June 22, 2018
Housing starts jumped 5% to a seasonally adjusted annual rate of 1.350 million in May, the highest level since July 2007, amid an acceleration in both single-family and multi-family home construction.
Single-family homebuilding increased 3.9% to a rate of 936,000 units in May. Single-family home construction rose in the Northeast and Midwest but fell in the South and West. Starts for the multi-family housing increased 7.5% to 414,000 units in May.
Building permits fell 4.6% to a rate of 1.301 million units, the lowest level since September 2017.
Permits to build single-family homes fell 2.2% in May to a pace of 844,000 units, also the lowest level since September 2017. Permits to construction multi-family homes fell 8.8% to 457,000 units.
Existing home sales slipped 0.4% to a seasonally adjusted annual rate of 5.43 million units last month, the second straight monthly decline in sales, as an acute shortage of properties on the market pushed house prices to a record high.
Sales rose in the Northeast, which accounts for a small fraction of the market. They fell in the West, South and Midwest.
There were 1.85 million previously-owned homes on the market in May. While that was up 2.8% from April, housing inventory was down 6.1% from a year ago. At May’s sales pace, it would take 4.1 months to exhaust the current inventory.
More than 35% of today’s buyers have a multicultural background, with foreign (non-citizen) buyers in the U.S. accounting for about 10% of existing-home sales, purchasing more than $150 billion in residential property annually.
If you’d like to connect with minority homebuyers, you need to be prepared to address some of the cultural barriers including language barriers, loan options, and home preferences. Fortunately, organizations such as the National Association of Hispanic Real Estate Professionals (NAHREP), the Asian Real Estate Association of America (AREAA), and the National Association of Gay and Lesbian Real Estate Professionals (NAGLREP) provide resources and education for a win/win situation between agent and buyer.
When communicating with your leads via email, avoid using overused email intros such as “Hi, my name is…” or “I’m just following up.” Instead, get right to the point by stating the reason you’re reaching out.
Remember, this is about the buyer/seller, so avoid making the conversation about you. Stay away from “I” statements by focusing on their needs and why your business and industry knowledge is beneficial for your clients.
There is a $54,500 (21.1%) price difference between new and existing homes in America. Historically, the difference has been $38,685 (15%). Slow wage growth, makes it difficult for many homeowners to bridge the gap, resulting in too many people bidding on too few homes.
Though the population is increasing, new construction is running at recession levels. The industry is building 30% fewer homes than a decade ago. Builders should be mindful that buyers may take time to adjust to higher mortgage rates. Those builders who take creative action to close the gap by creating models will price new homes lower than existing ones.
Builders who see the gap as a challenge, are working creatively on density, on automation and factory assembly, on design of smaller, more livable homes, on total-cost-of-ownership, on applying data to reduce cost of sales, on start-to-completion disciplines in “right-the-first-time” velocity, in other words, on what they control, rather than the tariffs and labor shortages they do not control.
Music icon, Kanye West, has decided to share his passion for home design with a brand segment called “Yeezy Home.” The aesthetic is being described as minimalistic with concrete panels and flooring, after one of West’s collaborators, Jalil Peraza, posted two photos on Instagram.
Kanye West seeks to construct low-income housing to fulfill the need for affordable housing across the nation. The houses will be made of prefabricated concrete and expanded polystyrene components, a type of inexpensive resin plastic which are easy to create and mold into any desired shape.