HOUSING PRODUCTION

Permits*

Permits for construction of new housing units were unchanged in the second quarter of 1997 at a seasonally adjusted annual rate of 1,423,000 units and were 2 percent below the second quarter of 1996. One-unit permits, at 1,053,000 units, were unchanged from the level of the previous quarter but down 5 percent from a year earlier. Multifamily permits (5 or more units in structure), at 302,000 units, were 3 percent below the first quarter but 7 percent above the second quarter of 1996.

Starts*

Construction starts of new housing units in the second quarter of 1997 totalled 1,440,000 units at a seasonally adjusted annual rate, a statistically insignificant 2 percent below the first quarter of 1997 and 4 percent below the second quarter of 1996. Single-family starts, at 1,108,000 units, were 5 percent lower than the previous quarter and 7 percent below the 1996 rate. Multifamily starts totalled 293,000 units, 14 percent above the previous quarter and 15 percent above the same quarter in 1996.

Under Construction*

Housing units under construction at the end of the second quarter of 1997 were at a seasonally adjusted annual rate of 823,000 units, equal to the previous quarter and even with the second quarter of 1996. Single-family units stood at 567,000, a statistically insignificant 1 percent above the previous quarter but 5 percent below the second quarter of 1996. Multifamily units were at 232,000 units, up a statistically insignificant 5 percent from the previous quarter and up 12 percent from the second quarter of 1996.

Completions*

Housing units completed in the second quarter of at a seasonally adjusted annual rate of 1,378,000 units were down 6 percent from the previous quarter and a statistically insignificant 1 percent from the same quarter of 1996. Single-family completions at 1,107,000 units were down 6 percent from the previous quarter and unchanged from the rate of a year earlier. Multifamily completions at 230,000 units were a statistically insignificant 9 percent below the previous quarter and a statistically insignificant 11 percent below the same quarter of 1996.

Manufactured (Mobile) Home Shipments*

Shipments of new manufactured (mobile) homes were at a seasonally adjusted annual rate of 349,000 units in the first quarter of 1997, which is 1 percent below the previous quarter and 2 percent below the rate of the same quarter a year earlier.

HOUSING MARKETING

Home Sales*

Sales of new single-family homes totalled 785,000 units at a seasonally adjusted annual rate (SAAR) in the second quarter of 1997, a statistically insignificant 5 percent below the previous quarter and 7 percent above the second quarter of 1996. The number of new homes for sale at the end of June 1997 numbered 282,000 units, down a statistically insignificant 2 percent from the last quarter and down 21 percent from the second quarter of 1996. At the end of June, inventories represented a 4.2 months' supply at the current sales rates, down a statistically insignificant 2 percent from the previous quarter and down 29 percent from the second quarter of 1996.

Sales of existing single-family homes for the second quarter of 1997 reported by the NATIONAL ASSOCIATION OF REALTORS^® totalled 4,150,000 (SAAR), up 1 percent from the first quarter's level but down 2 percent from the second quarter of 1996. The number of units for sale at the end of the second quarter was 2,060,000, 12 percent below the previous quarter and 7 percent below the second quarter of 1996. At the end of the second quarter, a 6.0 months' supply of units remained, 10 percent below the previous quarter and 6 percent below the second quarter of 1996.

Home Prices

The median price of new homes during the second quarter of 1997 was $144,700, equal to the previous quarter's level and up a statistically insignificant 3 percent from the second quarter of 1996. The average price of new homes sold during the second quarter of 1997 was $174,600, up a statistically insignificant 1 percent from the first quarter of 1997 and up a statistically insignificant 5 percent from the same quarter a year ago. The price adjusted to represent a constant-quality house was $170,400, a statistically insignificant 2 percent above the first quarter of 1997 and up a statistically insignificant 4 percent from the second quarter of 1996. The values for the set of physical characteristics used for the constant-quality house are based on 1992 sales.

The median price of existing single-family homes in the second quarter of 1997 was $123,700, 4 percent above last quarter and 4 percent above the second quarter of 1996, according to the NATIONAL ASSOCIATION OF REALTORS^®. The average price of $153,900 was 4 percent above the previous quarter and 6 percent above the second quarter of 1996.

