HOUSING PRODUCTION

Permits*

Permits for construction of new housing units increased 2 percent in the first quarter of 1997 to a seasonally adjusted annual rate of 1,422,000 units and were 1 percent above the first quarter of 1996. One-unit permits, at 1,048,000 units, were 3 percent above the level of the previous quarter but down 3 percent from a year earlier. Multifamily permits (5 or more units in structure), at 308,000 units, were 3 percent below the fourth quarter but 17 percent above the first quarter of 1996.

Starts*

Construction starts of new housing units in the first quarter of 1997 totalled 1,441,000 units at a seasonally adjusted annual rate, 2 percent above the fourth quarter of 1996, but 2 percent below the first quarter of 1996. Both these changes are statistically insignificant. Single-family starts, at 1,153,000 units, were 6 percent higher than the previous quarter but a statistically insignificant 1 percent below the 1996 rate. Multifamily starts totalled 248,000 units, a statistically insignificant 3 percent above the previous quarter but 11 percent below the same quarter in 1996.

Under Construction*

Housing units under construction at the end of the first quarter of 1997 were at a seasonally adjusted annual rate of 819,000 units, even with the previous quarter and the first quarter of 1996. Single-family units under construction at the end of the first quarter of 1997 stood at 572,000 units, even with the previous quarter but a statistically insignificant 2 percent below the first quarter of 1996. Multifamily units were at 219,000 units, up a statistically insignificant 1 percent from the previous quarter and up a statistically insignificant 2 percent the first quarter of 1996.

Completions*

Housing units completed in the first quarter of 1997 at a seasonally adjusted annual rate of 1,442,000 units were up a statistically insignificant 1 percent from the previous quarter and up a statistically insignificant 5 percent above the same quarter of 1996. Single-family completions, at 1,158,000 units, were unchanged from the previous quarter and a statistically insignificant 6 percent above the rate of a year earlier. Multi- family completions, at 247,000 units, were a statistically insignificant 3 percent above the previous quarter and 8 percent above the same quarter of 1996.

Manufactured (Mobile) Home Shipments*

Shipments of new manufactured (mobile) homes to dealers were at a seasonally adjusted annual rate of 349,000 units in the fourth quarter of 1996, which is 5 percent below the previous quarter and 3 percent below the rate of a year earlier.

HOUSING MARKETING

Home Sales*

Sales of new single-family homes totalled 824,000 units at a seasonally adjusted annual rate (SAAR) in the first quarter of 1997, 8 percent above the previous quarter and 12 percent above the first quarter of 1996. The number of new homes for sale at the end of March 1997 numbered 297,000 units, down 8 percent from the
last quarter and down 19 percent from the first quarter of 1996. At the end of March, inventories represented a 4.5 months' supply at the current sales rates, down 10 percent from the previous quarter and down 27 percent from the first quarter of 1996.

Sales of existing single-family homes reported by the NATIONAL ASSOCIATION OF REALTORS^®, for the first quarter of 1996 totalled 4,083,000 (SAAR), up 2 percent from the fourth quarter's level and up 3 percent from the first quarter of 1996. The number of units for sale at the end of the first quarter was 2,350,000, which is 52 percent above the previous quarter but only 4 percent above the first quarter of 1996. At the end of the first quarter, there was a 6.9 months' supply of units, 44 percent above the previous quarter but only 6 percent above the first quarter of 1996.

Home Prices

The median price of new homes during the first quarter of 1996 was $143,000, down a statistically insignificant 1 percent from the previous quarter's level and up a statistically insignificant 4 percent from the first quarter of 1996. The average price of new homes sold during the first quarter of 1996 was $170,800, equal to the average price in the third quarter of 1996 and up 6 percent from the same quarter a year ago. The price adjusted to represent a constant-quality house was $168,000, a statistically insignificant 2 percent above both the third quarter of 1996 and the first 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 first quarter of 1996 was $119,400, which is 2 percent above last quarter and 4 percent above the first quarter of 1996, according to the NATIONAL ASSOCIATION OF REALTORS^®. The average price of $147,300 was 2 percent above the previous quarter and 5 percent above the first 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 first quarter of 1997 shows that families earning the median income have 130.4 percent of the income needed to purchase the median-priced existing home. This figure is 1 percent below the fourth quarter of 1996 and 2 percent below the first quarter of 1996. This decrease is the result of a 2-percent increase in the median home price and a 1-basis-point increase in the interest rate offsetting a 1-percent rise in median family income during the last quarter. The fixed-rate index was unchanged from the fourth quarter of 1996 but fell by 4 percent from the first quarter of 1996. The adjustable-rate index decreased by 1 percent from the previous quarter but increased by 1 percent from the same quarter a year earlier.

