Housing Figures: Sales Rise for New, Existing Homes, While Multifamily Shows Strength
December 1, 2021
Housing Figures is our monthly round-up of the top news stories related to residential new construction spending and the latest market numbers.
Sales rose across new and existing homes in the latest counts, while pending sales also bounced back, indicating demand is there despite challenges. We also look at the latest starts and permits, with multifamily strength shining and permit activity increasing across both segments. And, despite challenges, builders are still showing confidence in the market.
Home sales rise across segments
U.S. new homes sales rose in October. New home sales of single-family homes rose 0.4% in October to a seasonally adjusted annual rate of 745,000 units, up from 742,000. The median sales price of those homes was $407,700 — a new record high. Construction continues to be hampered by shortages of materials and labor. [Realtor.com]
Meanwhile, existing home sales also rose. According to the National Association of Realtors, existing home sales rose 0.8% from September to October to a seasonally adjusted annual rate of 6.34 million. Comparatively, the median existing home sales price increased to $353,900, a 13.1% increase from October 2020. On a year-over-year basis, sales were down in each region. [NAR]
And, pending sales also bounced back. The Pending Home Sales Index, reported by NAR, increased 7.5% to 125.2 in October after a decline in September. The index is forward-looking, measuring expected future sales based on contract signings. Lawrence Yun, NAR’s chief economist, said that the gains should result in total existing home sales exceeding 6 million in 2021, which would be the best performance in 15 years. [HBS Dealer]
Single-family starts decrease as permits increase
Single-family starts decreased as multifamily starts increased. Starts for single-family homes decreased 3.9% in October to a seasonally adjusted annual rate of 1.04 million due to supply chain disruptions and labor and lot access. Meanwhile, multifamily starts increased 7.1% to an adjusted pace of 481,000 units. Overall housing starts decreased 0.7% on the strength of multifamily. Nevertheless, single-family starts are up 16.7% year-to-date. Because of supply chain effects, 152,000 single-family units have been authorized but aren’t started. [NAHB Now]
Still, permits rose for both single-family and multifamily. Housing permits increased 4% in October to an adjusted annual rate of 1.65 million. This rate is 3.4% above October 2020’s rate of 1.595 million. Broken down, single-family permits increased 2.7% to an adjusted rate of 1.069 million, while multifamily permits increased 6.6% to a pace of 581,000. [HBS Dealer]
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Prices reach historic levels, but slow on month-to-month level
Home prices made a historic leap this year. According to the Federal Housing Finance Agency’s House Price Index, home prices experienced their largest year-over-year gain, rising 18.5% from 2020. Idaho saw the highest home price appreciation with a nearly 36% increase. Utah and Arizona followed with increases of 30.3% and 27.7%, respectively. [HousingWire]
Month-to-month, however, price growth decelerated in September. The S&P CoreLogic Case-Shiller home price index reported an annual gain of 19.5% in September, which is down from 19.8% in August. Phoenix continued to lead in annual price gains with an increase of 33.1%, followed by Tampa and Miami. CoreLogic’s Deputy Chief Economist Selma Hepp said the data indicates the market is trending toward a healthier balance between buyers and sellers. [Yahoo! Finance]
The rental market continues to see increases. According to Redfin, the average monthly rents in October increased 13% nationwide over 2020, which is the highest growth rate in at least two years. Miami, Seattle, Portland and Austin saw rents rise more than 30%. The national median monthly mortgage payment for homebuyers rose 17% from October 2020. Month over month, rents rose 0.4%, which could be a seasonal slowdown or a sign of ongoing deceleration. [Redfin]
Confidence is high among home builders
Home builder sentiment rose in October thanks to strong demand. The National Association of Home Builders/Wells Fargo Housing Market Index rose to 83 in October thanks to strong demand from buyers despite supply-side challenges. Current sales conditions rose 3 points to 89, while buyer traffic also increased 3 points to 68. Still, builders are experiencing supply chain disruptions and labor and lot shortages. [CNBC]
Builder sales improved in latest HomeSphere survey. The latest State of the Industry report, compiled with BTIG, showed sales are improving for home builders. Results also indicate builders are continuing to take a more cautious approach to increasing prices, while a special question related to investor activity showed investors may be playing a growing role in contributing to demand and price acceleration. [HomeSphere]