The Week Ahead: Waiting for Housing Starts to Re-Start

Single-family housing starts took a step back in August after several consecutive months of gains. In the midst of an ongoing shortage of existing homes for sale, will new construction pick up?

The industry will find out when the HUD/Census Bureau New Residential Construction report covering September 2016 is published on Tuesday, October 18.

In August, single-family housing starts tumbled by 6 percent from July down to an annual rate of approximately 722,000. Even with the decline, however, single-family housing starts ticked up over-the-year in August by approximately 1 percent. The over-the-month decline in single-family housing starts may not be cause for concern in the industry, however.

“Part of the August decline in single-family starts was weather-related, particularly due to flooding issues in Louisiana,” National Association of Home Builders (NAHB) Chief Economist Robert Dietz said.

According to Trulia Chief Economist Ralph McLaughlin, the 12-month rolling total for single-family housing starts—a less volatile measure of new construction—increased by 7.5 percent over-the year in August to nearly 1.6 million starts. Even though August was the fifth straight month in which gains shrank from the previous month, the August 12-month rolling total was still the most starts for a 12-month period since May 2007.

Realtor.com chief economist Jonathan Smoke said that the housing market did not take a turn for the worse in August as recent data might suggest.

“In fact, we are seeing good signs that the new home market is finally growing substantially, with sales of new homes up big time over this time last year and so far this year,” Smoke said.

Thursday, October 20—Existing-Home Sales for September 2016, NAR

The National Association of Realtors (NAR) reported a decline in the pace of existing-home sales for the second consecutive month in August, down to an annual rate of 5.33 million. The industry will see how existing-home sales fared in September when the NAR publishes the September 2016 report on Thursday, October 20.

With affordability being a concern in some markets because of price appreciation outpacing wage growth and job gains, on the surface it seems like existing-home sales are down after hitting a post-crisis peak in June.

But when compared with historical averages, things don’t look so bad for existing-home sales, according to NAR’s August 2016 EHS Over Ten Years report. The report showed that the total number of homes sold nationwide in August 2016 was higher than the 10-year August average, as was the total number of homes in all four regions.

“Comparing August of 2006 to August of 2016 fewer homes were sold in 2016 in the US and all regions, the Northeast enduring the biggest decline of 51.4 percent,” said Michael Hyman of NAR. “The U.S. had a drop of 18.9 percent while the West had the smallest drop in sales at 8.3 percent over the 10-year period.”

This week’s schedule

Monday, October 17
Bank of America Q3 earnings report

Tuesday, October 18
Goldman Sachs Q3 earnings report
Comerica Q3 earnings report
Housing Market Index for October 2016, National Association of Homebuilders, 10 a.m. EST

Wednesday, October 19
Morgan Stanley Q3 earnings report
U.S. Bancorp Q3 earnings report
New Residential Construction (Housing Starts) for September 2016, HUD/Census Bureau, 8:30 a.m. EST

Thursday, October 20
BNY Mellon Q3 earnings report
Existing-Home Sales for September 2016, National Association of Realtors, 10 a.m. EST

Friday, October 21
SunTrust Q3 earnings report