US Housing Affordability, Custom Home Building, House Size: 3Q 2018

US Housing Affordability, Custom Home Building, House Size: 3Q 2018

While a niche, these data are most applicable to the use of construction framing wood products, this excellent indicators for future growth / building and softwood lumber production.

Released this week, the latest US home building and real estate data shows a US housing market returning to strength. But with a different mix of building types than prior to the building boom of 2004/05, and subsequent crash of September 2006.

Inventories across all types of US residential dwellings are average to tight, with prices starting to climb in some important pivotal markets.

SOURCE: NAHB Eye on Housing

According to 3Q 2018 data out Monday from the US Census Quarterly Starts and Completions by Purpose and Design and US National Association of Home Builders’ analysis, continuing a multiyear trend, new single-family home size decreased during 3Q 2018 median square floor area decreased to 2,320 square feet. Average (mean) square footage for new single-family homes declined to 2,495 square feet.

New home size has been falling over the last three years due to an incremental move to additional entry-level home construction, said NAHB.

Elsewhere, on Tuesday NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey indicates custom home building posted a small gain on a year-over-year basis.

There were 54,000 total custom starts for 3Q2018. This was a slight improvement over 3Q 2017 (51,000). Over the last four quarters, ending with the third quarter of 2018, custom housing starts totaled 175,000. This was a +1.2% gain over the prior four quarters. Note that this definition of custom home building does not include homes intended for sale, so the analysis uses a narrow definition of the sector.                                                                                                                                                                               — NAHB Eye on Housing

As measured on a one-year moving average, the market share of custom home building in terms of total single-family starts is now 20%, down from a cycle high of 31.5% set during 2Q2009.

SOURCE: NAHB Eye on Housing

Regular readers will remember Madison’s post of earlier this week, of the recent and historic 2-year highs for benchmark construction framing item Western Spruce-Pine-Fir KD 2×4 #2&Btr dimension softwood lumber item:

SOURCE: Madison’s Lumber Reporter www.madisonsreport.com

New US home sales data for October 2018 was also released this week, see Madison’s story for the full picture: https://madisonsreport.com/2018/11/29/us-new-existing-and-pending-home-sales-oct-2018/ and US house prices as well: https://madisonsreport.com/2018/11/29/us-housing-prices-inventory-oct-2018/

Specifically, median new US home sales price decreased -3.6% in October to US$309,700. Managing rising construction costs the months ahead will be a key challenge for the housing industry, as it will be increasingly difficult to pass along higher development costs to home buyers as rates rise.

Inventory of new US home for sale increased in October to 336,000 single-family homes for sale. The current months’ supply stands at a level of 7.4. This marks a somewhat elevated level of inventory, suggesting ongoing soft conditions for home construction in the near-term. However, favourable demographics and a healthy labour market point to long-term expansion, said NAHB Monday.

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