Tuesday, the government released its March 2012 New Residential Construction report. 

The report is made up of three sections, each related to a phase of the “new home” market. The report’s first part is Building Permits; the second is Housing Starts; the third is Housing Completions.

Of the three sections, it’s Housing Starts that gets the most attention from the press — mostly because, of the triad, it’s the simplest for a layperson to understand. However, the manner in which Housing Starts data is reported can be misleading.

Today’s newspapers offer up an excellent example.

According to the Census Bureau, total Housing Starts fell by 6% in March as compared to the month prior. 654,000 units were started on a seasonally-adjusted annualized basis.

For Housing Starts, it’s the lowest reading in 5 months, a statistic suggesting that the housing market may have lost some momentum. Much of the press covered the story from a “housing is slowing” angle.

A few published headlines include : 

• U.S. Housing Starts Unexpectedly Drop To 5-Month Low (BusinessWeek)
• New Home Constructions Takes Pause (CNNMoney)
• A Delayed Winter For Housing (US World And News)

Although these headlines are accurate, they tell just half of the story.

Housing Starts did drop in March, but if we remove a subset of the data — structures with “5 or more units”; a grouping that includes condominiums and apartment buildings — we’re left with Housing Starts for single-family residences only. It’s this data that matters most to buyers in Boynton Beach and nationwide. 

Few home buyers buy entire apartment buildings. Most buy single-family homes. 

In March, single-family Housing Starts were down 0.2% from the month prior, or just 1,000 units on a seasonally-adjusted, annualized basis.

That’s hardly a drop at all.

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The new construction housing market appears primed for growth this season.

According to the Census Bureau, the number of single-family building permits issued in February rose to 472,000 on a seasonally-adjusted, annual basis, marking the highest building permit tally since April 2010 — the last month of that year’s federal home buyer tax credit program.

Building permits are a pre-cursor to new home construction.

In 2011, from the date of permit-issuance to the date of “ground-breaking”, an average of 27 calendar days passed. February’s data, therefore, is a signal that the market for newly-built homes should be strong this year, an idea supported by the most recent homebuilder confidence survey.

As buyer foot traffic soars, homebuilders expect to make more sales in the next 6 months than at any time since the housing market’s collapse. Builder confidence is at a 5-year high.

Last month, however, single-family housing starts slipped.

As compared to January, February’s single-family housing starts fell by 50,000 units on a seasonally-adjusted, annualized basis. The 10% drop represents the largest one-month drop since February 2011. It’s a statistic that may suggest that this year’s results are simply seasonal.

For buyers of new construction, the news is mixed.

Rising permits and builder confidence may mean that Delray Beach homebuilders will be less willing to negotiate with today’s buyer on upgrades and/or home prices. However, as more new home supply is set to come online, excess housing stock could help keep home prices low. 

If you’re planning to buy new construction in FL this year, be sure to ask your real estate agent about the local home supply, and how the market is currently trending. With mortgage rates low and the summer buying season approaching, you may find some of your best deals of the year available in just the next few weeks.

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The housing market has carried forward its year-end momentum. 

According to the Census Bureau, on a seasonally-adjusted, annualized basis, January’s Single-Family Housing Starts crossed the half-million unit marker for the second straight month.

This hasn’t happened in close to 2 years and is the latest in a series of strong data that suggests the beleaguered housing market has turned a corner — both nationally and locally in Boca Raton.  

Although single-family starts slipped 1 percent from December, January’s annualized 508,000 figure represents a 16% spike from January 2011 and is the second-highest reading since April 2010 — the last month of 2010′s federal home buyer tax credit program.

A “housing start” is a new home on which construction has started.

The strength of January’s Housing Starts data surprised Wall Street analysts and is partially responsible for Thursday’s unexpected mortgage rate spike. 

In hindsight, though, we should have seen this coming.

Earlier in the week, the National Association of Homebuilders announced that homebuilder confidence had climbed to its highest point since 2007 amid builder reports of rising sales volume and the most foot traffic from buyers in more than 4 years.

In addition, builders expect to sell more homes in 2012 than in 2011.

Builders are building and buyers are buying.

Meanwhile, as another sign of housing market strength, the Census Bureau reports that, in January, Building Permits moved to a multi-year high as well. Permits issued for single-family homes in January rose 1 percent from December, a statistic that suggests housing will continue its run through the spring season, at least.

86 percent of homes break ground within one month of permit issuance.

It’s a good time to be a home buyer. Mortgage rates and home prices are low. Housing market momentum, however, is building. If you’re on the fence about whether to buy a home in Palm Beach Gardens , ask your real estate agent for additional market information.

The cost of home-ownership may never be as low as it is today.

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The new construction housing market continues to show strength across the country.

According to the U.S. Census Bureau, Single-Family Housing Starts rose to 447,000 units on a seasonally-adjusted, annualized basis in November — a 2 percent increase from October.

A “Housing Start” is defined as breaking ground on new home construction.

November’s figures mark the third straight month of Single-Family Housing Starts gains. The new construction metric is now 15 percent above its all-time low, set in February of this year.

None of this should be a surprise to new home buyers in Boynton Beach.

Housing data has been trending better since September with sales volumes rising and home inventories falling. Basic economics tells us that home prices should soon rise.

The good news is that low mortgage rates should keep homes affordable.