Housing Affordability

Housing affordability is the ratio of median family income to the income needed to purchase the median-priced home based on current interest rates and underwriting standards, expressed as an index. The NATIONAL ASSOCIATION OF REALTORS^® composite index value for the second quarter of 1997 shows that families earning the median income have 125.2 percent of the income needed to purchase the median-priced existing home. This figure is 4 percent below the first quarter of 1997 and equal to the second quarter of 1996. This decrease is the result of a 4-percent increase in the median home price and a 17-basis-point increase in the interest rate, more than offsetting a 1-percent rise in median family income during the last quarter. The fixed-rate index fell 4 percent from the first quarter of 1997 but was unchanged from the second quarter of 1996. The adjustable-rate index decreased by 3 percent from the previous quarter but increased by 1 percent from the same quarter a year earlier.

Apartment Absorptions

There were 37,600 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the first quarter of 1997, down 13 percent from the previous quarter and 14 percent from the first quarter of 1996. Of the apartments completed in the first quarter of 1997, 74 percent were rented within 3 months. This absorption rate is a statistically insignificant 4 percent above the previous quarter but a statistically insignificant 1 percent below the same quarter the previous year. The median asking rent for apartments completed in the fourth quarter was $736, which is a statistically insignificant 7 percent above the previous quarter and 19 percent higher than a year earlier.

Manufactured (Mobile) Home Placements

Manufactured homes placed on site ready for occupancy in the first quarter of 1997 totalled 330,000 at a seasonally adjusted annual rate, 1 percent below the level of the previous quarter and 2 percent below the fourth quarter of 1996. (Both changes are statistically insignificant.) The number of homes for sale on dealers' lots at the end of the first quarter totalled 108,000 units, 4 percent below the previous quarter but 26 percent above the same quarter of 1996. The average sales price of the units sold in the first quarter was $39,000, a statistically insignificant 1 percent below the previous quarter and 6 percent above the first-quarter 1996 price.

Builders' Views of Housing Market Activity

The National Association of Home Builders (NAHB) conducts a monthly survey focusing on builders' views of the level of sales activity and their expectations for the near future. NAHB uses these survey responses to construct indices of housing market activity. (The index values range from 0 to 100.) The second-quarter value for the index of current market activity for single-family detached houses stood at 60, up 3 points from the first quarter but down 5 points from 1996's second quarter. The index for future sales expectations, 64, was down 2 points from the first-quarter value and 4 points from 1996's level. Prospective buyer traffic had an index value of 44, which is 1 point below the first-quarter value and 8 points below 1996's second-quarter level. NAHB combines these separate indices into a single housing market index that mirrors the three components quite closely. In the second quarter, this index stood at 56, which is 1 point above the first-quarter level but 5 points below the value from 1996.

HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates for all categories of loans increased slightly from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 7.93 percent in the second quarter of 1997, 14 basis points higher than the previous quarter but 18 basis points lower than the same quarter of 1996. Adjustable-rate mortgages in the second quarter were going for 5.79 percent, 23 basis points above the previous quarter and 2 basis points below the same quarter of 1996. Fixed-rate, 15-year mortgages, at 7.46 percent, were up 17 basis points from last quarter but down 16 basis points from the same quarter of the previous year. The FHA rate increased 24 basis points during the quarter and was 3 basis points above the same quarter in 1996. It should be noted that we are reporting the average interest rate quote for the FHA series rather than the most active quote.

FHA 1-4 Family Mortgage Insurance*

Applications for FHA mortgage insurance on 1-4 family homes were received for 292,800 (not seasonally adjusted) properties in the second quarter of 1997, up 19 percent from the previous quarter and up 4 percent from the second quarter of 1996. Endorsements or insurance policies issued totalled 197,700, down 1 percent from the first quarter of 1997 and down 7 percent from the second quarter of 1996. Endorsements for refinancing were 20,700, down 14 percent from the first quarter of 1997 and down 57 percent from a year earlier.

PMI and VA Activity*

Private mortgage insurers issued 235,000 policies or certificates of insurance on conventional mortgage loans during the second quarter of 1997, up 15 percent from the first quarter and down 21 percent from the second quarter of 1996; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 59,000 single-family properties in the second quarter of 1997, down 7 percent from the previous quarter and down 36 percent from the second quarter of 1996.

