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March 1996
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
4th Quarter 1995
U.S. Housing
arket
C
onditions
M
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
SUMMARY
The year 1995 was a good year for housing that
followed a great year. Except for 1994 more hous-
ing units were authorized (1,333,000) and started
(1,350,500) than in any other year since 1989. Again,
except for 1994, more existing homes (3,812,000)
were sold than in any year since 1979. Data for the
first 11 months suggest that new home sales in 1995
will fall short of the totals in 1993 and 1994, but
still exceed other years since 1989.
In some important areas, 1995 surpassed 1994.
More multifamily units (243,500) were started than
in any year since 1990. In current dollars residential
fixed investment reached an all-time high of $295.
billion. Most significantly, the homeownership rate
rose to 64.7 percent, the highest rate since 1982. In
fact, in the past two quarters, the homeownership
rate exceeded 65 percent, a rate not achieved in any
quarter since the fourth quarter of 1981.
The influence of interest rates on housing activity
was clearly demonstrated in 1995, a year that
started slowly but finished strong. Permits, starts,
new home sales, and existing home sales were all
substantially higher in the last 6 months of the
year than in the first 6 months. Interest rates fell
throughout the year; by the fourth quarter, rates
for 30-year, fixed-rate mortgages were 176 basis
points lower than a year earlier.
Specific highlights for the fourth quarter are as
follows:
n Permits rose 4 percent in the fourth quarter
compared with the third quarter, while starts fell
1 percent. However, in both cases, the fourth quar-
ter level was significantly higher than the second
quarter.
n The absorption rate for multifamily units com-
pleted in the previous quarter fell from 75 to 72
percent. However, 48,200 units were brought onto
the market in the third quarter, substantially more
than in any quarter in the past 2 years.
n The National Association of Realtors’®^ Afford-
ability Index improved by 5 percent, as interest
rates fell, the median income increased slightly, and
the median existing home price decreased slightly.
As U.S. Housing Market Conditions went to press,
the Census Bureau released data on permits and
starts for January 1996. Starts increased over De-
cember, suggesting that the momentum from the
last half of 1995 carried over into 1996. While per-
mits fell, they remained above the 1995 annual
level. However, large month-to-month swings in
these numbers are not unusual, so monthly results
should be read with caution. Further discretion is
suggested by the decline in new home sales from
July through November. Unfortunately, data on
new home sales for December and January will
not be available until the middle of March. These
numbers bear watching because the inventory of
unsold homes now exceeds 7 months.
About the March Issue
This issue would normally have been published in
February and would have contained data for the
fourth quarter; however, the two Federal furloughs
have caused delays in the release of many data
series. We have timed our publication date to allow
for as many complete data tables as possible with-
out delaying too long. As a result we were able to
include fourth quarter or December data for all but
four series—housing units under construction,
housing units completed, prices for new homes,
and new home sales. The next edition scheduled
for release in May 1996 will contain the missing
fourth quarter or December data for these four
series.
I n s i d e
Table of Contents .......................
National Data .......................... 11
Regional Activity .................... 29
Historical Data ........................ 49
Summary 2
Table 15 FHA Unassisted Multifamily Mortgage Insurance Activity: 1980–Present ....................................... 65 Table 16 Mortgage Originations, 1– Family Units by Loan Type: 1970–Present ....................................... 66 Table 17 Residential Mortgage Originations by Building Type: 1970–Present ......... 67 Table 18 Mortgage Originations, 1–4 Family Units by Lender Type: 1970–Present ....................................... 68 Table 19 Net Acquisitions, 1–4 Family Units by Lender Type: 1970–Present ....................................... 69 Table 20 Mortgage Delinquencies and Foreclosures Started: 1984–Present ....................................... 70 Table 21 Expenditures for Existing Residential Properties: 1968–Present ....................................... 71 Table 22 Value of New Construction Put in Place, Private Residential Buildings: 1974–Present ...................... 72 Table 23 Gross Domestic Product and Residential Fixed Investment: 1959–Present ....................................... 73 Table 24 Net Change in Number of Households by Age of Householder: 1971–Present ................ 74 Table 25 Net Change in Number of Households by Type of Household: 1971–Present ................... 75 Table 26 Net Change in Number of Households by Race of Householder: 1971–Present ................ 76 Table 27 Total U.S. Housing Stock: 1970–Present ....................................... 77 Table 28 Rental Vacancy Rates: 1979–Present ....................................... 78 Table 29 Homeownership Rates by Age of Householder: 1982–Present ............ 79 Table 30 Homeownership Rates by Region and Metropolitan Status: 1983–Present ........................... 80 Table 31 Homeownership Rates by Race and Ethnicity: 1983–Present ............... 81 Table 32 Homeownership Rates by Household Type: 1983–Present ......... 82
