Tag Archives: Housing Starts

The continued—and oddly sluggish—recovery cycle the U.S is currently experiencing in not, according to a new report by Fitch Ratings and Oxford Analytica, on course to run the typical peaks-and-valleys cycle of the five major economic expansion periods the U.S. has experienced since the early 1970s.

Although rising rents and tight inventories have led to a surge in new construction in San Francisco, the new supply is barely able to keep pace with demand, creating challenges in the region, says Wells Fargo's Economics Group. "Multi-family permits, which include both apartments and condominiums, surged 30.4 percent in Santa Clara County during 2013 and have eclipsed previous highs for this market," the group said. Single-family home building is rebounding, but only "slowly and off exceptionally low levels."

CoreLogic released Tuesday its own quarterly Case-Shiller Indexes, assembled using the company’s proprietary data supplemented with statistics from the Federal Housing Finance Agency (FHFA). While prices nationwide were up an estimated 11.3 percent in Q4, seven cities managed to shoot up into the 20 percent range year-over-year, with Las Vegas leading at 25.6 percent growth.

Home asking prices rose just 9.0 percent year-over-year in April, the smallest gain in 11 months, and Trulia chief economist Jed Kolko has a few ideas why that number has fallen. One reason for the slippage is from a large price spike during the housing recovery in February and April of 2013, according Kolko. Year-over-year changes in April 2014 no longer include these elevated months, dropping yearly asking price numbers.

According to figures released Thursday by the Commerce Department, total construction spending in March bumped up 0.2 percent to an estimated adjusted annual rate of $942.5 billion. Compared to a year prior, March spending was up 8.4 percent. In the private sector, construction spending was put at an estimated rate of $679.6 billion, with residential projects accounting for $369.8 billion of that total.

According to numbers put out by the Commerce Department’s Bureau of Economic Analysis (BEA) Wednesday, real gross domestic product (GDP) grew at an annualized rate of 0.1 percent in Q1, a plunge from the final 2.6 percent growth rate reported for Q4 2013. The sudden slowdown reflects in part the toll this year’s winter season took on economic expansion, though not all changes were weather-related.

Home prices as measured by S&P Dow Jones performed more or less as expected in February, with annual growth rates continuing to slow. The S&P/Case-Shiller Home Price Indices shows prices among 20 of the nation’s biggest markets grew 0.8 percent on a seasonally adjusted basis in February, matching January’s rate of growth. Unadjusted, the index was unchanged month-over-month.

While strict lending standards may be precluding some from the housing market, one economist insists banks want to lend. It is lackluster employment and slow household formation among Millennials that is hindering the market now, according to Maury Harris, managing director and chief U.S. economist at UBS during a discussion hosted by the National Association of Home Builders (NAHB). “Banks have over $2 trillion of excess reserves,” Harris said. “Banks would like to put that money to work and increase lending, which would help the economy.”

In a report issued earlier this week, Fitch Ratings announced it is tapering its forecast for 2014 in acknowledgement of what has so far been a “subpar spring selling season.” Sales of both new and existing homes in March fell short of expectations, dashing optimistic projections of a rebound following the end of an unusually harsh winter. Housing starts also disappointed as homebuilders remain concerned about the shape of the market.

Average fixed mortgage rates declined for the second straight week, bringing them to a six-week low—and easing affordability conditions slightly as the homebuying season gets under way. Frank Nothaft, VP and chief economist for Freddie Mac, said the latest decline fits with a disappointing—though not dismal—construction report showing homebuilding rising at a rate of 2.8 percent in March.