NAHB's Eye on the Economy says residential market is solid

The National Association of Home Builders (NAHB), Washington, D.C., consistently provides tons of timely housing data and great insight into the residential market, a major niche in the electrical business that accounts for no less than 17% of industry sales, according to information from Electrical Wholesaling's Market Planning Guide.

One of Electrical Wholesaling's favorite NAHB reports is its blog Eye on the Economy. There'ss been a lot of talk in the housing industry over the past week about the May boost in housing sales, and the recent NAHB blog post summarized below offers some additional insight into what this means to the overall housing market.
"Housing news turned positive this week as spring gave way to summer. Future data will confirm whether the recent turn in momentum reflects a return to the improving trend that was in place before the end of 2013, but early signs are encouraging.

"New single-family home sales reached their highest pace in six years in May. According to estimates from the Census Bureau and HUD, new home sales were at a seasonally adjusted annual rate of 504,000 in May, a gain of 18.6% over a slightly downwardly revised April (425,000). This rate is the highest since May 2008 and is a significant increase from the winter low point for sales in March (410,000).

"The May pace of sales was certainly an improvement over the soft patch experienced from February through April. The most recent gains are likely due to a payback for weather-related declines during the winter, so future months will indicate whether a better trend has taken hold. But encouraging signs like better jobs numbers are consistent with this outcome.

"Another improved indicator is the NAHB/Wells Fargo Housing Market Index (HMI), which rose four points in June to 49. This is just shy of the 50 mark, indicating at least as much optimism as pessimism among single-family home builders. The index dipped 10 points to 46 in February from a sustained above-50 mark for eight months and remained near there for four months. The June gains were experienced in all the components of the HMI: current sales, expected sales and traffic."

Alongside the positive new home sales report was the May existing home sales measure. The National Association of Realtors reported that existing home sales were up 4.9% from April to May. While still 5% lower year-over-year, the 4.89 million seasonally adjusted annual rate confirmed a turn in the decline that had been in place since the middle of 2013. Year-over-year declines in existing home sales, which distinguish this market from the growing new home market, are likely due to recent drops in distressed and investor purchases, as well as the 2014 expiration of a tax rule connected to short sales.

"The one negative housing report in recent weeks was construction starts. The U.S. Census Bureau and HUD (Department of Housing and Urban Development) estimated that total housing starts declined 6.5% in May. Single-family starts were down 5.9%, while multi-family construction in properties with five or more units was down a larger 8.3%. The declines were a result, in part, to April’s numbers, where were among the highest since the end of the recession. On a year-over-year basis, the May pace of single-family construction was 4.7% higher and 19.2% higher for five-plus multi-family building."