Since mid-November, the average, conventional 30-year fixed rate mortgage has hovered near 4.000% nationwide with an accompanying 0.7 discount points plus closing costs. 1 discount point equals one percent of your loan size. This is down from near 4.500% six months ago, and the drop has made a big impact on home affordability. 

• June 2011 : $200,000 mortgage costs $1,013.37 per month
• December 2011 : $200,000 mortgage costs $954.83 per month

This represents $700 in savings per year. It’s no wonder home builders report the highest buyer foot traffic in 3 years. 

Meanwhile, the market shows little signs of slowing down. Building Permits are on the rise, too.

Permits for single-family homes rose to their highest levels of year in November and 89 percent of those homes will start construction within 60 days. This means that Single-Family Housing Starts should stay strong through the early part of 2012, and into the spring.

If you’re planning to buy new construction in FL , therefore, talk to your real estate agent soon and consider moving up your time frame. With mortgage rates low and next year’s buying season approaching, you may find that the best “deals” will come within the next few weeks only.

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Headlines in newspapers can be misleading — especially with respect to housing figures. Media coverage of the most recent Housing Starts data serves as an excellent illustration.

Wednesday, the Census Bureau released its September Housing Starts report. In it, the government said that national Housing Starts rose 15 percent in September as compared to August 2011, tallying 658,000 units on a seasonally-adjusted annualized basis.

The September reading is the highest monthly reading since April 2010, the last month of last year’s home buyer tax credit.

The sudden surge in starts is big news for a housing market that has struggled of late, and the press was eager to carry the story. Here is a sampling of some headlines:

• U.S. Housing Starts Rise 15%, Hit 17-Month High (MarketWatch)
• Home Building Jumps 15% in September (ABC)
• New Construction Surges In September (LA Times)

These headlines are each accurate. However, they’re also misleading.

Yes, Housing Starts did surge in September, but if we remove the “5 or more units” grouping from the Census Bureau data — the catgory that includes apartment buildings and condominium structures — we’re left with Single-Family Housing Starts and Single-Family Housing Starts rose just 1.7 percent last month.

That’s a good number, but hardly a great one. And for home buyers and sellers throughout Delray Beach and nationwide, it’s the Single-Family Housing Starts that matter most. Individuals like you and I don’t buy entire apartment buildings. Most often, we buy single-family homes. Therefore, that’s the data for which we should watch.

The good news is that media tales work in both directions.

Building Permits dropped 5 percent last month when the volatile 5-unit-or-more-units category was included from the math. Isolating for single-family homes, we find that permits were unchanged.

This is good housing because 82% of homes begin construction within 60 days of permit-issuance, hinting at a steady, late-fall housing market.

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Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.

A “Housing Start” is defined as a home on which ground has broken.

We shouldn’t put too much faith in the findings, however. Although housing starts were lower last month, as noted by the Census Bureau, the margin of error in the August Housing Starts report exceeded the actual result.

From the official report:

• August’s Published Results : -1.4% from July 
• August’s Margin of Error : ±10.3% from July

Therefore, August’s Housing Starts may have actually increased by up to +8.9% from July, or it may have dropped as much as -11.7%. We won’t know for sure until several months from now, after the Census Bureau has gathered more housing data.

One thing is certain, though — the long-term trend in Housing Starts is “flat”. There has been little change in new home construction since last summer.

The same can’t be said for Building Permits.

Considered a pre-cursor to Housing Starts, Single Family Building Permits climbed 2.5 percent with a minuscule Margin of Error of ±0.9 percent.

As is common in real estate, results varied by region:

• Northeast : +3.3 percent from July
• Midwest : +6.3 percent from July
• South : -1.3 percent from July
• West : +11.3 percent from July

When permits are issued, 86 percent of them begin break ground within 60 days. Therefore, expect Housing Starts and new home inventory to rebound in the months ahead.

For now, housing remains steady. And, with mortgage rates at all-time lows, homebuyer purchasing power in an around Boynton Beach is higher than it’s been in history. If you’re in the process of shopping for a home, talk with your lender to plan your mortgage budget.

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Single-Family Housing Starts fell to a seasonally-adjusted, annualized 425,000 units in July, according to the Census Bureau.

A “Housing Start” is defined as a home on which construction has started and ground has broken.

Furthermore, Single-Family Housing Starts were revised lower for both May and June of this year, by 6,000 units and 2,000 units, respectively.

The data may be worthless, however.

Like in most months, the government’s official report states that the Housing Starts numbers have a margin of error exceeding their actual measurement. Mathematically, this renders the data statistically irrelevant.

• July Published Results : +4.9%
• July Margin of Error : ±8.9%

In other words, July Housing Starts made have increased by as much as 13.8%, or they may have dropped up to 4.0%. We won’t know for certain until several months from now, when the Census Bureau gathers more data.

Regardless, the trend in Housing Starts has been flat since last summer. July’s reading is in-line with the 12-month average and, not surprisingly, New Home Sales have been mostly flat over the same time span.

Also included in the Housing Starts report is the Building Permits tally. As compared to June, permits were higher by a half-percent nationwide, with varying results by region.

• Northeast : +2.9 percent from June
• Midwest : +0.0 percent from June
• South : -1.4 percent from June
• West : +4.9 percent from June

When permits are issued, 86 percent of them start construction within 60 days. This means that new home sales and housing stock should follow the Building Permits trend, but on a 2-month delay.

Expect improvement into the fall season.

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