HOUSING MARKETING

Home Sales*

Sales of new single-family homes totaled 909,000 units at a seasonally adjusted annual rate (SAAR) in the second quarter of 1998, up 6 percent from the previous quarter and 17 percent above the second quarter of 1997. The number of new homes for sale at the end of June 1998 was 287,000 units, up a statistically insignificant 2 percent from the last quarter and unchanged from the second quarter of 1997. At the end of June, inventories represented a 3.7 months' supply at the current sales rates, down 12 percent from the first quarter of 1998 and down 16 percent from the second quarter of 1997.

Sales of existing single-family homes for the second quarter of 1998 reported by the NATIONAL ASSOCIATION OF REALTORS^® totaled 4,773,000 (SAAR), up 2 percent from the first quarter of 1998 and up 16 percent from the second quarter of 1997. The number of units for sale at the end of the second quarter was 2,080,000, 16 percent below the previous quarter and 6 percent below the second quarter of 1997. At the end of the second quarter, a 5.3 months' supply of units remained, 13 percent below the previous quarter and 17 percent below the second quarter of 1997.

*Units in thousands. **This change is not statistically significant. Sources: New: Bureau of the Census, Department of Commerce; and Office of Policy Development and Research, Department of Housing and Urban Development Existing: NATIONAL ASSOCIATION OF REALTORS®

Home Prices

The median price of new homes during the second quarter of 1998 was $147,900, down a statistically insignificant 3 percent from the previous quarter's level and above the second quarter of 1997 by a statistically insignificant 1 percent. The average price of new homes sold during the second quarter of 1998 was $178,900, down a statistically insignificant 1 percent from the first quarter of 1998 and up a statistically insignificant 1 percent from the second quarter a year ago. The price adjusted to represent a constant-quality house was $172,700, unchanged from the first quarter of 1998, and up a statistically insignificant 1 percent from the second quarter of 1997. 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 1998 was $131,100, 4 percent above last quarter but 6 percent above the second quarter of 1997, according to the NATIONAL ASSOCIATION OF REALTORS^®. The average price of $164,000 was up 5 percent from the previous quarter and 6 percent above the second quarter of 1997.

**This change is not statistically significant. 1A constant-quality house has the same physical characteristics from year to year and its price is estimated using statistical models. Sources: New: Bureau of the Census, Department of Commerce; and Office of Policy Development and Research, Department of Housing and Urban Development Existing: NATIONAL ASSOCIATION OF REALTORS®

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 1998 shows that families earning the median income have 130.7 percent of the income needed to purchase the median-priced existing home. This figure is 3 percent below the first quarter of 1998 but 5 percent higher than the second quarter of 1997.

The decrease in the housing affordability index is the result of a 4-percent increase in the median price of single-family homes during the second quarter. This effect on the affordability of housing index was not offset by the 1-percent increase in the median family income during the same time period or the 1-basis-point decline in mortgage interest rates.

The fixed-rate index declined 3 percent from the first quarter of 1998 but increased 7 percent from the second quarter of 1997. The adjustable-rate index decreased by 2 percent from the previous quarter but rose 3 percent from the same quarter a year earlier.

Source: NATIONAL ASSOCIATION OF REALTORS®

Apartment Absorptions

There were 44,900 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the first quarter of 1998, down 19 percent from the previous quarter but up 17 percent from the first quarter of 1997. Of the apartments completed in the first quarter of 1998, 77 percent were rented within 3 months. This absorption rate is 7 percent above the previous quarter and 7 percent above the same quarter in the previous year. The median asking rent for apartments completed in the first quarter was $738, which is a statistically insignificant 4 percent above the previous quarter but a statistically insignificant 3 percent below a year earlier.

*Units in thousands. **This change is not statistically significant. Sources: Bureau of the Census, Department of Commerce; and Office of Policy Development and Research, Department of Housing and Urban Development

Manufactured (Mobile) Home Placements

Manufactured homes placed on site ready for occupancy in the first quarter of 1998 totaled 294,000 at a seasonally adjusted annual rate, a statistically insignificant 2 percent above the level of the previous quarter but 13 percent below the first quarter of 1997. The number of homes for sale on dealers' lots at the end of the first quarter totaled 156,000 units, 8 percent above the previous quarter and 54 percent above the same quarter of 1997. The average sales price of the units sold in the first quarter was $41,500, a statistically insignificant 4 percent below the previous quarter but 6 percent above the first-quarter 1997 price.

*Units in thousands. These are HUD-code homes only and do not include manufactured housing units built to meet local building codes, which are included in housing completions figures. **This change is not statistically significant. Sources: Bureau of the Census, Department of Commerce; and Office of Policy Development and Research, Department of Housing and Urban Development

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 73, up 4 points from the first quarter and 13 points from 1997's second quarter. The index for future sales expectations, 77, was up 5 points from the first-quarter value and 13 points from 1997's level. Prospective buyer traffic had an index value of 54, which is 3 points above the first-quarter value and 10 points above 1997'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 69, which is 4 points above the first-quarter level and 13 points above the value in 1997.

Source: National Association of Home Builders, Builders Economic Council Survey