Flat Conditions for Some Housing Sectors, but Not All

Filed in Economics by on August 31, 2018 0 Comments

row of new, suburban townhouses

NAHB Chief Economist Robert Dietz provided this housing industry overview in the bi-weekly newsletter Eye on the Economy

Despite growing housing affordability concerns, builder confidence in the single-family market remains solid. The NAHB/Wells Fargo Housing Market Index came in at a level of 67 in August, a one-point drop from last month. This matched the relatively flat pace of construction in July, with total housing starts up less than 1% from the previous month.

However, market demand remains healthy, with starts up more than 6% thus far in 2018 on a year-to-date basis. And this positive trend should continue, with residential construction loan growth up 8% year-over-year as of the second quarter, according to NAHB analysis.

Affordability issues were reflected in recent sales data. Existing single-family home sales dipped in July from the previous month, and were down 1.5% compared to a year ago — marking the fourth-straight month of year-over-year declines. Sales volume is soft due to lack of inventory and recent price gains. Sales of newly built single-family homes were down almost 2% in July, though sales totals are up 7% thus far in 2018 on a year-to-date basis.

However, not all submarkets are experiencing flat growth conditions. For example, townhouse construction (single-family attached housing) surged in the second quarter to a total of 36,000 starts — 44% above first quarter totals.

Over the last year, construction has begun on more than 116,000 townhouses, a 23% increase compared to the prior year. This activity, including gains for single-family built-for-rent construction, suggests individual submarkets continue to grow as more builders offer housing that helps buyers and renters contend with rising affordability issues.

For more, go to Eye On Housing.


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