Economy Watch: New Home Sales Rise in June; Apartment Market Tighter in 2Q; Architectural Billings Still Positive
- Jul 25, 2013
The Census Bureau reported on Wednesday that new home sales in June were at an annualized rate 497,000 units, representing an 8.3 percent increase from May, when sales were an annualized 459,000 units. May sales were revised down from 476,000, and March and April sales were revised downward as well. The June 2013 rate is 38.1 percent higher than the same month a year earlier.
The percentage of new homes in the lowest price range (below $150,000) has been inching down in recent years, while the percentage of more expensive news has been edging up, according to bureau data. In June, 10 percent of new homes sold for less than $150k, down from 13 percent in 2012 and 16 percent in 2011. The percentage of new homes from $150k to $300k increased slowly, coming in at 55 percent in June, compared with 53 percent in 2012 and 54 percent in 2011. The $300k to $400k range has increased from 15 percent in ’11 to 17 percent in ’12 to 19 percent in June.
The bureau also said that the supply of new homes decreased from 4.2 months in May to 3.9 months in June, or 161,000 units at the current rate of sales. Supply peaked in January 2009 at 12.1 months, because sales had essentially ground to a halt before homebuilders could curtail their building activities. A supply of less than six months is considered in the normal range.
Apartment Market Slightly Tighter in 2Q
The National Multi Housing Council released its July Quarterly Survey of Apartment Market Conditions on Wednesday, which found that the apartment market nationwide tightened a bit in the second quarter. In fact, only the Market Tightness Index (55) remained above the break-even line of 50 during the quarter. Sales Volume (at 46) and Equity Financing (at 49) dipped a bit, with Debt Financing dropping sharply to 20.
“Debt costs for apartment firms have been rising,” NMHC chief economist Mark Obrinsky said in a statement. In addition to the 90 basis point increase in interest rates from the April survey, spreads over Treasuries have also gone up, likely dampening transactions somewhat, he said.
“Rates are still low by historical standards, however, and at current levels should not put too big a crimp in apartment activity going forward,” Obrinsky said. “Underlying demand trends remain strong, and we are approaching the cusp of a meaningful increase in supply that will hopefully be enough to meet the current need for apartment homes.”
Architectural Billings Still Positive
The American Institute of Architects reported that its Architectural Billings Index was 51.6 in June, down from 52.9 in May. Though down, the score still reflects an increase in demand for design services, since any score above 50 indicates an increase in billings. As a leading economic indicator of construction activity, the index reflects the nine- to 12-month lag time between architecture billings and construction spending.
Wall Street had a mild mixed day on Wednesday, with the Dow Jones Industrial Average off 25.5 points, or 0.16 percent, and the S&P 500 lost 0.38 percent. The Nasdaq was up 0.32 percent, however.