Rain Rain Go Away, April Housing Starts Are Here to Stay
At the fastest pace this year, home building surged in April. Housing starts rose 13.2% this April to a seasonally adjusted annual rate of 1.07 million, up from 947,000 in March and overachieving economists’ forecasts. April’s gains were mostly due to multi-family construction, where starts rose almost 40% from March. Starts improved in every region from March numbers.
For the first time this year existing-home sales increased, achieving 1.3 percent to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March.
NAR chief economist, Lawrence Yun knew that was coming:
Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.
Increased inventory has definitely eased pressure on pricing and Yun adds:
We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions.
Price gains are slowing according to year-over-year data. The median existing-home price for all home types in April was $201,700, 5.2% higher than this time last year. In the first quarter of 2014, the median price for all home types was a much steeper, 8.6% higher than a year earlier! “Current price data suggests a trend of slower growth, which bodes well for preserving favorable affordability conditions in much of the country,” confirms Yun.
Properties sold faster in April for the fourth straight month. The median time on market for all homes was 48 days in April, about a week shorter than in March.
NAR President, Steve Brown talks about the market last month:
The typical time on market shrunk in April, with four out of 10 homes selling in less than a month. Homes that show well and are properly priced tend to sell the fastest. More housing inventory gives buyers better choices, and takes the pressure off of the buying process, which is a welcome sign, especially for first-time buyers.
Bad weather has been implicated as the main reason for a housing market slowdown. According to an article in RealtorMag, economist John Krainer cites some other factors to the slowing of home sales like a fragile economic recovery:
Changes in fundamentals such as rising mortgage rates can account for much of the sluggishness in existing home sales over the past year. Existing-home sales have been falling since the second half of 2013. Further increases in future mortgage rates could dampen the recovery in existing home sales.
A gauge of future activity, building permits issued for home construction rose 8% to a seasonally adjusted annual rate of 1.08 million. Residential construction is poised to contribute to brighter looking housing market numbers. April’s housing starts report and better employment numbers will hopefully mean the economy will rebound in the 2nd quarter.