of new homes fell 1% in Q2—the largest decline in six years. 

“When there’s a shift in the market, new construction is always one of the first categories to take a hit,” said San Jose, California, Redfin agent Kristen Nowack. “In the San Jose area, overall prices are falling and there are plenty of homes for sale right now, which means buyers may be less likely to pay a premium for new construction.

“And when one builder starts dropping prices in response to the market, competitors follow suit, which could lead to overall lower prices.”

Although the supply of new homes took a hit, the inventory of existing homes rose 1.1% for the quarter—the fourth-consecutive quarter of increases. 

Prices of new-build homes dropped 0.5% year-over-year to an average of $372, 900 for the quarter. The median-sale price for existing homes continued its seven-year trend of growth by rising 3.2% in Q2 2019 to $309,700.