New data from the Department of Housing and Urban Development (HUD) shows that home sales increased, but results in the nation vary widely in different markets. In the Midwest, home sales increased by 36.8 percent, but the Northeast experienced a decline of 5.6 percent while the South witnessed a decline of 2.3 percent.
Tom Woods, chair of the NAHB said, “Sales are moving forward, and our builder members are telling us they are starting to see more activity as more buyers get off the fence and enter the marketplace.”
Chief economist of the NAHB, David Crowe, concurred, stating, “Following an unusually low sales report in March, today’s numbers are consistent with other data we’ve seen recently and indicate a continuing, gradual improvement in the housing market.”
Housing Starts Increase
According to the U.S. Department of Commerce, in addition to an increase in sales, housing starts jumped by 20.2 percent in April for an adjusted annual rate of 1.135 million homes. This is the highest increase we’ve seen in the U.S. since the recession first began to hit in November 2007.
Breaking down the numbers, we see that single-family housing starts rose by 16.7 percent while multifamily starts increased by 27.2 percent. “Our builders tell us that consumers are slowly returning to the market,” said Woods. “This month’s report shows release of pent-up demand and evidence of a sustainable housing recovery.”
Crowe also applauded the numbers but pointed out that single-family housing is still only about half it what is should be in a fully recovered market. “With low interest rates and affordable home prices, we expect more upward momentum in the months ahead,” said Crowe.
Even though sales have dropped in the Northeast, this region accounts for an 85.9 percent increase in starts while residential building starts fell by 1.8 percent in the South. In the Midwest, starts rose by 27.8 percent, and the West saw a gain of 39.0 percent.
The MPI was designed to measure the confidence of builders and developers in the current market, and the scale runs from zero to 100. Any score that is higher than 50 reflects that a greater number of reports show that conditions are improving rather than declining.
“Multifamily developers remain positive about the market,” said Dean Henry Stanton, chair of the NAHB Multifamily Leadership Board. “We’ll continue to see increased demand as new households form and the job market improves.”
June Is National Homeownership Month
As National Homeownership Month comes to a close, it has become evident that the increase in sales and starts may be because of the increased affordability of homes across the country. According to the NAHB/Wells Fargo Housing Opportunity Index, 66.5 percent of homes sold in the first quarter of 2015 were affordable to families with median annual incomes as low as $65,800.
At the end of March, the median home price in the U.S. was $210,000, down from $215,000 at the end of 2014.
First-time home buyers are also taking advantage of special programs, including those that offer low down payments, which is helping to push up sales. In some instances, Fannie Mae and Freddie Mac are underwriting loans for first-time home buyers with as little as 3 percent down. In addition, the average interest rate on mortgages fell from 4.29 percent to 4.03 percent.
Woods is a strong advocate of the Portfolio Lending and Mortgage Access Act, which he said “is intended to ease the ability to repay requirements for community lenders who may fear originating non-qualified mortgage loans.”