Economy Watch: Residential Starts, Existing Home Sales Surge
- Sep 20, 2012
In another sign that the housing market is getting some traction, U.S. housing starts were up in August to an annualized rate of 750,000 units, according to the Census Bureau on Wednesday. That’s a 2.3 percent increase compared with July, and 29.1 percent higher than August 2011. Of the August 2012 starts, single-family properties represented an annualized 535,000 units, or 5.5 percent more than in July.
At the current rate, single-family starts will end 2012 at 515,000, while total residential starts would be 740,000 if the next four months resemble the previous eight. That’s roughly 20 percent more residential construction than during 2011, probably meaning that the bottom has, at long last, passed for the housing market.
Housing permits, a more forward-looking indicator, were a little less for the month but up since last year. The annualized rate for permits was 803,000 units in August, down 1 percent month-over-month, though all of the decline was because of the volatile multi-family sector. Year-over-year, however, August 2012 was up 24.5 percent in terms of permitting.
Existing Home Sales Up Too
As for existing home sales, the National Association of Realtors said on Wednesday that total sales rose 7.8 percent to an annualized rate of 4.82 million units in August from 4.47 million in July. Sales for August 2012 were also 9.3 percent higher than during August 2011.
Total housing inventory at the end August rose 2.9 percent to 2.47 million existing homes available for sale, which represents a 6.1-month supply at the current sales pace, down from a 6.4-month supply in July (because the rate of sales edged up). According to NAR, inventory is 18.2 percent below a year ago when there was an 8.2-month supply.
The national median existing-home price, the organization also reported, was $187,400 in August, up 9.5 percent from a year ago. The last time there were six back-to-back monthly price increases from a year earlier was from December 2005 to May 2006. Moreover, the August 2012 increase was the strongest since January 2006, when the median price rose 10.2 percent from a year earlier.
Wall Street had another lackluster day on Wednesday despite the housing news, but it did end in positive territory. The Dow Jones Industrial Average gained 13.32 points, or 0.1 percent, while the S&P 500 was up 0.12 percent and the Nasdaq advanced 0.15 percent.