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Just Released: U.S. Housing Market Conditions, 3rd Quarter 2004

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HUD's Office of Policy Development & Research (PD&R) has
recently released the 3rd quarter 2004 issue of "U.S.
Housing Market Conditions," which presents a compilation
of statistical data and written reports on national
trends in housing production, marketing, finance,
investment, and inventory. In addition, an analysis of
economic and housing market trends is provided for ten
geographical regions, each illuminated by a profile on a
selected housing market. To keep things fresh, every
issue also includes a topical piece about a noteworthy
aspect of housing activity. The new edition features a
discussion on the importance of older housing units.

Housing production in the third quarter, although less
than the record-breaking second quarter, continued to be
very strong. Permits and starts were in the 2 million
range. Single-family production continues to lead the
market, with single-family permits tying the previous
record, and single-family starts and completions both
reaching their second-highest levels. The only
disappointing aspect of housing production was seen in
the manufactured housing sector, where performance
continued to lag.

Although the pace of sales activity declined slightly
from the record-setting rate of the second quarter, new
home sales and existing home sales reached their third-
and second-highest levels, respectively, in the third
quarter. Median prices for new homes decreased 3 percent,
and the prices of existing homes increased 3 percent.
Inventories of new and existing homes increased in the
third quarter; however, both inventories continue to be
low relative to the near-record sales paces. Overall,
builders were slightly less optimistic in the third
quarter, but were somewhat upbeat regarding future sales
expectations and prospective buyer traffic.

Housing affordability declined in the third quarter. This
decline was caused by a housing price increase of 2.7
percent in the quarter combined with a 9-basis-point
increase in the mortgage rate on closed loans, which more
than offset the 0.9 percent increase in incomes. Even
with this decline, affordability is still historically
high. The homeownership rate in the third quarter was the
second highest ever, with 69.0 percent of American
households owning their own homes.


Multifamily housing has not fared as well as the single-
family sector. Third quarter production was somewhat
higher with increased starts and completions, and
although the number or permits declined, the total figure
remained fairly high. The absorption of new rental units
continues to be very slow and the vacancy rate is still
close to the all-time high.

The discussion on older housing units sheds light on the
distribution, location, characteristics, and quality of
older homes in America. These units are important for
several reasons. First, they provide housing to a
significant proportion of American families. Second,
their age may create challenges in terms of housing
quality and safety. Third, they may be an important
source of affordable housing, especially as the median
price of newly constructed single-family houses rises
above the $200,000 threshold. Fourth, using existing
units conserves the scarce resources needed to replace
them.

This edition of U.S. Housing Market Conditions contains
local housing market profiles for the following cities:

o Aguadilla, Puerto Rico
o Atlanta, Georgia
o Bloomington-Normal, Illinois
o Chicago, Illinois
o Cleveland, Ohio
o Colorado Springs, Colorado
o Columbia-Lexington, South Carolina
o Eugene-Springfield, Oregon
o Las Vegas, Nevada
o Manchester-Nashua, New Hampshire
o Milwaukee-Waukesha, Wisconsin
o Modesto, California
o Newark, New Jersey
o Salisbury, Maryland
o Stockton, California
o Tacoma, Washington
o Tampa-St. Petersburg-Clearwater, Florida

The current issue of "U.S. Housing Market Conditions" is
available as a free download from HUD USER at
https://www.huduser.gov/periodicals/ushmc.html or in
printed form for a nominal charge by calling
1-800-245-2691.

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HUD USER
P.O. Box 23268
Washington, DC 20026-3268
1-800-245-2691
1-800-927-7589 (TDD)
202-708-9981 (fax)
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