WASHINGTON (11/27/13)--A report published Tuesday by the Commerce Department suggests that the number of permits issued to construct new homes in the U.S. increased by 6.2% in October, reaching a post-recession high of 1.03 million.
Permits issued in September--a month that saw a 5.2% increase--were upwardly revised to 974,000. The largest number of permits issued since 2008 had previously occurred in April, when the department counted one million new approvals.
Most of the gains were in permits concerning buildings of five units or more. This relatively volatile sector of the industry saw permits increase by 17% in October, with most issuance occurring in the South and West (MarketWatch Nov. 26). Applications for single-family homes rose by 0.8% to 620,000.
The highest increase in the number of permits overall issued occurred in the South and West. Numbers were relatively stagnant in the Northeast and they declined in the Midwest.
The number of permits increased by an annual basis of 13.9% in October.
Moody's analysts said that the report indicates more robust homebuilding in the next few months, and the possibility of builders reversing "aggressive price increases" that characterized the housing market over the past half-year, after building activity slowed significantly in the second quarter (Economy.com Nov. 26).
But the firm's analysts also noted that, in October, there were 7,000 fewer single-family home permits issued than there were in August, revealing that this relatively more stable sector of the building industry is experience weak growth. Moody's analysts also said that rising mortgage interest rates, increasing material and land costs, and land and labor shortages could hamper supply growth--problems that could be offset if builders are flexible on prices and help with mortgage financing.
Not all permits lead to timely construction, and the Commerce Department said that October's partial government shutdown has delayed collection of September and October ground-breaking data. A report containing that information is expected to be published on Dec. 18 (MarketWatch.com Nov. 26).
WASHINGTON and NEW YORK (11/27/13)--Two prominent indexes confirmed Tuesday that home prices have been accelerating this fall, but the upward trend is showing signs of abatement.
The seasonally adjusted Standard &Poor's/Case Shiller 20-city Home Price Index and the Federal Housing Finance Agency Purchase-Only House Price Index increased in September by 1% and 0.3% respectively.
The S&P/Case Shiller Index over the entire third quarter grew by 13.3% on an annual basis, with the strongest gains out west--in Las Vegas (29.1%), San Francisco (25.7%), Los Angeles (21.7%) and San Diego (20.9%). Weakest gains were recorded in New York (4.3%), Washington (7%) and Boston (7.5%). The FHFA index also showed annual nationwide growth in September, with its purchase-only index increasing by 8.5% since September 2012 (Economy.com Nov. 26).
Both the FHFA and S&P/Case Shiller indicate that housing prices have almost recovered from the recession. The former's purchase-only index last reached its September 2013 level, 206.4, in April 2005 before peaking in 2006. A nationwide measure recorded by the latter showed that housing prices climbed by 11.2% on an annual basis in the third quarter--the highest increase since the first quarter of 2006.
Similarly, both the regulator and the research firm showed that prices started to cool as the quarter wore on. Growth in S&P/Case Shiller 10-city and 20-city indexes declined steadily, and almost identically, from 2.2% in June to 0.7% in September. Nationally, the FHFA purchase-only index grew by 0.7% in June and July, before dropping to 0.5% in August and 0.3% in September.
Bloomberg said price increases can be attributed to a lackluster supply of homes on the market, with fewer distress sales (Bloomberg.com Nov. 26).
Moody's analysts said that the FHFA's numbers--which don't account for cash purchases and agency mortgage-finance purchases--reflect weaker demand from non-investor customers.