Tuesday, April 19, 2016

Wednesday: Existing Home Sales

by Bill McBride on 4/19/2016 06:20:00 PM

One more comment on housing starts, here is my prediction from the beginning of this year:

Most analysts are looking for starts to increase to around 1.25 million in 2016, and for new home sales around 560 thousand. This would be an increase of around 12% for both starts and new home sales.

I think there will be further growth in 2016, but I'm a little more pessimistic than some analysts. Some key areas - like Houston - will be hit hard by the decline oil prices. And I think growth will slow for multi-family starts. Also, to achieve double digit growth for new home sales in 2016, the builders would have to offer more lower priced homes (the builders have focused on higher priced homes in recent years).  There has been a shift to offering more affordable new homes, but it takes time.

My guess is growth of around 4% to 8% in 2016 for new home sales, and about the same percentage growth for housing starts.  Also I think the mix between multi-family and single family starts will shift a little more towards single family in 2016.
So far housing starts are up 14.5% year-over-year for the comparable period (January through March). I expect the year-over-year change to slow sharply. To reach the bottom of my predicted range (4% year-over-year), starts could be flat for the rest of the year compared to the same period in 2015.  That will still be decent growth all things considered (slow down in oil producing areas and in multi-family).

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 10:00 AM, Existing Home Sales for March from the National Association of Realtors (NAR). The consensus is for 5.27 million SAAR, up from 5.08 million in February.

• During the day, the AIA's Architecture Billings Index for March (a leading indicator for commercial real estate).