New Construction Increases, and National Pending Home Sales Climb
Housing production reached the highest levels since November 2007. And the gains could continue in the coming months, as low interest rates and affordable home prices encourage more buyers to enter the market. In April, housing starts rose to 1.135 million units, an increase of 20.2 percent from March. The South was the only region to see housing starts drop, with a decrease in production of 1.8 percent. Housing production was booming in the Northeast with an 85.9 percent gain. In the Midwest and West production increased 27.8 percent and 39 percent, respectively. When it comes to projects still in the planning stages, 1.143 million permits were issued in April, a climb of 10.1 percent. The Midwest saw a 1.3 percent decline in the number of permits issued. But all other regions reported permit gains̶of 38.8 percent in the Northeast, 9.9 percent in the South, and three percent in the West.
National Pending Home Sales Increase
April’s Pending Home Sales Index, which measures contract signings, climbed to the highest level since May 2006. What’s more, the index has been on a steady climb every month this year. According to the National Association of Realtors, buyer demand is strong despite inventory shortages in many metropolitan areas across the country. With more buyers competing for fewer homes, it is quickly becoming a seller’s market, and home prices are increasing as a result. Contract signings were up in every region of the country, with the Northeast and the Midwest posting the largest gains. A 10.1 percent climb in the Northeast put the index 9.4 percent higher than a year earlier. In the Midwest, the index increased five percent month-over-month and 13.3 percent year-over-year. The South saw contract activity rise by 2.3 percent from a month earlier and 14.8 percent year-over-year. In the West, the index climbed a slight 0.1 percent, but was 16.4 percent higher than April 2014.
Housing Still Affordable
Of all the new and existing homes sold in the first three months of the year, 66.5 percent of them were affordable to families earning the U.S. median income of $65,800, according to the National Association of Home Builders/ Wells Fargo Housing Opportunities Index. Homes are now more affordable than they were at the end of 2014, when median-income families could only afford 62.8 percent of homes sold. With 85 percent of metropolitan areas across the country reporting an increase in housing affordability, now is a great time for consumers to purchase a home.