Apartment Absorptions

There were 43,400 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the fourth quarter of 1996, down 19 percent from the previous quarter and down a statistically insignificant 5 percent from the fourth quarter of 1995. Of the apartments completed in 1996's fourth quarter, 72 percent were rented within 3 months. This absorption rate is a statistically insignificant 1 percent above the previous quarter but a statistically insignificant 5 percent below the same quarter the previous year. The median asking rent for apartments completed in the fourth quarter was $690, which is a statistically insignificant 1 percent above the previous quarter and a statistically insignificant 2 percent higher than a year earlier.

Manufactured (Mobile) Home Placements

Manufactured homes placed on site ready for occupancy in the fourth quarter of 1996 totalled 332,000 at a seasonally adjusted annual rate, 7 percent above the level of the previous quarter and 8 percent above the fourth quarter of 1995. The number of homes for sale on dealers' lots at the end of the fourth quarter totalled 112,000 units, a statistically insignificant 1 percent below the previous quarter but 22 percent above the same quarter of 1995. The average sales price of the units sold in the fourth quarter was $39,200, unchanged from the previous quarter and a statistically insignificant 2 percent higher than the 1995 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 1997 first-quarter value for the index of current market activity for single-family detached houses stood at 57, unchanged from the fourth quarter and from 1996's first quarter. The index for future sales expectations, 66, was up 5 points from the fourth-quarter value and up 4 points from 1996's level. Prospective buyer traffic had an index value of 45, which is 4 points above the fourth-quarter value and 3 points above 1996's first-quarter level. NAHB combines these separate indices into a single housing market index that mirrors the three components quite closely. In the first quarter, this index stood at 55, which is 2 points above the fourth-quarter level and 1 point above the value from 1996.

HOUSING FINANCE

Mortgage Interest Rates

Mortgage interest rates for all categories of loans changed little from the previous quarter. The contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was 7.79 percent in the first quarter, 10 basis points higher than the previous quarter but 51 basis points higher than the same quarter of 1996. Adjustable-rate mortgages in the first quarter were going for 5.56 percent, the same as in the previous quarter and 23 basis points above the same quarter of 1996. Fixed-rate, 15-year mortgages, at 7.29 percent, were up 9 basis points from last quarter and up 51 basis points from the same quarter of the previous year. The FHA rate fell 3 basis points during the quarter and was 61 basis points above the same quarter in 1996. It should be noted that we are now reporting the average interest rate quote for the FHA series rather than the most active quote.

FHA 1­4 Family Mortgage Insurance*

Applications for FHA mortgage insurance on 1­4 family homes were received for 245,700 (not seasonally adjusted) properties in the first quarter of 1997, up 11 percent from the previous quarter but down 22 percent from the first quarter of 1996. Endorsements or insurance policies issued totalled 199,700, down 5 percent from the fourth quarter of 1996 and down 3 percent from the first quarter of 1996. Endorsements for refinancing were 24,100, up 33 percent from the fourth quarter of 1996, but down 40 percent from a year earlier.

PMI and VA Activity*

Private mortgage insurers issued 205,000 policies or certificates of insurance on conventional mortgage loans during the first quarter of 1997, down 15 percent from the fourth quarter and down 16 percent from the first quarter of 1996; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported the issuance of mortgage loan guaranties for 63,600 single-family properties in the first quarter of 1997, down 7 percent from the previous quarter and down 27 percent from the first quarter of 1996.

Mortgage Originations by Loan Type, 1­4 Family Units

The total value of mortgage originations for 1­4 family homes was $190.9 billion in the fourth quarter of 1996, unchanged from the third quarter of 1996. Uninsured mortgage volume grew 5 percent; FHA-insured mortgages decreased 5 percent; VA-guarantied mortgages decreased by 12 percent; and privately insured mortgages decreased 15 percent. The overall increase from the fourth quarter of 1995 was 1 percent. FHA mortgage volume increased 31 percent and VA-guarantied mortgages increased 4 percent while the volume of uninsured mortgages decreased 1 percent, and privately insured mortgages decreased 7 percent. Market shares changed to reflect changes in volumes during the fourth quarter of 1996 and the fourth quarter of 1995; however, the changes never exceeded 3 percentage points.

