January’s New Residential Construction and Existing Home Sales

There were just two widely watched reports released during the past week, the January report on New Residential Construction from the Census Bureau and the Existing Home Sales Report for January from the National Association of Realtors (NAR)…at the same time, the week did see the release of the first two regional Fed manufacturing surveys for February: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index rose from –12.6 in January to +5.7 in February, meaning that a plurality of Second District manufacturers are now seeing improvement in various facets of their businesses, after widespread deterioration was reported in January… meanwhile, the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions fell from +44.3 in January to +18.1 in February, indicating that a considerably smaller majority of that region’s manufacturers reported increases in general business activity this month than last..

January Housing Starts Reported Lower; Building Permits Unchanged

The January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,366,000, which was is 9.8 percent (±12.5 percent)* below the revised December estimated annual rate of 1,515,000, and was 0.7 percent (±13.0 percent)* below last January’s rate of 1,376,000 housing starts annually….the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from December, or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been up by 2.7% or down by as much as 22.3% from those of December, with revisions of a greater magnitude in either direction possible…with this report, the annual rate for December housing starts was revised from the 1,499,000 reported a month ago to 1,515,000, while November starts, which were first reported at a 1,289,000 annual rate, were revised from last week’s initial revised figure of 1,294,000 up to a 1,344,000 annual rate with this report…

The annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 95,500 housing units were started in January, down from the revised 106,800 units that were started in December, and down from the 99,200 units that were started in November…of those housing units started in January, an estimated 67,600 were single family homes and 26,600 were units in structures with more than 5 units, down from the revised 74,100 single family starts in December and down from the 30,300 units started in structures with more than 5 units in December…

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,483,000, 0.1% above the revised December rate of 1,482,000 permits, but 1.7 percent below the 1,508,000 a year rate of building permit issuance in January a year earlier…the annual rate for housing permits issued in December was revised from the 1,483,000 reported last month to 1,482,000….

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 112,500 housing units were issued in January, down from the revised estimate of 112,600 new permits issued in December….of those, 73,300 were permits for single family homes and 34,800 were permits for units in structures of more than 5 units, up from the 68,300 single family permits in December, but down from the 40,300 permits for units in structures of more than 5 units….for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.366 Million Annual Rate in January and Newsletter: Housing Starts Decreased to 1.366 million Annual Rate in January, which excerpts from and links to his real estate newsletter post with the same title..

Existing Home Sales Fell 4.9% in January; Median Sales Price Down 7.0% from June

The National Association of Realtors (NAR) reported that existing home sales fell by 4.9% from December to January on a seasonally adjusted basis, projecting that 4.08 million existing homes would sell over an entire year if the January home sales pace were extrapolated over that year, a pace that was still 2.0% above the 4.00 million annual sales rate projected for January of a year ago…December’s home sales are now shown to have been running at a 4.29 million annual rate, revised up from the 4.24 million annual rate indicated by last month’s report..

the NAR also reported that the median sales price for all existing-home types was $379,100 in January, 5.1% higher than in January a year earlier, which they report is “the 19th consecutive month of year-over-year price increases.” even though existing-home sales prices have been falling since June…the NAR press release, which is titled “Existing-Home Sales Decreased 4.9% in January, But Increased Year-Over-Year for Fourth Consecutive Month“, is in easy to read plain English, so if you’re interested in more details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily read about those things in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is seasonally adjusted and at a not very informative annual rate, we usually take a look at the raw data overview (pdf) to see what actually happened during the month…this unadjusted data indicates that roughly 240,000 homes sold in January, down by 27.1% from the 329,000 homes that sold in December, but up 2.6% from the 234,000 homes that sold in January of last year, so we can see how a large mid-winter seasonal adjustment boosted the reported headline sales figure…that same pdf indicates that the median home selling price for all housing types fell 1.7% over the month, the 6th decrease in seven months, from a revised $403,700 in December to $379,100 in January, which was also down 7.0% from the $426,900 median sales price recorded in June, but still up 4.8% from the median sales price figure of $378,600 in January of 2024….for those interested in both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Decreased to 4.08 million in January and Newsletter: Existing-Home Sales Decreased to 4.08 million SAAR in January, which links to his newsletter post of the same title..

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)