Market Recap: Housing Starts and Building Permits Mixed, Case-Shiller Home Price Index Appreciates, and Pending Home Sales Go Up
Posted On March 01, 2019
Some economic indicators continue to be delayed by the partial government shutdown earlier this year. In the housing sector, January’s new home sales report originally scheduled for Tuesday and January’s US construction spending originally scheduled for Friday, were both delayed. Of the reports released, housing starts declined and building permits inched up, home price appreciation continues to slow down, and pending home sales increased.
After several months of delays due to the partial government shutdown, the December housing starts and building permits report was released on Tuesday. From the report, housing starts declined 11.2% month-over-month to a seasonally adjusted annual rate of 1.08 million and building permits increased slightly, up 0.3% month-over-month to a seasonally adjusted annual rate of 1.33 million. Specifically, single-family housing starts are down 6.7%, compared to the 20.4% decline in multi-family housing starts. However, this delayed data is from December, when builder activity tends to slow down, and more recent reports, including February’s National Association of Home Builders (NAHB) housing market sentiment index, shows builders are optimistic about the upcoming Spring.
The S&P CoreLogic Case-Shiller Home Price Index increased 0.2% month-over-month and 4.2% year-over-year in December. Home price appreciation appears to be leveling off, with this figure marking the slowest pace of annual growth since November 2014. Only five of the twenty cities on the index posted a month-over-month increase, and the increases were marginal, with Las Vegas showing the most substantial 0.2% month-over-month increase. Twelve cities declined month-over-month and three were unchanged. Annually, Las Vegas continues to lead appreciation trends, up 11.4%, the only city with a double-digit annual rate of increase.
The pending home sales index tracks homes that are under contract but not yet closed. In January, the pending home sales index increased 4.6% month-over-month to a level of 103.2. December’s figure was also revised upward. Pending home sales activity is used to predict the future health of the housing market. January and December’s gains indicate a busy Spring is ahead.
The Spring and Summer months typically see more housing activity than the Fall and Winter. With the recent slowdown in home price appreciation plus a downward trend in mortgage rates, many buyers that were previously unable to make a home purchase in 2018, may take advantage of the more affordable market in 2019.