US homebuilding rose in October on a rebound in multifamily housing projects.

U.S. homebuilding rose in October amid a rebound in multifamily housing projects, but construction of single-family homes fell for a second straight month, suggesting the housing market remained mired in weakness as mortgage rates march higher.

Other details of the report published by the Commerce Department on Tuesday were also soft. Building permits declined last month and homebuilding completions were the fewest in a year. Housing starts increased 1.5 percent to a seasonally adjusted annual rate of 1.228 million units last month.

Data for September was revised to show starts dropping to a rate of 1.210 million units instead of the previously reported pace of 1.201 million units.

Building permits slipped 0.6 percent to a rate of 1.263 million units in October. Economists polled by Reuters had forecast housing starts rising to a pace of 1.225 million units last month.

The housing market is being hobbled by rising borrowing costs as well as land and labor shortages, which have led to tight inventories and higher house prices. This is making home buying unaffordable for many workers as wage growth has lagged.

The 30-year fixed mortgage rate is hovering at a seven-year high of 4.94 percent, according to data from mortgage finance agency Freddie Mac. Wages rose 3.1 percent in October from a year ago, trailing house price inflation of about 5.5 percent.

Residential investment contracted in the first nine months of the year and housing is likely to remain a drag on economic growth in the fourth quarter. Economists expect housing activity to remain weak through the first half of 2019.

U.S. financial markets were little moved by Tuesday’s housing starts data.

Single-family homebuilding stalls

Single-family homebuilding, which accounts for the largest share of the housing market, dropped 1.8 percent to a rate of 865,000 units in October after declining in September.

Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.

A survey on Monday showed confidence among single-family homebuilders dropped to a more than two-year low in November, with builders reporting that “customers are taking a pause due to concerns over rising interest rates and home prices.”

Single-family starts in the South, which accounts for the bulk of homebuilding, fell 4.0 percent last month. Single-family homebuilding jumped 14.8 percent in the Northeast and fell 2.0 percent in the West. Groundbreaking activity on single-family homes dropped 1.6 percent in the Midwest.

Permits to build single-family homes fell 0.6 percent in October to a pace of 849,000 units. These permits remain below the level of single-family starts, suggesting limited scope for a strong pickup in homebuilding.

Starts for the volatile multifamily housing segment surged 10.3 percent to a rate of 363,000 units in October. Permits for the construction of multifamily homes fell 0.5 percent to a pace of 414,000 units.

Tuesday’s data also suggested that housing supply is likely to remain tight in the near term. Homebuilding completions in October fell 3.3 percent to a rate of 1.111 million units, the lowest level since September 2017.

Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap.

[“source=forbes]

New private home sales plunge by half in October

New private home sales plunge by half in October

Stirling Residences sold 75 units at a median price of $1,738 psf. Ms Tricia Song of Colliers International said continued take-up at projects such as Stirling Residences, Park Colonial, The Tre Ver and JadeScape "underscored genuine demand in large
Stirling Residences sold 75 units at a median price of $1,738 psf. Ms Tricia Song of Colliers International said continued take-up at projects such as Stirling Residences, Park Colonial, The Tre Ver and JadeScape “underscored genuine demand in large city-fringe projects that offer ample facilities and (are) near MRT stations”.PHOTO: LIANHE ZAOBAO

The lack of major new launches led demand for new private homes to shrink by almost half in October from a month earlier. But existing launches saw good pick-up three months after the July 6 cooling measures kicked in, analysts say.

Developers sold 487 units last month, down 48 per cent from 932 in September, and 36 per cent lower than the 761 units booked in October last year.

There was only one new launch – the 56-unit freehold condo 10 Evelyn located off Newton Road – which sold two units at a median price of $2,478 per sq ft (psf).

The 202 units from existing projects launched for sale last month were the lowest number since February this year.

“The meagre number of new units launched last month was unsurprising given that developers had put 1,169 units on the market from six non-landed launches in September,” said Ms Tricia Song, Colliers International’s head of research.

The trend is similar to that following earlier rounds of cooling measures “where the number of project launches, units launched and units sold eased in the third month of the measures”, Huttons Asia head of research Lee Sze Teck noted.

“This is likely to be a blip. Buyers are finding value in earlier launched projects and committing to a buy… Sales volumes are still heavily concentrated in the city fringe or rest of central region (RCR) largely due to a number of major launches in the RCR in 2018,” he added.

INTEREST IN EARLIER PROJECTS

Buyers are finding value in earlier launched projects and committing to a buy… Sales volumes are still heavily concentrated in the city fringe or rest of central region (RCR) largely due to a number of major launches in the RCR in 2018.

HUTTONS ASIA HEAD OF RESEARCH LEE SZE TECK, who says the trend is similar to that following earlier rounds of cooling measures “where the number of project launches, units launched and units sold eased in the third month of the measures”.

Ms Christine Sun, Orange Tee & Tie’s head of research and consultancy, noted that 485 of the 487 units sold were from existing launches, up from the average of 460 units sold from such launches in the past 12 months.

“This shows that demand for new homes at existing launches have seen a pick-up after the (July 6) measures,” she said.

The figures were released yesterday by the Urban Redevelopment Authority (URA) based on its survey of licensed housing developers. The above figures exclude executive condominium (EC) units, which are a public-private housing hybrid.

Meanwhile, EC sales nearly doubled to 23 last month from 12 in September, reflecting pent-up demand due to limited stock.

Rivercove Residences has consistently sold at $1,000 psf since its launch in April this year.

Developers moved 510 units, including ECs, last month, reflecting a drop of nearly 46 per cent from September’s 944 units and also 48 per cent lower than the 972 units sold in October last year.

Last month’s top-selling project was Affinity at Serangoon, with 81 units sold at a median price of $1,499 psf. That’s more than double the 31 units sold in September.

Ms Song attributed strong sales to “the developer’s discount in pricing to below $1,500 psf from $1,584 psf in June”.

Stirling Residences sold 75 units at a median price of $1,738 psf; Park Colonial, 52 units at a median price of $1,754 psf; Riverfront Residences, 55 units at a median price of $1,327 psf; and The Tapestry, 26 units at a median price of $1,375 psf.

“Continued take-up at Stirling Residences, Park Colonial, The Tre Ver and JadeScape underscored genuine demand in large city-fringe projects that offer ample facilities and (are) near MRT stations. Projects that are priced affordably below $1,400 psf such as Riverfront Residences and The Tapestry in the suburbs also have supporters,” Ms Song added.

Cushman & Wakefield’s senior director Christine Li expects new sales to rebound this month, fuelled by new major launches such as Whistler Grand, Kent Ridge Residences, Parc Esta and Woodleigh Residences.

[“source=indianexpress”]