Housing starts fell in March to an annual rate of 1.215 million units, a nearly 7 percent drop from the previous month.
New housing construction has remained mostly flat for the last six months, fluctuating around 1.25 million units.
Construction of single family units fell by 6.2 percent in March to an 821 thousand unit annual rate. Construction of units in multifamily buildings had a sharper fall. A total of 394 thousand units (annual rate) were started in the month, a near 8 percent drop.
The 30-year mortgage rate fell to 3.97 percent last week, continuing a pattern of steady declines for five consecutive weeks. Weaker demand for housing, revealed by declines in the demand for mortgages, is likely behind the falling mortgage rates. There has been some improvement in housing construction and housing sales, though most of those gains occurred around the middle of last year.
Last week, the U. S. Census Bureau released a report called “The Changing Economics and Demographics of Young Adulthood from 1975 to 2016” that had some disconcerting news (URL for the report is at the bottom of this article.) The report finds that an increasing percentage of young people are still living with their parents.
As young people become independent and form a household, they either rent an apartment or house or purchase their own home. That purchase makes those new households our customers. They are the buyers of products or services of NKBA members.
But this study indicates that over one-third of young adults, that is 34.1 percent of 18- to 34-year-olds, are still living in their parents home. This is nearly 10 percentage points higher than the 26 percent who lived with their parents in 2005. The difference in the ten-year period amounts to more than 7.3 million people who are not setting up their own households. Additionally, 1 in 4 of these people are neither working nor going to school. They have not developed the skills to become productive members of the community.
Get the full report here.
Visit the NKBA website to view the latest economic and industry research available to NKBA members.
Manuel Gutierrez, Consulting Economist to NKBA, economist @nkba.org
Explanation of NKBA’s Economic Indicators Dashboard
The dashboard displays the latest value of each economic indicator. Note that all the data, except for “mortgage rate” and “appliance store sales” are seasonally adjusted and are represented at annual rates.
Remodeling Expenditures. This is the amount of money spent on home improvement projects during the month in question. It covers all work done for privately-owned homes (excludes rentals, etc.). The data are in billions of dollars and are issued monthly by the U.S. Department of Commerce.
Single Family Starts. It is the number of single family houses for which construction was started in the given month. The data are in thousands of houses and are issued monthly by the U.S. Department of Commerce.
Existing Home Sales. These data are issued monthly by the National Association of Realtors, and capture the number of existing homes that were sold in the previous month.
High-End Home Sales. This series represents sales of new homes priced at $750,000 and over. The data are released quarterly by the U.S. Department of Commerce, and are not seasonally adjusted. Thus, a valid comparison is made to the same quarter of prior year.
Mortgage Rate. We have chosen the rate on 30-year conventional loans that is issued by the Federal Home Loan Mortgage Corporation (known popularly as Freddie Mac.) Although there are a large number of mortgage instruments available to consumers, this one is still the most commonly used.
Employees in Residential Remodeling. This indicator denotes the number of individuals employed in construction firms that do mostly residential remodeling work.
Building Materials Sales. These data, released monthly by the Department of Commerce, capture the total sales of building materials, regardless of whether consumers or contractors purchased them. However, we should caution that the data also include sales to projects other than residential houses.
Appliance Store Sales. This driver captures the monthly sales of stores that sell mostly household appliances; the data are stated at an annual rate. We should not confuse this driver with total appliance sales, since they are sold by other types of stores such as Home Centers.
We hope that you find this dashboard useful as a general guide to the state of our industry. Please contact us if you would like to see further detail.
