Existing-home sales fell for the fifth straight month, the National Association of Realtors reported today. Total existing-home sales-including single-family, townhouses, condos, and co-ops-slipped 0.5% in August at a seasonally adjusted annual rate and were 13% below the near-record August 2005 rate. The median sales price-the price above which half of the month's sales occurred-fell 1.7% compared to August 2005, the first year-over-year drop since April 1995 and a vivid contrast to the double-digit increases occurring early this year. The decrease in the median sales price for single-family houses was 1.2%; for condos and co-ops, 1.9%. Inventories of homes for sale at month's end climbed another 1.5% to a record 3.92 million. That represented a 7.5-month supply at current selling rates, the highest inventory/sales ratio since April 1993.
The Realtors' report was in line with two homebuilding releases last week. The National Association of Home Builders reported on September 18 that its survey of builders' expectations for the next six months declined for the eighth straight month in August, to a 15-year low. On September 19, Census reported that housing starts plunged 6%, seasonally adjusted, from July to August, and 20% compared to August 2005. Building permits, usually a reliable guide to near-term future starts, fell 3% for the month and 22% from the year-ago month. One bright spot: permits jumped 67% from July to August in the five parishes in Louisiana devastated by Hurricane Katrina; for the first time all year, the monthly total was within 3% of the year-ago total.
BLS on Wednesday released August data on seasonally adjusted nonfarm payroll employment by state (www.bls.gov/sae). BLS reported that from July to August, total nonfarm employment rose in 35 states and the District of Columbia, decreased in 14 states, and was unchanged in Pennsylvania. From August 2005 to August 2006, employment rose in 48 states and DC and fell in Louisiana (-9%) and Michigan (-0.4%). The largest percentage increases were in Nevada (5.3%); Arizona (4.6%); and Idaho (4.4%). Construction employment rose from July in 23 states, fell in 13, and was unchanged (or within 100 jobs) in 14 states and DC. Compared to August 2005, construction employment rose in 45 states plus DC, was off by 100 in Alaska, and fell in four states: Louisiana (-9%), Connecticut, Nebraska and North Dakota (all -3%). The largest year-over-year percentage gains in construction employment were in Idaho (16%), Utah (15%), Wyoming (12%), Oregon (11%), Arizona and Mississippi (10% each).
Reed Construction Data reported on Wednesday that the year-to-date value of construction starts through August 2006, excluding residential contracts, totaled $185.0 billion, 9.2% higher than in the first eight months of 2005. “Allowing for construction cost inflation, the real volume of new starts has increased about 2% so far in 2006, compared to the same period in 2005. August starts were up 12.2% from July. Monthly construction starts are summarized from the Reed Connect database of all active construction projects in the United States. The month-to-month increase was partly seasonal, but also reflects a pickup in construction starts after small declines in the previous two months. August starts this year were 4.4% below the record level of starts last August.”
The divergent trends in nonresidential and residential activity also showed in the American Institute of Architects' monthly index of billings at architecture firms. AIA on Friday noted “very strong activity at commercial/industrial firms, which reported their highest reading in the 11-year history of the [index]. Institutional firms reported continued favorable conditions, while residential architects reported their fifth straight month of declining billings.” Among the 300 firms surveyed, 37.5% responded that change orders have become a lot more common or somewhat more common in recent years. Change orders average about 4% of total construction costs.