***Eye on the Economy is a biweekly survey of NAHB’s economic and housing analysis.
As existing home sales weakened due to limited inventory, home building-related activity improved in February, albeit modestly. Builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index stands at a level of 58 as of March, consistent with a generally positive outlook tempered by concerns regarding supply-side constraints. Buyer traffic is up, but expectations concerning future sales waned.
Housing starts improved in February, increasing 5.2% to an annual pace of 1.178 million single-family and multifamily residences, according to government estimates. The increase was broad based with single-family starts up 7.2% over January to the fastest rate since November 2007. Total permits were down 3.1% on a monthly basis, but the decline was entirely in the multifamily sector.
Similarly, new single-family home sales were up slightly in February, increasing 2% nationwide to an annual rate of 512,000. Consistent with the ongoing, modest recovery in building, new home inventory increased to 240,000 – a 5.6 months’ supply – according to Census estimates. However, only 53,000 of these homes were completed, ready-to-occupy residences.
Lastly, NAHB’s Chief Economist David Crowe retired on Friday, March 18, concluding an accomplished career that spanned more than 40 years as a professional housing economist in Washington, D.C. Dave spent 27 years as an economics expert for NAHB, serving as chief economist since 2008. The NAHB Economics and Housing Policy group will miss his leadership, guidance and industry insight, and fondly wishes him a happy retirement.