BuilderBytes' MetroIntelligence Economic Update for 11/27/13

Please click here to see the edition of BuilderBytes for 11/27/13 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Building permits in October rise to five-year high
• Case-Shiller Home Price Index rose by 3.2 percent in 3Q 2013
• FHFA House Price Index rose 2.0 percent in 3Q 2013
• Consumer confidence dips again in November

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BuilderBytes' MetroIntelligence Economic Update for 11/26/13

Please click here to see the edition of BuilderBytes for 11/26/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Pending home sales slip for fifth straight month
• Job openings little changed between August and September

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BuilderBytes' MetroIntelligence Economic Update for 11/21/13

Please click here to see the edition of BuilderBytes for 11/21/13 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Producer Price Index declined by 0.2 percent in October
• Federal Reserve may start scaling back asset purchases as economy improves
• Initial unemployment claims fall by 21,000 in latest report
• Philadelphia Fed's Outlook Survey shows slower growth in November

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BuilderBytes' MetroIntelligence Economic Update for 11/21/13

Please click here to see the edition of BuilderBytes for 11/21/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Existing home sales dipped by 3.2 percent in October; prices continued to rise
• Retail sales in October higher than forecast
• CPI fell by 0.1 percent in October; down by 1.0 percent over previous 12 months
• Business inventories rose more than expected in September
• Overall mortgage applications fall by 2.3 percent in latest survey but purchase loans up by 6 percent

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BuilderBytes' MetroIntelligence Economic Update for 11/19/13

Please click here to see the edition of BuilderBytes for 11/19/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Builder confidence remains unchanged in November at 54
• Industrial production and capacity utilization both edged down in October
• Wholesale sales and inventories both edged up in September
• Empire State Manufacturing Survey edges down in November but future optimism continues

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

2013 in Review

A year ago, I wrote about the excitement of a housing rebound that finally seemed to have legs, with all relevant indices showing positive growth.  Today, despite numerous economic and political headwinds that have been regularly buffeting the demand for new homes, I think it’s safe to say that the rebound is here to stay, but is transitioning into the next stage which will likely face steeper interest rates, tighter lending standards and higher building costs.

For the month of August 2013, seasonally adjusted annual new home sales rose by 7.9 percent over July totals to 421,000 units, and are up by 12.6 percent year-over-year.  At the same time, however, median sales prices rose by just 0.55 percent over the last year, while inventory rose from 4.6 to 5.0 months.  While the relatively tight inventory levels can be traced mostly to negative equity, fewer distressed sales and a depressed supply of new construction, the combination of higher interest rates and slumping consumer confidence is certainly contributing to a potential but temporary pull-back in activity.

According to the most recent outlook from Freddie Mac, we should expect the housing recovery to take some time, especially since the economy won’t be running at its full potential until after 2015.  Nonetheless, their chief economist notes that the market should continue to absorb these economic shocks and improve further in 2014, with 1.15 million new housing units added to the existing stock.

Builder confidence, which had climbed to 58 last August on the NAHB Housing Market Index (HMI), has since settled back to 54.  This recent dip has been largely attributed to the cost and availability of labor and buildable lots, as well as ongoing political uncertainty in Washington.  Still, according to the newly minted NAHB/First American Leading Market Index (LMI), 52 of the 350 metro areas tracked regularly have returned to or exceeded pre-recessionary levels of activity.  With a score of .85 in October based on current permits, prices and employment data, the national housing market is thus operating at 85 percent of normal capacity.

That improvement is also due to builders continuing to pull more permits and start more homes.  In August 2013, they pulled a seasonally adjusted annual total of 918,000 permits, which was down 3.8 percent from July but 11 percent higher than the same month of 2012.  Housing starts totaled 891,000 units per year in August, for an increase of just 0.9 percent since July but up by 19 percent over the last year.

For builders, however, there is definitely a concern about future profit margins, mostly due to these higher costs for materials, labor and especially land.  The Dow Jones U.S. Home Construction Index, which tracks major public builders, has also taken notice, declining by over 20 percent since last peaking at in May 2013.  Nonetheless, there is still enough confidence in the rebound for Toll Bros. to recently snap up California’s Shapell Industries and its 5,200 lots for $1.6 billion as well as for TRI Pointe Homes’ $2.7 billion merger with Weyerhauser’s own homebuilding business, which gives it access to 27,000 lots sold under brands including Pardee, Winchester and Trendmaker Homes.

