Economic Snapshot: June 2017 housing market report

A look at builder confidence, housing starts and existing home sales in the past month.

Housing market index

Builder confidence dipped two points to a level of 67 from a downwardly revised May reading of 69, according to the National Association of Home Builders/ Wells Fargo Housing Market Index.

“Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.

All three HMI components posted two-point losses in June but remain at healthy levels. The component gauging current sales conditions is now at 73, the index charting sales expectations in the next six months is now at 76, and the component measuring buyer traffic is now at 49.

Much like the marine industry, the housing industry is struggling with a workforce crisis, which impacts builder confidence.

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“As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single-family sector,” said NAHB Chief Economist Robert Dietz.

Looking at the three-month moving averages for regional HMI scores, the Midwest and South each edged one point lower to 67 and 70, respectively. The Northeast and West both dropped two points to 46 and 76, respectively.

Housing starts

Privately owned housing starts were at a seasonally adjusted annual rate of 1,092,000 in May, which is 5.5 percent below the revised April estimate of 1,156,000 and 2.4 percent below the May 2016 rate of 1,119,000.

Single-family housing starts were at a rate of 794,000 in May. This is 3.9 percent below the revised April figure of 826,000.

Privately owned housing completions were at a seasonally adjusted annual rate of 1,164,000 in May. This is 5.6 percent above the revised April estimate of 1,102,000 and is 14.6 percent above the May 2016 rate of 1,016,000.

Single-family housing completions were at a rate of 817,000 in May. This is 4.9 percent above the revised April rate of 779,000.

Existing home sales

Total existing-home sales rose 1.1 percent to a seasonally adjusted annual rate of 5.62 million in May, up from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7 percent above a year ago and the third highest pace in the past year.

The median existing-home price for all housing types was $252,800 in May. This surpasses last June as the new peak median sales price, is up 5.8 percent from the previous year and marks the 63rd straight month of year-over-year gains.

Total housing inventory rose 2.1 percent at the end of May to 1.96 million existing homes available for sale, but is still 8.4 percent lower than the previous year. Inventory has fallen year over year for 24 consecutive months. Unsold inventory is at a supply of 4.2 months at the current sales pace, down from 4.7 months a year ago.

"Home prices keep chugging along at a pace that is not sustainable in the long run," said Lawrence Yun, NAR chief economist. "Current demand levels indicate sales should be stronger, but it's clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions."

First-time buyers were 33 percent of sales in May, which is down from 34 percent in April but up from 30 percent a year ago.

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