New Construction Numbers RoseAccording to statistics released yesterday by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD), building permits issued in June 2011 were up 2.5 percent from May and up 6.7 percent from June 2010.
Permits for privately owned units experienced gains, up 2.5 percent from May 2011 and up over 6 percent from June 2010. Privately owned housing starts jumped over 14 percent from May to 629,000, a nearly 17 percent rise from June 2010. Unfortunately, housing completions experienced a drop of nearly 2 percent from May, a loss of over 39 percent from June of the previous year.
Over 400,000 building permits (on an annualized basis) were authorized for single-family homes in June 2011, a rise of 0.2 percent from the previous month. Permits for single family housing starts jumped over 9 percent from May 2011, but housing completions remained unchanged from the prior month.
Permits were issued for multi-unit buildings at an annualized rate of 198,000 this June, and housing starts for buildings with five or more units were 170,000. This represents a 31 percent increase from May and an astounding 104 percent rise from one year ago. The June rate of housing completions for multi-unit buildings was 89,000, a rate that is 53 percent below June 2010.
Existing Home Contracts Cancellation Rate Rises, And Home Prices Inch UpThe National Association of Realtors (NAR) announced yesterday that cancellations of existing home sales contracts spiked, though prices seemed to stabilized.
Sales were strongest in the Midwest and South, and declined in the Northeast and West. Single-family home sales were stable while the condo sector weakened, according to NAR's numbers.
Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 0.8 percent to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8 percent below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit.
That's the not-so-good news: There may not be quite enough demand to stimulate true price recovery.
Lawrence Yun, NAR chief economist, admitted that this is an uneven recovery.
"Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month," Yun said. "The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year."
Yun cited other factors in the sales performance. "Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders."
The national median existing home price for all housing types was $184,300 in June, up 0.8 percent from June 2010. Distressed homes â€" foreclosures and short sales generally sold at deep discounts â€" accounted for 30 percent of sales in June, compared with 31 percent in May and 32 percent in June 2010.
But The Home Value News May Not Be That Great
We're back in familiar territory - housing news that seems good but maybe isn't so great after all. CoreLogic, a leading provider of information, analytics and business services, released its May Home Price Index (HPI) which shows that home prices in the U.S. increased on a month-over-month basis.
According to the CoreLogic HPI, national home values, including distressed sales, increased by 0.8 percent in May 2011 compared to April 2011, the second consecutive month-over-month increase, however incremental.
This should be good news. However, on a year-over-year basis, home prices actually declined by 7.4 percent in May 2011 when compared to May 2010, after declining by 6.7 percent in April 2011 when juxtaposed against April 2010. If you exclude distressed sales, year-over-year prices fell 0.4 percent in May 2011 against May 2010. Distressed sales include short sales and real estate owned (REO) transactions.
These stats are a mixed, and often confusing bag.
"Two consecutive months of month-over-month growth and continued relative strength in the non-distressed market segment are positive seasonal signs in the housing market. Slowly declining shadow inventory and stabilized negative equity levels are also positive signs. Nonetheless, the fragile economic recovery is still critical to the long-term recovery in the housing market," said Mark Fleming, CoreLogic's chief economist.
It is true that two months of growth is good, but it does not a recovery make, and I'm also less then certain that negative equity levels (the amount by which a home is "underwater" in relation to the mortgage balance) have stabilized.
Still, I'll call it an overall positive sign even if home prices on a year-over-year basis fell less than one percent. Times are still really tough.
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.