Southwest ............................................... 39 Spotlight on: Oklahoma City, Oklahoma ............................................ 39 Great Plains ............................................ 41 Spotlight on: Lincoln, Nebraska ......... 42 Rocky Mountain .................................... 42 Spotlight on: Grand Junction, Colorado .............................................. 43 Pacific ..................................................... 44 Spotlight on: San Jose, California ....... 45 Northwest .............................................. 46 Spotlight on: Portland-Vancouver, Oregon-Washington ............................ 47
Historical Data ................................. 49
Table 1 New Privately Owned Housing Units Authorized: 1959–Present ........ 49 Table 2 New Privately Owned Housing Units Started: 1959–Present ............... 51 Table 3 New Privately Owned Housing Units Under Construction: 1969–Present .... 52 Table 4 New Privately Owned Housing Units Completed: 1968–Present ......... 53 Table 5 Manufactured (Mobile) Home Shipments, Residential Placements, Average Prices, and Units for Sale: 1974–Present ....................................... 54 Table 6 New Single-Family Home Sales: 1963–Present ....................................... 55 Table 7 Existing Single-Family Home Sales: 1968–Present ............................. 56 Table 8A New Single-Family Home Prices: 1963–Present ........................... 57 Table 8B Existing Single-Family Home Prices: 1968–Present ........................... 58 Table 9 Housing Affordability Index: 1970–Present ....................................... 59 Table 10 Market Absorption of New Rental Units and Median Asking Rent: 1970–Present ....................................... 60 Table 11 Builders’ Views of Housing Market Activity: 1978–Present ........... 61 Table 12 Mortgage Interest Rates, Average Commitment Rates, and Points: 1972–Present ....................................... 62 Table 13 Mortgage Interest Rates, Points, Effective Rates, and Average Term to Maturity on Conventional Loans Closed: 1982–Present .......................... 63 Table 14 FHA, VA, and PMI 1–4 Family Mortgage Insurance Activity: 1968–Present ....................................... 64
TABLE OF CONTENTS
Summary ..................................................... 1 Regional Perspective ................................ 3 Measuring the Performance of Our Cities .................................................... 3 Cities within their regional context ....... 4 Patterns of urban decentralization .......... 7 Reasons for observed structural changes .................................................. 7 Distributional effects of structural changes .................................................. 8 Summary .................................................. 9
National Data .................................... 11
Housing Production .................................. 11 Permits ................................................... 11 Starts ....................................................... 12 Under Construction ............................... 12 Completions ........................................... 13 Manufactured (Mobile) Home Shipments ............................................ 13
Housing Marketing ................................... 14 Home Sales ............................................. 14 Home Prices ........................................... 15 Housing Affordability ............................ 16 Apartment Absorptions ......................... 16 Manufactured (Mobile) Home Placements .......................................... 17 Builders’ Views of Housing Market Activity .................... 18
Housing Finance ....................................... 19 Mortgage Interest Rates ......................... 19 FHA 1–4 Family Mortgage Insurance ............................................. 20 PMI and VA Activity ............................. 20 Mortgage Originations by Loan Type, 1–4 Family Units ...................... 21 Residential Mortgage Originations by Building Type ................................. 22 Mortgage Originations by Lender Type, 1–4 Family Units ...................... 23 Delinquencies and Foreclosures ............ 24
Housing Investment ................................. 25 Residential Fixed Investment and Gross Domestic Product ..................... 25
Housing Inventory .................................... 26 Housing Stock ........................................ 26 Vacancy Rates ........................................ 27 Homeownership Rates ........................... 27
Regional Activity ............................ 29
New England .......................................... 30 Spotlight on: Danbury, Connecticut ......................................... 30 New York/New Jersey ........................... 31 Spotlight on: Elmira-Corning, New York ............................................ 32 Mid-Atlantic ........................................... 33 Spotlight on: Philadelphia, Pennsylvania ....................................... 34 Southeast ................................................ 35 Spotlight on: Huntsville, Alabama ............................................... 36 Midwest .................................................. 37 Spotlight on: Minneapolis-St. Paul, Minnesota ............................................ 38
Summary 4
Figure 1. City and Suburban Population Growth by Region, 1980–1990 (percent)
Northeast Midwest South West
Percent Change
City Suburb
0.4 (^) - 4.
