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Odeta Kushi

@odetakushi

Dec 19, 2023

Privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1.56 million, above consensus expectations of 1.36 million. This is 14.8 percent above the revised October estimate of 1.359 million, and is 9.3 percent above the November 2022 rate of 1.427 million.

Single‐family housing starts in November were at a rate of 1.143; this is 18% above the revised October figure of 969,000. Lower rates contributed to more single-family homebuilding in November.

Further, homebuilder sentiment ended the year on a more positive note increasing for the first time in 5 months. Falling mortgage rates led to a pickup in prospective buyer traffic and sales expectations.

Single‐family homebuilding in November:

🟢Permits +0.7% MoM: leading indicator of future starts. Highest level of SF permits since May 2022.

🟢Starts +18% MoM: Modestly more groundbreaking on new homes. Single-family housing starts are at the highest level since April 2022.

🔴Completions -3.2% MoM: Less supply added to the housing stock.

Single-family starts are outpacing SF completions for the first time since spring of last year.

There are currently 680,000 single-family homes under construction, down 18% from the peak in spring 2022. In contrast, there are nearly one million apartments under construction, down just 1.3% from the peak reached earlier this year.

Multi-family completions picked up nearly 27% on a month-over-month basis in November. This supply will put downward pressure on rents, and there is more to come given all the multi-family under construction.

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Odeta Kushi

@odetakushi

Feb 16, 2023

U.S. housing starts are expected to fall to an annual rate of 1.35 million in January from 1.382 million one month earlier. Excluding the early pandemic months (spring 2020) that would be the slowest pace since November 2019. We'll find out shortly... (1/n)

U.S. housing starts come in below consensus expectations at an annual pace of 1.309 million. This is 4.5% below the revised December estimate of 1.371 million and 21.4% below the January 2022 rate
of 1.666 million. Single‐family starts declined 4.3% compared to December. (2/n)

Today, there is still a large backlog of SF homes under construction, hampered by supply-side headwinds from labor shortages and high construction material costs. Those homes are not move-in ready and thus do not meaningfully contribute to the stock of livable homes. (3/n)

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Odeta Kushi

@odetakushi

Feb 15, 2023

This month's CRE X-Factor analyzes the commercial real estate market slowdown. A few highlights:

1.) Commercial transaction volume fell in Q4 by 26% on a quarterly basis, making it the second consecutive quarter of declining deal activity.

2.) Cap rates for all asset classes are now trending up following a long downward trend. When prices become more broadly agreed upon, cap rates could move quickly as transactions pick back up, increasing the reference points available to buyers & sellers when valuing a property.

3.) Nationally, there are a record number of apartment units under construction. As these new units are delivered throughout 2023 and the first half of 2024, rent growth may slow as the market struggles to absorb the new inventory amid softening demand.

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Odeta Kushi

@odetakushi

Jan 6, 2023

U.S. nonfarm payrolls are expected to increase by 200,000 in December and the unemployment rate is forecast to hold steady at 3.7%. We'll find out shortly...(1/n)

Total nonfarm payroll employment increased by 223,000 in November and the unemployment rate fell to 3.5 percent. Modest downward revisions to both October an November. (2/n)

Average hourly earnings for all employees on private nonfarm payrolls rose by 0.3 percent, slower than last month. Over the past 12 months, average hourly earnings have increased by 4.6%, down from 4.8%. (3/n)

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Odeta Kushi

@odetakushi

Jan 4, 2023

The number of openings was little changed at 10.5 million in Nov, beating expectations of a decrease to 10.1 m from 10.3 m one month earlier. The number of hires changed little at 6.1 million. Job openings outpaced hires by 4.4 million. This is still a hot labor market. (1/5)

The ratio of open jobs to each unemployed person remained steady at 1.7. That is better than the nearly 2-to-1 levels seen in July, but still far above the 1.2 jobs per unemployed person that characterized the pre-pandemic years. (2/5)

While there is good news on the inflation front (goods inflation slowing, housing peaked), the narrative around inflation has shifted to wages & the labor market. The supply-demand imbalance implies upward pressure on wages. To appease the Fed, this gap must narrow. (3/5)

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Odeta Kushi

@odetakushi

Sep 28, 2022

U.S. pending-home sales for August were expected to fall 1.4% from the prior month. But they came in 2% lower from July and 24% lower than one year ago. Pending home sales are forward-looking indicator of home sales based on contract signings.

August's pending home sales point to further declines in existing-home sales. This is supported by mortgage applications data, which have come in weaker in the month of September. With rates now touching 7 percent, further cooling in the housing market is all but assured.

The rapid decline in affordability has contracted housing demand, which reduces the pace of sales. But there are also fewer existing homeowners listing their homes for sale, which also reduces the pace of sales. This is a supply and demand story.

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