Latest Remodeling Stats Are Unexpected
Revisions to the U.S. Census Bureau’s recent year estimates of home improvement spending in the C-30 Construction Spending series increased estimates of home improvement spending by 6 percent for 2011 (from $114 billion to $121 billion) and decreased spending over 10 percent for 2012 (from $125 billion to $112 billion).
Although the revisions are routine, the numbers took those who closely follow such numbers by surprise. As a result, the Leading Indicator of Remodeling Activity (LIRA), released quarterly by the Harvard Joint Center for Housing Studies and scheduled to be released in July was not be issued. “At this time, there is no obvious explanation for why the revisions to the C-30 improvements data were so extreme this year,” says research analyst Abbe Will, writing in the Joint Center’s blog.
“Typically, these annual revisions are minimal and, in the past, changes were always in the same direction as the original estimates, often revising the whole series downward somewhat. This time, not only was the magnitude of the revisions significantly larger than in recent years, but the direction of the revisions was extremely divergent from what could have been expected based on previous annual revisions,” she continues.
“As part of the Joint Center’s investigation of this issue, we will be in contact with the federal agencies involved in collecting the survey data and developing these estimates to assess whether changes in survey methodology or weighting procedures, for example, might explain these large shifts,” Will adds.
The next LIRA is scheduled for release on October 17, 2013.
Builder Confidence Rises Six Points
Builder confidence in the market for newly built, single-family homes rose six points to 57 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July. This is the index’s third consecutive monthly gain and its strongest reading since January of 2006.
“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB chief economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”
Single-family Starts Remain Steady
The pace of single-family housing starts held fairly even in June, with a decline of less than one percentage point, but overall housing starts declined 9.9 percent to a seasonally adjusted annual rate of 836,000 units as construction of multifamily buildings slowed following recent months of strong activity in that sector, according to figures from HUD and the U.S. Census Bureau.
Median Home Prices Rise
Homeowners in the U.S. paid a median price of $110,000 for their homes, according to a 2011 American Housing Survey profile released last month. This is an increase of 2.3 percent from the $107,500 reported in the 2009 survey. The median purchase price of homes constructed in the past four years was higher at $235,000, down 2.1 percent from the $240,000 reported for new construction in 2009.
Gen X Is Largest Group of Home Buyers
Generation X Americans, those born between 1965 and 1979, comprised 31 percent of recent home purchases, followed closely by Millennials, sometimes called Generation Y, those born between 1980 and 2000, at 28 percent, according to the 2013 National Association of Realtors Home Buyer and Seller Generational Trends study . Percentages of recent home purchases among prior generations was significantly lower, 18 percent were Younger Boomers, those born between 1955 and 1964; 14 percent were Older Boomers, Americans born between 1946 and 1954; and 10 percent were from the Silent Generation, those born between 1925 and 1945.
U.S. Is Not Experiencing a Housing Bubble
The market is not experiencing a housing bubble, and the rise in mortgage rates will help to prevent one in the future, according to CoreLogic’s July MarketPulse Report.
Additional conclusions include:
• Housing affordability is near its height due to historically low interest rates and home prices.
• According to the housing affordability index, all but two states are affordable today, and most states are near their recent affordability high points.
• Cash sales peaked above 40 percent two years ago and are slowly receding.
• Cash sales are one of the drivers behind the rapid house price recovery.
• The median year occupied homes were built in the U.S. was 1974.
• Nationally, piped gas was the most prevalent home heating source, used by 50.4 percent of occupied homes. Electricity was used by 35.3 percent.
• Among all U.S. homes, 72.5 percent of owner-occupied units had central air.
Source: American Housing Survey: — HUD, U.S. Census Bureau