Source: The State of the Nation's Cities: America’s
Changing Urban Life, Norman J. Glickman et al., Center
for Urban Policy Research, Spring 1996.
Figure 2. City and Suburban Employment Growth by Region, 1980–1990 (percent)
Northeast Midwest South West
Percent Change
City Suburb
Source: The State of the Nation's Cities: America’s
Changing Urban Life, Norman J. Glickman et al., Center
for Urban Policy Research, Spring 1996.
documenting fluctuations around the long-run
urban trend. The comprehensive array of variables
is divided into six categories: employment and eco-
nomic development; demographic factors; housing
and land use; poverty and income distribution; fiscal
conditions and the public sector; and social, envi-
ronmental, health, and other factors. The exhaus-
tive list of variables helps to measure cities’ perfor-
mance along any number of dimensions, such as
health, poverty, crime, unemployment, education,
and racial integration.
One innovative feature of the data set is that for
most variables it provides measures for central cit-
ies and for either their surrounding suburbs or the
entire metropolitan area. This feature will help re-
searchers at HUD, CUPR, and elsewhere to com-
pare the performance of central cities with that
of their surrounding areas. Important insights can
be gleaned from such comparisons. For example,
one can begin to infer reasons for the disparities be-
tween a city and its suburbs by comparing a suburb
that is doing well with a neighboring central city
that is deteriorating. A second innovation of the
database is an index of dissimilarity—a barometer
of racial segregation—that measures the proportion
of a metropolitan area’s residents that must move
to achieve perfect racial integration.
This article is divided into five sections. The first
section describes cities within their regional con-
text. The second section focuses on decentraliza-
tion patterns, including the “Edge City.” The third,
fourth, and fifth sections discuss urban trends, the
distributional effects of these trends among cities,
and the recent performance of cities in general.
Cities within their regional
context
From 1980 to 1990, the Northeast and Midwest
regions—the Frostbelt—were population and em-
ployment losers relative to the rest of the country.
Figures 1 and 2 show that Midwestern cities lost
4.2 percent of their population during the decade,
while the population in Northeastern cities grew
by only 0.4 percent. In both regions suburban em-
ployment growth was more than 50 percent greater
than in the cities.
Cities in the Northeast and Midwest also suffered
severe population and employment losses. Accord-
ing to Table 1, Pittsburgh lost 12.8 percent of its
population and 9.7 percent of central-city jobs.
Detroit’s population and central-city employment
shrunk by 14.6 percent and 15 percent, respectively.
Other Frostbelt cities, such as Buffalo; Newark,
New Jersey; Chicago; Cincinnati; Kansas City,
Missouri; and St. Louis, suffered significant losses
in population and/or central-city employment.
On the other hand, the South and West regions—the
Sunbelt—performed very well. The population of
the average city in the South and West grew by 6.
percent and 18.6 percent, respectively. Average city
5 Summary
Central City Suburbs
Population Employment Median Income Population Employment Median Income
- Table 1. Change in Population, Employment, and Median Household Income, 1980–
- Northeast 0.4 9.0 4.0 13. City Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank
- Boston, MA 2.0 45 12.8 37 46.8 1 6.2 59 14.9 56 34.6
- Buffalo, NY -8.3 66 -0.2 55 0.5 59 -2.7 69 6.9 68 2.6
- Burlington, VT 3.8 38 19.5 25 23.3 13 17.7 30 38.6 22 31.4
- Hartford, CT 2.5 43 0.0 53 21.2 16 7.5 51 15.0 55 28.7
- Manchester, NH 9.5 29 16.2 28 28.8 8 27.4 17 41.2 20 36.3
- New York, NY 3.5 39 11.6 39 35.7 4 1.7 65 10.2 65 33.7
- Newark, NJ -16.4 74 -4.1 64 34.8 5 0.4 67 10.0 66 31.4
- Philadelphia, PA -6.1 60 4.3 49 17.7 24 7.9 50 21.2 42 24.1
- Pittsburgh, PA -12.8 72 -9.7 70 -2.5 63 -5.7 70 0.8 71 -5.8
- Portland, ME 4.5 36 18.6 26 37.2 3 15.9 33 32.8 23 32.5
- Providence, RI 2.5 42 5.2 48 22.0 14 6.6 58 15.1 54 25.5
- Midwest -4.2 10.4 8.7 17.