Mortgage Originations by Loan Type, 1-4 Family Units

The total value of mortgage originations for 1-4 family homes was $176.9 billion in the first quarter of 1997, down 8 percent from the fourth quarter of 1996. Privately insured mortgages decreased 13 percent; uninsured mortgage volume decreased 7 percent; VA-guarantied mortgages decreased 6 percent; and FHA-insured mortgages decreased 2 percent. The overall decrease from the first quarter of 1996 was 9 percent. VA-guarantied mortgages decreased 25 percent; privately insured mortgages decreased 13 percent; uninsured mortgages decreased 8 percent; and FHA mortgage volume decreased 2 percent. Market shares changed to reflect changes in volumes during the first quarter of 1997; however, the changes in market shares never exceeded 1 percentage point.

Residential Mortgage Originations by Building Type*

Residential mortgage originations totalled $186.9 billion in the first quarter of 1997, down 8 percent from the fourth quarter of 1996 and 9 percent from the first quarter of 1996 and identical to the single-family mortgage pattern. The financing volume for multifamily (5+) units totalled $10.0 billion in the first quarter, down 21 percent from the previous quarter and 11 percent from the first quarter of 1996.

Mortgage Originations by Lender Type, 1-4 Family Units

During the first quarter of 1997, commercial banks with a volume of $48.1 billion and a market share of 27.2 percent showed a 2-percent increase from the fourth quarter of 1996 and an 11-percent increase from the first quarter of 1996. Lenders in the other categories posted declines for the first quarter: Mutual savings banks with a volume of $5.7 billion and a market share of 3.2 percent declined 29 percent; savings and loans with a volume of $25.0 billion and a market share of 14.1 percent declined 10 percent; and mortgage companies with the largest volume, $97 billion, and highest market share, 54.8 percent, declined 9 percent from the previous quarter. Other lenders were unchanged from a very small volume and market share. However, data are based on a newly introduced sample design that calls into question comparisons of current and previous data. More data from the newly introduced sample design must be collected before the series can be used with confidence for time-to-time comparisons.

Delinquencies and Foreclosures

Total delinquencies were at 4.36 percent at the end of 1997's first quarter, 1 percent above the fourth quarter, but 3 percent below the first quarter of 1996. Ninety-day delinquencies were at 0.56 percent, down 8 percent from the fourth quarter of 1996 and down 20 percent from the first quarter of 1996. During the first quarter of 1997, 0.37 percent of loans entered foreclosures, 12 percent above the previous quarter but the same as the first quarter of 1996.

HOUSING INVESTMENT

Residential Fixed Investment and Gross Domestic Product*

Residential Fixed Investment (RFI) for the second quarter of 1997 was $321.4 billion, 1 percent above the value from the first quarter of 1997 and up 2 percent from the second quarter of 1996. As a percentage of the Gross Domestic Product, RFI was 4.0 percent, unchanged from the previous quarter but down 0.2 percentage point of the value from a year ago.

HOUSING INVENTORY

Housing Stock*

As of the second quarter of 1997, the estimate of the total housing stock, 115,722,000 units, was a statistically insignificant 0.6 percent above the level of the first quarter of 1997 and 1.3 percent above 1996's second-quarter level. The number of occupied units was up a statistically insignificant 0.3 percent from last quarter and was 1.0 percent above the same quarter in 1996. Owner-occupied homes were 0.9 percent above the level of the first quarter of 1997 and 1.4 percent above the second quarter of 1996. Rentals decreased a statistically insignificant 0.7 percent from last quarter and remained unchanged from the second quarter of 1996. Vacant units rose 2.3 percent from last quarter and 4.2 percent from 1996.

Vacancy Rates

The 1997 second-quarter national rental vacancy rate, at 7.9 percent, was down a statistically insignificant 0.4 percentage point from last quarter and down a statistically insignificant 0.1 percentage point from the level of the second quarter of 1996. The homeowner vacancy rate, at 1.6 percent, was down a statistically insignificant 0.1 percentage point from last quarter but up a statistically insignificant 0.1 percentage point from the second quarter of 1996.

Homeownership Rates

The national homeownership rate was 65.7 percent in the second quarter of 1997, up 0.3 percentage point from last quarter and from the second quarter of 1996. The homeownership rate for minority households increased a statistically insignificant 0.4 percentage point from the first quarter and increased 0.8 percentage point from the second quarter of 1996. The 58.6-percent homeownership rate for young households was up a statistically insignificant 0.5 percentage point from last quarter's rate and down a statistically insignificant 0.2 percentage point from 1996's second quarter.