The U.S. housing market remains in healthy condition as purchase and rental affordability improve marginally despite a drop in the number of homes for sale, according to the Housing Tides Index. Data compiled also reveals that the U.S. housing and homebuilding industry resumed its strengthening trend with the Index increasing to a value of 73.6, after falling slightly to 72.4 in February. The Index scores increased in 33 of the top 41 local markets this month.
These conclusions are based on research compiled for The Housing Tides Index, which is a monthly pulse of the U.S. housing market across the top 41 U.S. markets.
Data is compiled by referencing 18 market indicators ranging from unemployment rates and housing permits to rental vacancy and mortgage foreclosure rates.
Other information included in the March Housing Tides Index includes:
- The construction unemployment rate increased from 5.7 percent in November to 7.4 percent in December. While this is higher than the designated “healthy” range, unemployment rates vary seasonally and homebuilders have often pointed to labor scarcity as an obstacle to increasing construction volume.
- Housing supply improved markedly, rising from 2.9 months of supply in November to 3.9 in December. However, this supply increase is due to a large decrease in home sales while for-sale inventory simultaneously fell to its lowest level since December 2013.
- U.S. rent prices reversed course and fell in December. The median asking rent for two-bedroom units decreased from $1,630 in November to $1,500 in January.
- Mortgage foreclosure rates continued to decline in December, with latest data showing that just 0.9 percent of all homes with a mortgage are in foreclosure. The mortgage foreclosure rate is down from 1.37 percent in December 2015.
The top five cities of the 41 cities referenced in the Index that showed improvement include (1) St. Louis, 78.1, up 8.2 YoY; (2) Raleigh-Durham-Chapel Hill Triangle, 77.4, up 4.0 YoY; (3) Las Vegas-Henderson-Paradise, 76.0, up 5.8 YoY; (4) Houston-The Woodlands-Sugar Land, 75.5, up 5.0 YoY; (5) Austin-Round Rock, 75.5, up 4.8 YoY.
For each of the top 41 markets, those variables are tested to determine which are statistically significant for predicting housing permits in that area.
The Housing Tides Index concerning construction uses primary economic indicators that affect permit rates for single and multi-family construction. Rather than simply using each variable as reported five months prior, the models draw from three-month moving averages.
Overall, the data offered in the Housing Tides Index for March seem to confirm that the U.S. housing market is on an upswing despite rising interest rates and lack of inventory.