- Chicago, IL -7.4 65 -2.3 60 8.3 37 9.1 46 16.2 50 10.4
- Cincinnati, OH -5.6 58 -0.3 57 4.4 47 7.4 53 20.3 43 7.5
- Cleveland, OH -11.9 70 -14.8 72 -8.5 72 -0.5 68 4.7 69 -0.2
- Columbus, OH 12.1 24 24.1 21 13.2 27 9.7 45 19.2 46 11.2
- Des Moines, IA 1.1 48 6.9 46 0.7 58 13.1 37 25.1 34 3.8
- Detroit, MI -14.6 73 -15.0 74 -15.5 74 1.7 66 13.7 59 2.2
- Fargo, ND 20.7 17 28.8 15 -6.5 69 3.9 63 13.6 60 -3.0
- Indianapolis, IN 4.4 37 13.6 34 5.8 44 7.3 54 22.0 39 6.2
- Kansas City, MO -4.0 55 10.6 40 6.2 42 18.8 28 27.0 32 5.8
- Milwaukee, WI -1.3 51 -3.9 62 -7.1 71 5.7 60 14.0 58 1.3
- Minneapolis, MN -0.1 50 12.5 38 11.2 29 21.9 25 31.6 24 11.6
- Omaha, NE 6.9 32 15.4 30 3.6 49 4.3 62 16.5 49 6.3
- Sioux Falls, SD 23.9 12 35.1 10 2.8 51 -8.6 72 4.2 70 5.2
- St. Louis, MO -12.4 71 -6.7 69 6.5 41 6.9 56 16.8 48 8.3
- Toledo, OH -6.1 61 -0.3 56 -3.4 66 7.2 55 21.3 41 2.0
- Wichita, KS 8.9 30 7.4 44 2.6 52 11.5 41 14.7 57 4.8
- South 6.1 9.3 26.7 39.
- Atlanta, GA -7.3 64 0.2 52 24.3 10 41.9 8 57.8 7 25.4
- Austin, TX 34.7 5 39.9 8 8.9 33 58.9 2 80.6 1 12.3
- Baltimore, MD -6.5 62 2.8 50 18.3 21 16.5 32 29.6 30 21.6
- Birmingham, AL -6.5 63 -3.9 61 1.2 56 8.2 49 19.8 45 7.3
- Charleston, NC -10.4 68 -13.8 71 -6.9 70 -6.1 71 -2.7 72 -11.0
- Charlotte, WV 25.9 9 34.5 11 18.7 20 16.6 31 24.5 36 17.2
- Columbia, SC -3.1 54 7.5 43 18.1 22 15.0 35 26.4 33 15.8
- Dallas, TX 11.4 25 10.0 41 6.8 40 45.0 7 53.2 10 9.9
- El Paso, TX 21.2 16 26.8 17 3.9 48 39.6 10 62.0 5 1.9
- Fort Worth, TX 16.2 22 15.2 31 9.3 31 50.8 4 58.5 6 9.1
- Houston, TX 2.2 44 -4.7 67 -10.4 73 45.9 6 49.8 11 -5.4
- Jackson, MS -3.1 53 -4.2 65 -0.9 61 24.9 20 41.9 18 8.7
- Jacksonville, FL 17.4 21 38.2 9 19.5 18 49.7 5 47.9 13 22.0
- Little Rock, AR 10.9 26 17.1 27 7.3 39 6.7 57 17.6 47 7.7
- Louisville, KY -9.8 67 -4.0 63 3.4 50 3.7 64 15.2 52 2.7
- Memphis, TN -5.6 59 -0.7 58 1.8 55 35.8 12 67.4 4 12.2
- Miami, FL 3.4 40 -4.9 68 -3.7 67 23.4 21 28.6 31 8.9
- Davidson, TN 7.2 31 15.5 29 8.8 35 25.7 19 40.9 21 13.7 Nashville-
- New Orleans, LA -10.9 69 -14.9 73 -1.4 62 5.6 61 8.3 67 -4.7
- City, OK 10.3 27 9.2 42 2.0 54 12.3 38 15.1 53 1.7 Oklahoma
- San Antonio, TX 19.1 19 27.4 16 4.6 46 28.4 16 43.7 14 8.5
- Tampa, FL 3.1 41 14.6 32 16.5 25 33.2 13 54.4 9 21.2
7 Summary
its southern location. Boston was certainly helped
by the development of high-technology industries
in and around the city, particularly along Route 128.
New Orleans, on the other hand, never recovered
from the oil-based recession of the 1970s. It failed
to develop a replacement engine to drive economic
growth and encourage people to remain in or relo-
cate to the area.
