Okie dokie, Housing Starts look good, Building Permits not so much. Mortgage Apps explode!
Economic Event | Period | Economic Survey | Actual Reported | Original Prior | Revised Prior |
MBA Mortgage Applications | MAY 11 | | 9.2% | 1.7% | |
Housing Starts | APR | 685K | 717K | 654K | 699K |
Housing Starts MoM | APR | 4.7% | 2.6% | -5.8% | -2.6% |
Building Permits | APR | 730K | 715K | 747K | 769K |
Building Permits MoM | APR | -4.5% | -7.0% | 4.5% | 8.8% |
Wire: BLOOMBERG News (BN) Date: May 16 2012 7:37:03
New U.S. Housing Construction in April Exceeds Forecasts (1)
By Shobhana Chandra
May 16 (Bloomberg) -- Builders in the U.S. broke ground on
more homes than anticipated in April, indicating the residential
real estate industry is stabilizing.
Starts rose 2.6 percent to a 717,000 annual rate from
March’s revised 699,000 pace that was stronger than previously
reported, Commerce Department figures showed today in Washington.
The median estimate of 80 economists surveyed by Bloomberg News
called for a rise to 685,000. Building permits, a proxy for
future construction, fell from a more than three-year high.
Employment gains, cheaper homes and record-low mortgage
rates are combining to lift demand and encourage builders to take
on projects. At the same time, distressed properties are
thwarting a quicker recovery in the housing market three years
after the end of the recession it helped trigger.
“We’re at a point where we see more light and less
tunnel,” said Michael Gapen, a senior U.S. economist at Barclays
Capital in New York. “Residential construction is no longer a
drag on the economy and will contribute to growth.”
Estimates in the Bloomberg survey for April ranged from
641,000 to 730,000. The prior month was revised from 654,000.
Today’s report reflects revisions dating back to January 2010.
Stock-index futures maintained gains after the figures, with
the contract on the Standard & Poor’s 500 Index expiring next
month rising 0.6 percent to 1,335.9 at 8:32 a.m. in New York.
Permits decreased 7 percent to a 715,000 annual pace last
month from 769,000 in March, which was the fastest since
September 2008, today’s report showed. March was revised from a
previously reported 764,000 pace.
Single-Family Starts
Construction of single-family houses climbed 2.3 percent to
a three-month high 492,000 rate from 481,000 the prior month.
Work on multifamily homes, such as townhouses and apartment
buildings, increased 3.2 percent to an annual rate of 225,000.
Two of four regions had an increase in overall starts,
reflecting an 11.6 percent gain in the South and a 6.7 percent
rise in the Midwest, today’s report showed.
The outlook for residential real estate is improving,
figures signaled yesterday. The National Association of Home
Builders/Wells Fargo index of builder confidence jumped to a
five-year high, the Washington-based group reported.
Borrowing costs remain attractive. The average rate on a 30-
year fixed mortgage fell to an all-time low of 3.83 percent in
the week ended May 10, according to data from Freddie Mac going
back to 1971. The average 15-year rate dropped to 3.05 percent,
also the lowest ever, the McLean, Virginia-based mortgage-finance
company said.
Housing Affordability
A housing affordability index that’s based on a combination
of resale prices, household income and mortgage rates reached an
all-time high in the first quarter, the National Association of
Realtors reported yesterday.
One source of strength in residential construction is that
work on apartment projects has climbed as the foreclosure crisis
turned more Americans into renters. While demand for multifamily
units, which include townhouses, is projected to provide
homebuilders with new business, it remains volatile.
In the U.S. Southeast region, which has lagged behind the
U.S. recovery the past three years, building is accelerating, led
by new construction of condominiums in Miami, according to
SunTrust Banks Inc. Chief Executive Officer William Rogers.
Housing in the Nashville, Tennessee, and Washington markets is
“back on the upswing,” while Marco Island and Sarasota,
Florida, “are showing improvement,” he said.
“We are starting to see some traction,” he said in an
interview in Atlanta, where the lender is based. “In housing,
things are stabilizing to stabilized.”
Foreclosures, Inventories
Builders still have to contend with a stream of distressed
houses returning to the market, adding to inventory and pushing
prices even lower.
Foreclosures and tight credit markets remain a constraint on
the housing industry, said Federal Reserve Governor Elizabeth
Duke in a speech yesterday in Washington.
While still-elevated foreclosures are “indicative of a
historic level of homeowner stress,” she said, “there are signs
that further gradual improvement may lie ahead.”
There are “some promising signs in the trend of house
prices as well” and “somewhat encouraging” indicators of
housing construction activity, Duke said.
John Broussard
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
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