Top Housing Markets: Texas, Florida, California
Texas remains the dominant new housing market in the U.S. in the construction of single-family as well as multifamily homes. Year-to-date through July, nearly 115,000 new housing permits were issued in the Lone Star State — 15% of the nation’s total.
Florida consistently comes in second place. This year is no exception, as the state has contributed 11% of new homes, for a total of 83,600 permits issued. In the third place is most populous California, which has issued slightly over 73,000 housing permits.
The chart below displays the top 10 states for new housing permits so far this year.
Within major metropolitan areas, the top markets are Dallas-Fort Worth (38,600 units), Houston (33,700) and New York (28,400). These three areas account for one in seven new houses built in the U.S.
In the single-family market, we find that the metro areas of Houston and Dallas-Fort Worth continue to top the list of metropolitan areas with most housing permits issued. Out of the 367 metropolitan areas in the U.S., these two account for one in 10 new single-family houses built.
Through July of this year, these two markets have issued nearly 47,000 new permits for single-family homes. Austin, with 10,629 single-family permits through July, gives Texas three of the top 10 metro areas issuing such permits in the nation.
Household Savings Rates Start To Edge Up
For many years, since the early Seventies, U.S. households had been saving less, and less of their income. The ratio of saving to disposable income fell steadily for nearly 35 years, from a high of 13.5% attained in 1973 to the low point of 3.7% by 2007 — at the onset of the Great Recession.
Since then, households have been gradually increasing the proportion of disposable income that they’re saving, to reach the current rate of 6.7%, as of July.
The vast majority of references to economic growth hinge more on consumers’ spending, with little if any mention of consumer savings. Notwithstanding the importance of spending, consumer savings play a key role in the economy, aside from providing direct future benefits to themselves. From an economy-wide perspective, consumer savings are a key source of funds for business investment, which in turn is the primary driver of future growth of an economy.
Witness the phenomenal growth of the Chinese economy over the last 25 years. That growth was not achieved via spending by consumers but, rather, business investment. And this investment was not fed by internal savings of Chinese households — they had nothing to save. It came from savings of foreigners who were willing to invest in the prospects of the nascent Chinese economy.
Mortgage Rates Edge Up
Another week, another marginal change in mortgage rates. Last week, the 30-year, fixed-mortgage rate rose minimally, by one basis point (0.01%) to 4.52%. Rates are hovering at their lowest level since early May.
Manuel Gutierrez, Consulting Economist to NKBA
Explanation of NKBA’s Economic Indicators Dashboard
The dashboard displays the latest value of each economic indicator with a colored triangle that highlights visually the recent trend for each of the drivers. “Green” is a positive signal, indicating that the latest value is improving; “Yellow,” as it’s commonly understood, denotes caution because the variable may be changing direction; “Red” indicates that the variable in question is declining, both in its current value and in relation to the recent past.
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. This 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 are sales of new homes priced at $500,000 and higher. 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 total sales of building materials, regardless of whether consumers or contractors purchased them. However, we should caution that the data also includes 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 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.