Patterns of urban
decentralization
Prior to World War II, and for nearly three decades
thereafter, U.S. industry enjoyed an insular domes-
tic market and dominance abroad. However, foreign
industrial competition grew increasingly stiff during
the 1970s. The automobile industry is a perfect il-
lustration. Abetted by the OPEC oil shocks, foreign
automakers were able to sell their cheaper, more
reliable, and more fuel-efficient vehicles to Ameri-
can consumers. By the 1990s, one of every four ve-
hicles in the United States was produced abroad.
Foreign manufacturers made similar inroads in the
steel, textiles, and consumer electronics industries.
To meet the decreased demand for domestic prod-
ucts, American firms downsized their domestic
operations, displacing hundreds of thousands of
workers.
Many of the losses in American manufacturing
are attributable to the cost advantage of foreign
producers by the ready supply of cheaper, nonunion-
ized, low- or semiskilled labor. In their efforts to
be more cost competitive, domestic producers have
begun to build plants or subcontract manufacturing
overseas, exacerbating the loss of less skilled jobs
in the United States, particularly in its cities.
Manufacturing jobs have decentralized, moving
out of central cities. Services, which by their nature
cannot be imported, and high-skilled professional
jobs, in which the United States has a comparative
advantage, have moved in. Services and high-skilled,
high-technology jobs have also grown in the sub-
urbs, far removed from the cities that experienced
the greatest manufacturing job losses.
As jobs and population left the central city, retailers
followed, filling shopping malls and creating “Edge
Cities”—highly developed retailing centers located
far from traditional downtown areas. With mer-
chandise and other urban amenities now closer
to where they live, suburban shoppers abandoned
many centrally located stores. Inevitably, urban
retailers either curtailed their operations or went
out of business, further depleting the withering
urban job base.
Reasons for observed
structural changes
Residential suburbanization has been an ongoing
process in the United States since World War II.
Indeed, there is a “natural evolution theory” of
suburbanization, which postulates: As incomes
grow, people will be willing to spend more on
spacious homes, larger yards, and the concomitant
higher commuting costs. So, over time, one would
expect to observe larger numbers of people residing
in suburbia, independent of other socioeconomic
phenomena. There is presently a debate in the lit-
erature as to whether urban problems (such as
crime and poverty) have accelerated the rate of
suburbanization, but the evidence is far from con-
clusive. The only certainty is that the United
States is becoming increasingly suburban and
has been moving in that direction for decades.
Manufacturing and service jobs have also been
moving to the suburbs over the past 25 years. As
discussed above, a major reason is the availability of
skilled labor: As well-trained workers increasingly
reside in the suburbs, businesses have located their
operations there. In addition, suburban land is often
cheaper, regulations are less strict, and transporta-
tion is less costly and time consuming. Another
advantage is that firms that locate in the suburbs
risk no potential environmental liability left by a
previous polluter.
Global factor-price equalization is the cause of
many of the job losses in Northern and Midwest-
ern cities. In other words, American manufacturers
cannot pay real wages substantially greater than
those being paid by foreign firms and remain price
competitive. One wage-reducing response to for-
eign competition is to relocate production to lower
wage/less unionized areas. Domestically, this has
been accomplished by the movement of manufac-
turing facilities, particularly to the sparsely union-
ized South. Internationally, producers have moved
their production to low-wage countries. Both Ford
and General Motors, for example, now have plants
in Mexico.
Labor-saving technological change is yet another
way that firms can reduce labor demand and labor
costs. Both increases in worker productivity and
Summary 8
automation—the outright replacement of human
workers with machines—have been successfully
introduced. For its most routine tasks, such as
spot-welding chassis assemblies, the auto industry
now uses robots. In banking the automated teller
machine has assumed the most routine tasks that
bank tellers used to perform. In short, low- and
semiskilled labor is increasingly being replaced by
lower cost machinery in both manufacturing and
services.
Distributional effects
of structural changes
Foreign competition and labor-saving technological
change have combined to slow the demand for labor
and with it, the growth in real wages. Real average
hourly earnings exhibited no significant growth
from 1966 to 1994. In fact, measured in constant
1982 dollars, the $7.52 average hourly wage of 1966
is slightly higher than its $7.42 counterpart of 1995.^2
For urban workers who depend on hourly wage jobs
for a living, they have not increased their earning
power. Measured in 1994 dollars, real median family
income, which now incorporates more two-earner
families, has shown little increase, growing only
slightly from $37,319 in 1976 to $38,782 in 1994. 3
These figures conceal a stunning redistribution of
income between skill categories and income classes.
