CHICAGO—The latest economic data has largely become an avalanche of good news. Unemployment is down, and the number of job openings is hitting historic highs, raising expectations that the jobs market will continue to be robust. However, according to the most recent State of the Housing Market report from SNL Real Estate, the US housing market continues to show some weakness, which could damage the gathering recovery.
The housing market has sustained steady increases when it comes to prices. SNL cites the most recent S&P/Case-Shiller Home Price Index, published Feb. 24, which show its 20-city composite notched for December a year-over-year gain of 4.5%. Still, price levels remain a bright spot amid other troubling signs.
“The housing recovery is faltering,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession.”
“The softness in housing is despite favorable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence,” Blitzer added.
Sales of new single-family homes rose on an annual basis according to the data released jointly in February by the US Census Bureau and the US Department of Housing and Urban Development. The seasonally adjusted annual sales rate for new single-family homes in January was 481,000, 5.3% above the January 2014 estimate of 457,000.
According to SNL, there were tremendous differences on a regional level. “The Northeast saw the greatest decline by a wide margin, falling 51.6% since December and 50% from the year-ago month to a rate of 15,000 units in January 2015,” the firm found. The Midwest, however, saw new home sales rise to 62,000 units, a year-over-year gain of 21.6%. The South saw an annual gain of 8.6% and Western sales grew 5%.
And even though housing starts are still below the historic average, builders have stepped up their activity. Starts in January increased 16.3% year-over-year, according to the US Census and HUD. “The seasonally adjusted annual rate for single-unit home starts in January was 678,000,” according to SNL, compared to the “January 2014 rate of 583,000.”
All four US regions saw year over year increases. The Midwest led the way with its 53,000 single-unit starts last January rising to 92,000 in January 2015. The Northeast saw an annual increase of 13.5% to 59,000 starts, the South rose 12.5% to 368,000 units and the West increased 5.3% to 159,000 starts.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