After hitting the highest level in nearly four years during August, existing home sales fell for the second consecutive month in October to an annual rate of 5.12 million units. Even with this pullback, these sales have remained above year-ago levels for the last 28 months, with monthly sales totals up by 6.0 percent over October 2012.  With just 14 percent of distressed sales in the mix, sales prices rose for the 11^th consecutive month to $199,500, up 12.8 percent over the past year.
  

However, one important consequence of these rising prices has been lower affordability, which has fallen to a five-year low as home price gains have easily outpaced income growth.  According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), 64.5 percent of potential homebuyers nationwide could afford the median-priced home during the third quarter of 2013 -- up substantially from the last trough of 40.4 noted in the same quarter of 2006 but down 13 percentage points from the first quarter of 2012.

Still, for the 49 percent of buyers paying cash in September – at least according to RealtyTrac – rising interest rates aren’t relevant, especially for the institutional funds which have invested up to $20 billion for over 200,000 homes added to the nation’s rental stock.  What remains to be seen is what happens when the low-hanging fruit has been picked off and these deals no longer pencil.

Indeed, may we continue to live in interesting times.

Apologies for our temporary absence

Due to an issue with Google about renewing the domain for Housing Chronicles, the site was temporarily disabled.  This has now been fixed.  Thanks for reading!

November column for Builder & Developer magazine now online

My column for the November 2013 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "GOP-Centered Building Industry Update," I wanted to tackle the question of why the building industry is so wedded financially to the Republican Party when (a) the favor is not necessarily returned; and (b) an increasingly diverse pool of new home buyers doesn't support the party's policies. It's a huge disconnect and a potential PR issue in the future.  An excerpt:

In the 2012 campaigns, just over three quarters of the NAHB’s BuildPac funds went to the GOP – far higher than the 55 percent from the National Association of Realtors or the 57 percent from the Mortgage Bankers Association. Looking ahead to the 2014 elections, while the GOP money lead from BuildPac has shrunk to 67 percent, it’s still far higher than the 48 percent planned by the NAR...

By 2043, the Census Bureau estimates that the country will no longer be a white-majority country, fueled today by significantly higher birth rates among multi-racial couples, Asians and Hispanic immigrants...

So why is this important? Because the GOP has a substantial image problem among minority voters, with just 11 percent of non-white voters declaring allegiance to the Republican party as of mid-2012. And when the NAHB’s primary PAC is still targeting two-thirds of its funds towards Republican candidates, it’s hard to ignore this huge political disconnect between supplier and buyer.

To read the entire column, click here.

To read the entire November 2013 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 11/15/13

Please click here to see the edition of BuilderBytes for 11/15/13 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Productivity rose by 1.9 percent in third quarter 2013
• Initial unemployment claims fall by 2,000 in latest report
• Trade deficit widened in September

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BuilderBytes' MetroIntelligence Economic Update for 11/14/13

Please click here to see the edition of BuilderBytes for 11/14/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Mortgage loan applications fall by 1.9 percent in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/12/13

Please click here to see the edition of BuilderBytes for 11/12/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Employment rose by 204,000 in October; unemployment rate mostly unchanged at 7.3 percent
• Consumer confidence unexpectedly dips in November
• Consumer credit rose more than expected in September

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/08/13

Please click here to see the edition of BuilderBytes for 11/08/13 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Third quarter GDP grew at 2.8 percent rate in first estimate
• Initial unemployment claims fall by 9,000 in latest report
• Mortgage loan applications decline by 7 percent in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/7/13

Please click here to see the edition of BuilderBytes for 11/7/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Leading Economic Index rose again in September
• Service sector economy continues to grow but impacted by government shutdown
• Planned job cuts rise 13.5 percent in October

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BuilderBytes' MetroIntelligence Economic Update for 11/5/13

Please click here to see the edition of BuilderBytes for 11/5/13 on the Web.  Please note that BuilderBytes will now be published on Tuesdays, Thursdays and Fridays.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• FOMC decides to continue quantitative easing
• Initial unemployment claims dip by 10,000 in latest report
• Chicago Business Barometer rose in October to highest level since March 2011
• Manufacturing sector economy expanded in October for fifth straight month
• Factory orders rose 1.7 percent in September

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/01/13

Please click here to see the edition of BuilderBytes for 11/01/13 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Private sector employment grew by 130,000 jobs in October; previous month total revised down to 145,000
• Business inventories rose in August, supporting third quarter growth
• Consumer Price Index rose as projected in September as inflation remains low
• Mortgage applications jumped 6.4 percent in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.