As unskilled labor saw its earnings decline, skilled
workers reaped large increases. From 1975 to 1992,
nominal average earnings doubled for high school
dropouts, rose 2.5 times for high school graduates,
nearly tripled for holders of bachelor’s degrees, and
tripled for holders of advanced degrees. During the
same period, the consumer price index increased
2.5 times, meaning only those with college degrees
and beyond increased their real earnings. In 1992
the holder of a bachelor’s degree earned an average
annual wage of $32,269, 72 percent more than a
high school graduate. Over a worklife the annual
difference translates to $600,000 more for a college
graduate (for example, $1.421 million vs. $821,000).
According to income categories, between 1979 and
1989, the average real incomes of families in the
lowest quintile fell by 2.1 percent, while the in-
comes of families in the top quintile rose by 13.
percent.
The redistribution of income away from those with
less education and wealth has exacerbated urban
poverty. American cities harbor a disproportionate
share of the Nation’s poor and poorly educated
citizens. Therefore, when earnings of the poor and
undereducated slip, cities bear the brunt. A com-
parison of the proportions of city and suburban
populations in poverty confirms this fact. In 1990
in the Northeast, 19.9 percent of the average city’s
population lived in poverty. The average city in
the Midwest, South, and West had 20.8 percent,
19.7 percent, and 15.6 percent, respectively, of its
population living in poverty. The corresponding
numbers for each region’s suburbs were: 6.8 per-
cent for the Northeast, 6.3 percent for the Midwest,
9.3 percent for the South, and 9.3 percent for the
West.
While well-paying manufacturing jobs have disap-
peared from cities, affordable housing remains
concentrated in older urban cores. The location of
affordable housing away from centers of suburban
job growth has trapped the poor and minorities in
central cities, removed from economic opportunity.
These trends have also fostered income and racial
polarization: Middle and upper income Americans
work and reside in suburbia, while a predominantly
African-American and Hispanic underclass crowds
the inner city. According to the 1990 Index of Dis-
similarity calculated in HUD’s new data set, for the
average large metropolis of the Northeast and the
Midwest, two-thirds of the population would have
to be moved to achieve perfect racial integration,
73.4 percent and 69 percent, respectively. For the
South 64.4 percent and for the West 50.3 percent
of the population would have to move to achieve
racial integration. More importantly, for the North-
east and the Midwest, the percentages for 1990
exceeded their 1970 counterparts, confirming an
increase in racial polarization.
Summary 10
U.S. Housing Market Conditions is published quarterly by the U.S. Department of Housing and Urban
Development, Office of Policy Development and Research.
Henry G. Cisneros ..................................................................................................................................................................... Secretary Michael A. Stegman ....................................................................... Assistant Secretary, Office of Policy Development and Research Frederick J. Eggers ........................................................................................................ Deputy Assistant Secretary, Economic Affairs Paul A. Leonard ....................................................................................................... Deputy Assistant Secretary, Policy Development Duane T. McGough ........................................................................................ Director, Housing and Demographic Analysis Division David E. Shenk ............................................................................................................. Director, Economic Market Analysis Division Katherine L. O’Leary ............................................................................................................... Director, Research Utilization Division Ronald J. Sepanik .............................................................................. Deputy Director, Housing and Demographic Analysis Division Bruce D. Atkinson ................................................................................................................................................................... Economist Stacy Jordan ............................................................................................................................................................................. Economist Sue George Neal ...................................................................................................................................................................... Economist Randall M. Scheessele ............................................................................................................................................................. Economist Edward J. Szymanoski ............................................................................................................................................................. Economist Vanessa Void-Taylor ............................................................................................................................. Research Utilization Specialist Robert R. Callis ..................................................................................................................................................... Bureau of the Census
HUD Field Office Economists who contributed to this issue are:
New England: John R. Reilly ........................................................................................................................................................ Boston Danbury: Michael W. Lackett ..............................................................................................................................................Boston New York/New Jersey: Paul M. Bannett ................................................................................................................................ New York Elmira-Corning: William Coyner ....................................................................................................................................... Buffalo Mid-Atlantic: Frances A. Kenney ........................................................................................................................................... Richmond Philadelphia: Jan L. Vagassky .................................................................................................................................... Philadelphia Southeast: Bette L. Almand ......................................................................................................................................................... Atlanta Huntsville: Donald R. James ...................................................................................................................................... Birmingham Midwest: Joseph P. McDonnell .................................................................................................................................................. Chicago Minneapolis-St. Paul: Rodney E. Johnson ................................................................................................................. Minneapolis Southwest: Linda L. Hanratty .................................................................................................................................................. Ft. Worth Oklahoma City: Kenneth W. Altizer .................................................................................................................... Oklahoma City Great Plains: Donald J. Gebauer ........................................................................................................................................... Kansas City Lincoln: James P. Laakso ..................................................................................................................................................... Omaha Rocky Mountain: James A. Coil ................................................................................................................................................... Denver Grand Junction: George H. Antoine ................................................................................................................................... Denver Pacific: Robert E. Jolda ....................................................................................................................................................... San Francisco San Jose: Pamela J. Leong ......................................................................................................................................... San Francisco Northwest: Pamela R. Sharpe ....................................................................................................................................................... Seattle Portland-Vancouver: Thomas E. Aston ............................................................................................................................ Portland
11 National Data
National Data
H OUSING PRODUCTION
Permits*
P ermits for the construction of new housing units rose 4 percent in the fourth quarter of 1995 to a seasonally
adjusted annual rate (SAAR) of 1,437,000 units, 3 percent lower than in the fourth quarter of 1994. The January
1996 level is 1,373,000 (SAAR) and the annual estimate for 1995 is 1,333,000 units, 3 percent below the 1994
annual estimate. One-unit permits, at 1,077,000 units, were up 3 percent from the previous quarter and up 2
percent from a year earlier. The January 1996 estimate is 1,045,000 units (SAAR) and the annual estimate for
1995 is 999,100 units, 6 percent below the 1994 annual estimate. Multifamily permits (5 or more units in struc-
ture), at 292,000 units, were 9 percent above both the third quarter and the same quarter the previous year. The
1995 annual estimate is 268,600 units, 11 percent above the 1994 annual estimate. The January 1996 estimate
is 259,000 (SAAR), 15 percent below the December 1995 estimate.
*Components may not add to totals because of rounding. Units in thousands.
**This change is not statistically significant.
Source: Bureau of the Census, Department of Commerce
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
TOTAL 1,437 1,376 1,393 + 4 - 3
ONE UNIT 1,077 1,043 1,059 + 3 + 2
TWO TO FOUR 68 65 66 + 5** + 4**
FIVE PLUS 292 268 268 + 9 + 9
13 National Data
Certificateof Occupancy^ Completions*
Housing units completed in the fourth quarter of 1995, at a seasonally adjusted annual rate of 1,325,000 units,
were 3 percent above the previous quarter, but 4 percent below the same quarter last year. ( Note: The quarterly
value is based on data for October and November only. ) (Both changes are statistically insignificant.) Single-
family completions, at 1,038,000 units, were 2 percent above the previous quarter and 11 percent below the
year-earlier rate. Multifamily completions, at 252,000 units, were 8 percent above the previous quarter and 34
percent above the same quarter last year.
CertificateOccupancyof Latest
Quarter =
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
TOTAL 1,325 1,282 1,378 + 3** - 4**
ONE UNIT 1,038 1,016 1,159 + 2** - 11
TWO TO FOUR 36 34 31 + 4** + 15
FIVE PLUS 252 232 188 + 8** + 34
*Components may not add to totals because of rounding. 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 =Entries for “Latest Quarter” are based on October and November data only. December data were unavailable due to the partial
shutdown of the Federal Government.
Manufactured (Mobile)
Home Shipments*
S hipments of new manufactured (mobile) homes to dealers were at a seasonally adjusted annual rate of
334,000 units in the third quarter of 1995, 3 percent above the previous quarter and 12 percent over the rate a
year earlier.
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
MANUFACTURERS’ 334 325 277 + 3 + 12
SHIPMENTS
*Components may not add to totals because of rounding. 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 starts figures.
Source: National Conference of States on Building Codes and Standards
National Data 14
EXISTING 4,020 4,090 3,760 - 2 + 7
HOMES SOLD
FOR SALE 1,450 1,800 1,380 - 19 + 5
MONTHS’ 4.5 5.2 4.3 - 13 + 5
SUPPLY
Home Sales*
HOUSING MARKETING
SOLD
S ales of new single-family homes totalled 666,000 units at a seasonally adjusted annual rate (SAAR) in October
and November of 1995, 9 percent below the previous quarter and about the same as in the fourth quarter of
1994. The number of new homes for sale at the end of November 1995 numbered 375,000 units, up 7 percent
from the last quarter and 11 percent over the final quarter last year. At the end of November, inventories repre-
sented a 7.2 months’ supply at the current sales rates, 12 percent above the end of the previous quarter and 9
percent above the final quarter of the previous year.
