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Housing starts fell to a seasonally adjusted annual rate of 891,000 in April, falling -30.2% from March, and -29.7% from April 2019. Building permits for future construction fell to 1.074 million, down -20.8% for the month and -19.2% for the year, with single family home permits down -24.3%. Completed units declined -11.8% for the year, with large drops in the Northeast (-72,000 units Y/Y) and the West (-55,0000 units Y/Y) that were slightly offset by yearly gains in the South (+15,000 Y/Y) and the Midwest (+3,000 Y/Y).
The National Association of Realtors reported that sales of existing homes fell -17.8% in the largest monthly decline since July 2010, and fell -17.2% compared to April 2019. Sales of single family homes fell to a 3.94 million annual rate (-15.5% Y/Y), and sales of condominiums/co-ops fell to a 390,000 annual rate (-31.6% Y/Y). The inventory of homes available for sale is dependent on the rate of sales, so the dropping sales rate helped push the inventory up to 4.0 months from 3.3 months for single family homes, and from 4.0 months to 5.3 months for condominiums. Despite the drop in sales, the median sales price increased to $288,700, up +7.3% Y/Y, with home prices gaining the most on a yearly basis in the Midwest ($231,000, +9.5%), followed by the Northeast ($311,500, +8.8%), the West ($423,300, +6.1%), and the South ($253,800, +5.8%).
The IHS Markit Composite Purchasing Managers’ Index (PMI) rose from an all time low of 27.0 in April to 36.4 in May, indicating a slightly slower pace of continuing contraction. The Services PMI rose from 26.7 to 36.9, and the Manufacturing PMI rose from 36.1 to 39.8. For both the service and manufacturing sectors, client demand fell, with new orders posting the second sharpest decline since the 2009 financial crisis, leading to increasing reports of layoffs and lowered working hours. Business confidence was up from April’s all time low, but remained pessimistic and respondents noted “it would take a long time for conditions to normalise”. An IHS Markit spokesman commented that the decline was expected to continue to moderate, but that a full recovery was unlikely to be swift, and that GDP was expected to decline at a yearly rate of -37% in Q2, with the economy taking two years to return to its pre-pandemic level peak.
Tuesday May 26 – New Home Sales
Thursday May 28 – 2020 Q1 GDP Second Estimate