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Posts tagged with: "HOUST1F"

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Houses sold, newly started, and for sale: Cycles in housing activity

The FRED Blog has discussed how mortgage interest rates affect decisions in the housing market and how the construction of new housing slowed down after the 2007-2009 Financial Crisis. Today we examine the cycles in sales and new construction.

The FRED graph above shows the percent change from the preceding year in the quarterly number of new single-family houses sold (the orange bars) and in the number of housing starts (the blue bars), which represent new single-family homes under construction. You do not see much of a difference between the two sets of bars because growth in house sales frequently coincides with new housing construction—a.k.a, housing starts. That suggests that a booming (or contracting) housing market rapidly increases (or decreases) new residential building activity.

But building a new house is a time-consuming endeavor and it takes several months to finish a construction project and put a new house on the market. The FRED graph above compares growth in housing starts (again in blue) to growth in the number of single-family homes for sale (the red bars). Now you can see each set of bars more distinctively because there is a lag between the timing of expansions and contractions in new home starts and the listing of homes for sale. On average, the peak in the number of homes put up for sale is recorded approximately a year after the peak in new building activity.

How these graphs were created: Search for and select “New One Family Houses Sold: United States.” From the “Edit Graph” menu, use the “Add Line” tab to search for “Privately Owned Housing Starts: 1-Unit Structures.” From the “Edit Line 1” tab, select units “Percent Change from Year Ago” and click on “Copy to all.” From the “Modify frequency:” drop-down menu, select “Quarterly.” Repeat this step for Line 2. Last, from the “Format” tab, select “Graph type: Bar” and choose colors to taste. For the second graph, repeat the above steps but add “New One Family Homes for Sale in the United States” as the second line.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: HNFSEPUSSA, HOUST1F, HSN1F

Housing starts

A “housing start” is a new housing unit for which construction has begun. The graph above shows monthly housings starts in the U.S. for the past 20 years (Nov 1998 to Nov 2018) separated into three groups: single-family houses, houses with two to four units, and houses with five or more units. Note that this statistic pertains to the number of housing units and not number of houses/buildings.

The graph shows that housing starts dropped during the past recession and then increased again. That’s no surprise. However, single-unit starts have not reached their pre-recession levels. Initially, the reason was thought to be that households were either finding it more difficult to access mortgages or getting cold feet when considering the potential pitfalls of homeownership, such as the large number of foreclosures during the recession. Now, ten years after the recession, we may have to find another explanation for this change, which appears to be more than just transitory.*

Even if it doesn’t provide a definitive explanation, the graph below makes it easier to see this change by showing the percentages of the total number of units started.

*Maybe the new generation is less interested in single-family homes in the suburbs, which would be consistent with the decline in driving that we observed in a recent blog post.

How these graphs were created: For the first graph, search for “housing starts” and you should find all the seasonally adjusted series on the first page of results. Select them and click “Add to Graph.” For the second graph, take the first, go to the “Edit Graph” panel’s “Format” tab, and select graph type “Area” with stacking “Percentage.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: HOUST1F, HOUST2F, HOUST5F


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