Economic Snapshot: Ups and down in existing home sales, housing starts

This month’s existing home sales and housing starts provide potentially confusing numbers. While this month’s existing home sales report may seem disappointing when compared to last year’s sales, it is important to look at the decrease in distressed homes. Housing starts are also up from 2013, even if the index remains a bit volatile in 2014.

Existing home sales 

Existing home sales rose 2.4 percent in September to 5.17 million, up one percent from 5.05 million in August and at their highest pace for 2014, but still 1.7 percent below the previous year.

The strongest sales this month were among condos, up 5.2 percent to 0.610 million, while sales of single-family homes climbed two percent to 4.56 million. Condo sales showed no change year-over-year and single-family home sales dipped 1.9 percent.

Total housing inventory for existing homes fell 1.3 percent to 2.30 million. This represents a 5.3-month supply at the current sales pace. And despite fewer home sales this month, unsold inventory increased six percent over the previous year, when there were 2.17 million existing homes available.

Distressed homes – foreclosures and short sales – increased slightly to 10 percent from eight percent in August, but are down from 14 percent in September 2013. Only seven percent of September sales were foreclosures and three percent were short sales.

Home prices are down 4.0 percent to a median of $209,700 but are up 5.6 percent YOY.

Housing starts

Housing starts reached an annualized rate of 1.02 million in September, climbing 6.3 percent from August when rates dropped 12.8 percent from July, which was another month of sharp gains. Housing starts are up 17.8 percent from the previous year.

The multifamily component rose 16.7 percent after a sharp decline in August. The single-family component was less volatile, increasing 1.1 percent after a 2.0 decrease last month. And though building permits fell 5.1 percent in August, they rebounded in September by 1.5 percent.

Consumer price index 

The consumer price index increased 0.1 percent in September and 1.7 percent over the last year.

The increases in shelter and food indexes outweighed the declines in energy indexes, where all items dipped and resulted in an overall 0.7 percent decrease. The food index rose 0.3 percent as five of the six major grocery store food group indexes increased. The 12-month change in the shelter index has been on a steady incline, reaching three percent this month for the first time since January 2008.

All items less food and energy grew slightly at 0.1 percent, also increasing 1.7 percent in the past 12 months. New vehicles saw a mild increase of 0.3 percent in September.

Leave a Reply

Your email address will not be published. Required fields are marked *