The housing recovery remains tentative but there are some bright spots, said Metrostudy chief economist Brad Hunter during an appearance Wednesday on Bloomberg Radio’s Bloomberg Surveillance with Tom Keene and Michael McKee.
Housing starts are up 2.8% in March, significantly less than Wall Street forecasts. “Total starts should really be more like 1.6 million so we’re still way, way off from where we should be there,” Hunter said. He and Keene briefly discussed first-quarter results in a few growing markets. “Houston in one market that has been extraordinarily resilient ... and it remains one of the strongest in the country," Hunter noted. Dallas housing starts were also up 26% in the first quarter, but some big markets in Florida have not seen the same growth as those in Texas. “Tampa starts were down 22% in the first quarter compared with last year,” Hunter said.
Hunter touched on the rapid rise in rents in cities across the country. This has pushed many out of apartments to become first-time home buyers, but these first-time buyers typically will look to resale homes or small condos to start out. Although the FHA has lowered its loan limits and there has been some loosening on the part of the banks, the people buying new homes are still Gen X move-up buyers, not first-time home buyers, which has been the norm since 2010.
“We are in a phase where we are still getting household formation rates back to normal,” Hunter said. Some of the barriers to housing market growth are consumer confidence and quality job growth. Student loans also were highlighted as an additional financial barrier for first-time home buyers. Hunter said that builders are not reporting this but thinks it is because the student debt-strapped are not even out looking.
The U.S. Department of Housing and Urban Development on Wednesday released the New Residential Construction report for March with a preliminary 990,000 units authorized in March and revised 1,014,000 in February. See the full report here.