HOUSING MARKETING

Home Sales*

Sales of new single-family homes totaled 806,000 units at a seasonally adjusted annual rate (SAAR) in the fourth quarter of 1997, unchanged from the previous quarter and a statistically insignificant 6 percent above the fourth quarter of 1996. The number of new homes for sale at the end of December 1997 numbered 284,000 units, down a statistically insignificant 1 percent from the last quarter and down 12 percent from the fourth quarter of 1996. At the end of December, inventories represented a 4.6 months' supply at the current sales rates, down a statistically insignificant 7 percent from the third quarter and down a statistically insignificant 8 percent from the fourth quarter of 1996.

Sales of existing single-family homes for the fourth quarter of 1997 reported by the NATIONAL ASSOCIATION OF REALTORS^® totaled 4,353,000 (SAAR), up 2 percent from the third quarter's level and up 9 percent from the fourth quarter of 1996. For the entire year, 4,215,000 existing homes were sold setting a new record. The number of units for sale at the end of the fourth quarter was 1,540,000, 27 percent below the previous quarter and 1 percent below the fourth quarter of 1996. At the end of the fourth quarter, a 4.3 months' supply of units remained, 27 percent below the previous quarter and 10 percent below the fourth quarter of 1996.

*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 fourth quarter of 1997 was $143,000, down a statistically insignificant 1 percent from the previous quarter's level and from the fourth quarter of 1996. The average price of new homes sold during the fourth quarter of 1997 was $174,900, up a statistically insignificant 1 percent from the third quarter of 1997 and up a statistically insignificant 2 percent from the fourth quarter a year ago. The price adjusted to represent a constant-quality house was $171,000, nearly equal to the third quarter of 1997 and up a statistically insignificant 4 percent from the fourth 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 fourth quarter of 1997 was $124,800, 1 percent below last quarter but 6 percent above the fourth quarter of 1996, according to the NATIONAL ASSOCIATION OF REALTORS^®. The average price of $155,700 was 1 percent below the previous quarter but 7 percent above the fourth quarter of 1996. For the year the median price was $124,100 and the average price was $154,200.

**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 fourth quarter of 1997 shows that families earning the median income have 131.7 percent of the income needed to purchase the median-priced existing home. This figure is 4 percent above the third quarter of 1997 and unchanged from the fourth quarter of 1996. This increase is the result of a 17-basis-point decrease in the interest rate, a 1-percent rise in median family income, and a 1-percent decrease in the median home price during the last quarter. The fixed-rate index rose 5 percent from the third quarter of 1997 and 2 percent from the fourth quarter of 1996. The adjustable-rate index increased by 4 percent from the previous quarter and was unchanged from the same quarter a year earlier.

Source: NATIONAL ASSOCIATION OF REALTORS®

Apartment Absorptions

There were 51,100 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the third quarter of 1997, up a statistically insignificant 14 percent from the previous quarter but down a statistically insignificant 5 percent from the third quarter of 1996. Of the apartments completed in the third quarter of 1997, 73 percent were rented within 3 months. This absorption rate is 5 percent below the previous quarter but 3 percent above the same quarter the previous year. The median asking rent for apartments completed in the third quarter was $734, which is a statistically insignificant 3 percent above the previous quarter and 8 percent higher than 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 third quarter of 1997 totaled 279,000 at a seasonally adjusted annual rate, a statistically insignificant 6 percent above the level of the previous quarter but 10 percent below the third quarter of 1996. The number of homes for sale on dealers' lots at the end of the third quarter totaled 140,000 units, 11 percent above the previous quarter and 25 percent above the same quarter of 1996. The average sales price of the units sold in the third quarter was $42,000, a statistically insignificant 3 percent above the previous quarter and 8 percent above the third-quarter 1996 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 fourth-quarter value for the index of current market activity for single-family detached houses stood at 62, up 1 point from the third quarter and 5 points from 1996's fourth quarter. The index for future sales expectations, 67, was up 1 point from the third-quarter value and 6 points from 1996's level. Prospective buyer traffic had an index value of 43, which is 3 points below the third-quarter value but 2 points above 1996's fourth-quarter level. NAHB combines these separate indices into a single housing market index that mirrors the three components quite closely. In the fourth quarter, this index stood at 58, which is unchanged from the third-quarter level but 5 points above the value in 1996.

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