Housing starts increased to 582,000 in June, the second straight month of increases after reaching the lowest point since 1970 in April. Single-family home starts are driving this growth, with 470,000 housing starts in June, while multifamily starts declined from 143,000 in May to 101,000 in June. Single-family starts in June were 28 percent lower than in June 2008 while multifamily were 75 percent lower.
Prices for new homes rose slightly in May and are now just 3.6 percent lower than in May 2008. Prices for existing single-family homes increased very slightly according to the National Association of Realtors (NAR) data, but remain 16 percent lower than the previous May. At the same time, the S&P/Case-Shiller Index remained about the same. Prices of existing condominiums remained about the same as well but are almost 22 percent lower than last May. Housing affordability remains near historic highs although it declined slightly, reflecting the rise in prices and mortgage rates.
Total existing home sales increased slightly in May, a welcome positive sign, and the inventory of homes for sale decreased, with a nine-month supply, down from 9.5 months’ supply in April. Still, this remains above the historic average of 7.2 months’ supply (since 1982). The number of new homes sold decreased slightly from 344,000 in April to 342,000 in May, and the inventory of new homes for sale declined as well—the months’ supply decreased to 10.2 from 10.4.
Home mortgage rates (30-year fixed) rose slightly in June to 5.42 percent, but remain very favorable by historic standards. Mortgage delinquency and foreclosure rates remain very high.
These housing trends in total suggest continued movement in the right direction, but a healthy and balanced housing market is still not in view.
Source: Urban Land Institute