Housing has returned to the upper ranges of our forecast coming in at 1,127 while new home sales continued on a growth path reaching 667,000. Existing home sales (gold line) started moving back up again after several months of lower levels. Existing homes are struggling under low inventory and increasing prices.
There is no doubt, the rate of increase in housing starts has slowed. You can see this in the first chart. Growth that started since 2010 appears to have taken a rest over the last several months and is struggling from lower supply numbers and higher prices. Prices increased by more than 5% from this time last year. Home sales remain above the previous year but have slowed by over 3% this month alone. Supply has increased most recently which potentially could ease pricing pressure.
Even though housing starts dropped 0.8% this month on a month-to-month basis the number of units increased from 1,155,000 to 1,180,000 at an annual rate. This represents a 2.7% increase on a year-over-year basis.
New home sales statistics were recently released and they continue to show a developing market where prices are increasing which correspondingly slowed demand. There is a lower level of supply available across the entire housing marketplace. New home sales dropped 9.4% for the month, but year-over-year activity is up 9.2%. The sales period, the time new homes stay on the market For Sale, is down to 2.9 months from a previous 3.6 months just a year ago; all signs of a tightening market; good for suppliers and, not as good for buyers. Fortunately, the market is not showing signs of stress, but rather a normal activity when supply and demand are tilted to higher demand and moderate supply.