Eye on the Economy: Cautious Optimism Heading Into Mid-Spring

***Eye on the Economy is a biweekly survey of NAHB’s economic and housing analysis.

Builder confidence in the market for newly built single-family homes was unchanged in April, remaining at a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). April marked the third consecutive month the index has stayed at this level, indicating that builders remain cautiously optimistic about housing market growth.

Single-family construction starts fell in March from the elevated pace set the month before, yielding unchanged market conditions on a three-month moving average basis consistent with the flat reading of the HMI. According to estimates from the Census Bureau and HUD, the annual pace of single-family starts was 764,000 in March, down from the upwardly revised, post-cycle high rate of 841,000 recorded in February. This 9.2% decline should not overshadow the fact that the rate was still in line with recent trends and was 22.6% higher than that of March 2015.

However, the March estimates concerning multifamily starts do indicate a change in market pace. Multifamily starts declined more than 8% in March to a 312,000 annual rate. The current three-month moving average (approximately 341,000) is notably below the peak levels set last summer. Multifamily permits for March fell 20.6% from February, down 12.4% on a year-over-year basis.

Rounding out the housing market data, estimates from the National Association of Realtors revealed a 5.1% increase in existing home sales in March. The growth in sales reverses a 7.1% monthly decline from the previous month. Total existing home sales in March increased to a seasonally adjusted rate of 5.33 million units combined for single-family homes, townhomes, condominiums and co-ops. However, existing home inventory remains tight. March’s inventory stood at a 4.5-month supply, 1.5% lower than a year ago.

 



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