Residential Mortgage Originations by Building Type*

Residential mortgage originations totalled $203 billion in the fourth quarter of 1996, up 1 percent from both the third quarter of 1996 and the fourth quarter of 1995, and nearly identical to the single-family mortgage pattern. The financing volume for multifamily (5+) units totalled $12.2 billion in the fourth quarter, up 16 percent from the previous quarter and 6 percent from the fourth quarter of 1995.

Mortgage Originations by Lender Type, 1­4 Family Units

During the fourth quarter of 1996, commercial banks with a volume of $47.1 billion and a market share of 24.7 percent showed a 12-percent increase from the third quarter of 1996 and a 2-percent increase the fourth quarter of 1995. Lenders in the other categories posted declines for the fourth quarter: Mutual savings banks with a volume of $8 billion and a market share of 4.2 percent declined 20 percent. Savings and Loans with a volume of $27.9 billion and a market share of 14.6 percent declined 8 percent; and other lenders declined 43 percent from a very small volume and market share. Mortgage companies with the largest volume, $107 billion, and highest market share, 56.1 percent, had no change from the previous quarter. However, third and fourth quarter data are based on a newly introduced sample design that calls into question any comparisons of current data with earlier data. More data from the newly introduced sample design needs to be collected before the series can be used with confidence for time-to-time comparisons. Volume data for other lender types are unaffected; however, comparisons of their market share data across time are affected by this question of comparability.

Delinquencies and Foreclosures

Total delinquencies were at 4.37 percent at the end of 1996's fourth quarter, 5 percent above the third quarter, but 3 percent below the fourth quarter of 1995. Ninety-day delinquencies were at 0.62 percent, also up 5 percent from the third quarter of 1996, but down 13 percent from the fourth quarter of 1995. During the fourth quarter of 1996, 0.33 percent of loans entered foreclosures, the same as in both the previous quarter and the fourth quarter of 1995.

HOUSING INVESTMENT

Residential Fixed Investment and Gross Domestic Product*

Residential Fixed Investment (RFI) for the first quarter of 1997 was $318.5 billion, 2 percent above the value from the fourth quarter of 1996 and up 6 percent from the first quarter of 1996. As a percentage of the Gross Domestic Product, RFI was 4.1 percent, up 0.1 percentage point from the previous quarter but equal to the value from a year ago.

HOUSING INVENTORY

Housing Stock*

As of the first quarter of 1997, the estimate of the total housing stock, 115,064,000 units, was a statistically insignificant 0.4 percent above the level of the fourth quarter of 1996 and 1.6 percent above 1996's first quarter level. The number of occupied units was up a statistically insignificant 0.4 percent from last quarter and was 1.2 percent above the same quarter in 1996. Owner-occupied homes were a statistically insignificant 0.3 percent above the level of the fourth quarter of 1996 and 1.6 percent above the first quarter of 1996. Rentals increased a statistically insignificant 0.6 percent from last quarter and increased a statistically insignificant 0.5 percent from the first quarter of 1996. Vacant units rose a statistically insignificant 0.5 percent from last quarter and 4.5 percent from 1996.

Vacancy Rates

The 1997 first-quarter national rental vacancy rate, at 7.5 percent, was down a statistically insignificant 0.2 percentage point from last quarter and down 0.4 percentage point from the level of the first quarter of 1996. The homeowner vacancy rate, at 1.7 percent, was unchanged from last quarter but up a statistically insignificant 0.1 percentage point from the first quarter of 1996.

Homeownership Rates

The national homeownership rate was 65.4 percent in the first quarter of 1997, equal to the rate from the last quarter but up 0.3 percentage point from the first quarter of 1996. The homeownership rate for minority
households increased a statistically insignificant 0.3 percentage point from the fourth quarter and increased 1.0 percentage point from the first quarter of 1996. The rate for young households of 58.1-percent homeownership was up a statistically insignificant 0.1 percentage point from last quarter's rate and a statistically insignificant 0.4 percentage point from 1996's first quarter.