Like the Economy, the U.S. Housing Market Remains Buoyant
As the national economy registered strong growth during the first quarter
of 1997 -- the annual growth rate of 5.6 percent was the highest in a decade
-- the long boom in the U.S. housing market showed no sign of faltering.
Housing "has made a solid debut" in the first quarter, reports
the May 1997 issue of U.S. Housing Market Conditions (USHMC).
Marketing is "off to a good start," rivaling 1996's record-setting
pace.Housing affordability continues at high levels. Although interest
rates rose slightly -- 10 basis points during the quarter and about 50
basis points from
a year ago -- the increase has not reduced housing market activity. Interest
rates remain below 8 percent at a level that encourages housing market
activity. The recent quarter-point increase from the Federal Reserve is
not expected to affect the housing market much, USHMCanalysts note.
Builders also "seem upbeat, especially about future sales expectations,"
as indicated by National Association of Home Builders data.
Many market indicators rank high, even rivaling last year's excellent
performance:
Permits. Permits in the first quarter reached 1.4 million on
a seasonally adjusted annual basis, up 2 percent from the previous quarter
and 1 percent from the first quarter of 1996. Single-family permits, at
1 million, were up 3 percent from the previous quarter but down 3 percent
from a year ago.
Starts. Housing starts, at 1.4 million, changed little from
the previous quarter. Single-family starts, however, at 1.2 million, were
6 percent above the last quarter.
Sales. New home sales in the first quarter of 1997 were 8 percent
above the previous quarter and 12 percent above the first quarter of 1996.
Sales of existing homes were up 2 percent from the last quarter and 3 percent
from the first quarter of 1996.
Inventories. New homes on the market declined to a 4.5-month
supply while the inventory of existing homes increased to a supply of almost
7 months.
Multifamily. The multifamily production and rental markets were
somewhat mixed during the first quarter of 1997, although market absorption
of newly completed apartments continued at a good level. Rental vacancy
rates declined to 7.5 percent from 1996's record high of 7.8 percent.
The informative quarterly, U.S. Housing Market Conditions, presents
essential data and analysis on housing and housing markets from up-to-date
government and industry sources. Subscriptions are available from HUD USER
for $30 per year.
