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HUD’s Office of Policy Development and Research has released its analysis of the national housing market for the third quarter of 2015. The report contains updates on production, marketing, multifamily housing performance, homeownership, and affordability statistics for the third quarter, provides comparisons with previous quarters, and places the data in larger historical context.

The analysis indicates that during the third quarter of 2015, housing market indicators continued to improve. Construction starts for single-family homes rose, but fell for multifamily dwellings. While purchases of new single-family homes continued to decline slightly, sales of existing homes increased. Home values increased in the third quarter, appreciating by 4 to 5 percent. Most measures of delinquency and foreclosures continued to improve. The national homeownership rate rose after previously dropping for seven straight quarters.

Key Findings

  • Construction starts on single-family homes were up 5 percent from the previous quarter and 14 percent from the previous year, but multifamily housing starts dropped 9 percent from the previous quarter. Single-family housing starts, although improving, have bounced back slowly during the recovery and the total share of multifamily housing starts (35 percent) remains above historic levels.
  • Sales of existing single-family homes were up 3 percent from the previous quarter and up 8 percent from a year earlier, according to the National Association of Realtors. Sales of new homes were down 2 percent from the previous quarter but up 11 percent over the previous year. First-time buyers accounted for 30 percent of all sales transactions this quarter, well below the historic norm of 40 percent. The market summary attributes this weakness in sales to stringent bank lending standards, low sales inventory, and technical issues with seasonal adjustment factors.
  • Housing affordability dropped in the third quarter and home prices continued to rise. The NAR Composite Housing Affordability index declined by 2.6, reaching 158.6. The S&P/Case-Shiller national repeat-sales price index registered an estimated 1.0 percent increase in the third quarter and a 4.7 percent increase over the previous four quarters. Home values are at their highest level since the fourth quarter of 2007, according to the index. 
  • The number of underwater borrowers declined 14 percent between the first and second quarters and 64 percent since 2012, according to CoreLogic. Foreclosure starts fell 12 percent in the third quarter from the previous quarter and foreclosure completions fell 1 percent after rising for the previous three quarters, according to RealtyTrac. 
  • The U.S. Homeownership rate increased 0.3 percentage points over the previous quarter, reaching 63.7 percent and arresting a seven-quarter downward trend. During this same time, vacancies in rentals for single-family and multifamily housing also increased to 7.1 percent and 7.9 percent respectively. According to the Census Bureau, the overall vacancy rate in the rental market rose to 7.3 percent in the third quarter.

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