Sales of existing single-family homes reported by the NATIONAL ASSOCIATION OF REALTORS®^ for the
fourth quarter of 1995 totalled 4,020,000 (SAAR), down 2 percent from the third quarter’s level, but 7 percent
above the fourth quarter of 1994. The number of units for sale at the end of the fourth quarter fell to 1,450,000,
19 percent below the previous quarter, but 5 percent above the fourth quarter of 1994. At the end of the fourth
quarter, there was a 4.5 months’ supply of units, 13 percent below the previous quarter and 5 percent above the
fourth quarter of 1994.
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
SOLD
New Homes
NEW HOMES 666 722 659 - 9 —
SOLD
FOR SALE 375 352 338 + 7 + 11
MONTHS’ 7.2 6.4 6.6 + 12 + 9
SUPPLY
Existing Homes
Latest
Quarter =
*Units in thousands. =New home entries for “Latest Quarter” are based on October and November data only. December data were unavailable due to the
partial shutdown of the Federal Government.
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®
National Data 16
H ousing 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 ASSO-
CIATION OF REALTORS ®^ composite index value for the fourth quarter of 1995 showed that the family earning
the median income had 129.3 percent of the income needed to purchase the median-priced existing home. This
figure is 5 percent above the third quarter of 1995 and 2 percent above the fourth quarter of 1994. This increase is
the result of a 2-percent decrease in the median home price used in the series, a 20-basis-point interest rate drop,
and a 1-percent rise in median family income during the last quarter. The fixed-rate index improved from both
the third quarter of 1995 and the fourth quarter of 1994. The adjustable-rate index rose by 6 percent from the
previous quarter, but fell by 1 percent from the rate a year ago.
s
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
s
Same Quarter
Previous
Year
Source: NATIONAL ASSOCIATION OF REALTORS®
COMPOSITE 129.3 122.9 126.6 + 5 + 2
INDEX
FIXED-RATE 126.6 120.5 114.1 + 5 + 11
INDEX
ADJUSTABLE- 139.4 131.5 140.3 + 6 - 1
RATE INDEX
Housing Affordability
APARTMENTS 48.2 36.0 29.5 + 34 + 63
COMPLETED*
PERCENT 72 75 82 - 4** - 12
ABSORBED
NEXT
QUARTER
MEDIAN RENT $665 $662 $595 — + 12
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
*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
Apartment Absorptions
There were 48,200 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apart-
ments completed in the third quarter of 1995, up 34 percent from the previous quarter and up 63 percent from
the third quarter of 1994. Of the apartments completed in the third quarter of 1995, 72 percent were rented
within 3 months (the absorption rate). This absorption rate was a statistically insignificant 4 percent below
the previous quarter and 12 percent below the same quarter last year. The median asking rent for apartments
completed in the third quarter was $665, about the same as the previous quarter and 12 percent higher than a
year earlier.
17 National Data
Manufactured (Mobile)
Home Placements
Homes placed on site ready for occupancy in the third quarter of 1995 totalled 294,000 at a seasonally ad-
justed annual rate, up 1 percent from the previous quarter and up 5 percent from the third quarter of 1994. The
number of homes for sale on dealers’ lots at the end of the third quarter totalled 95,000 units, 13 percent above
the previous quarter and 30 percent above the same quarter the previous year. The average sales price of the
units sold in the third quarter was $36,570, up 4 percent from the previous quarter and 9 percent higher than
the year-earlier price.
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
PLACEMENTS* 294 292 280 + 1** + 5
ON DEALER 95 84 73 + 13 + 30
LOTS*
AVERAGE SALES $36,570 $35,070 $33,630 + 4 + 9
PRICE
Same Quarter
Previous
Year
*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
19 National Data
HOUSING FINANCE
Mortgage Interest Rates
Mortgage interest rates for all categories of loans fell from the last quarter, as they did from last year. The
contract mortgage interest rate for 30-year, fixed-rate, conventional mortgages reported by Freddie Mac was
7.34 percent in the fourth quarter, 34 basis points lower than the previous quarter and 76 basis points lower
than the same quarter last year. Adjustable-rate mortgages in the fourth quarter were going for 5.65 percent,
20 basis points below the previous quarter and 53 basis points below the same quarter last year. Fixed-rate,
15-year mortgages, at 6.87 percent, were down 32 basis points from last quarter and 174 basis points from the
same quarter last year. The FHA rate fell 33 basis points during the quarter and 150 basis points from the same
quarter last year.
%
CONVENTIONAL 7.34 7.68 9.10 - 5 - 19
FIXED-RATE
30-YEAR
CONVENTIONAL 5.65 5.85 6.18 - 3 - 9
ARMS
CONVENTIONAL 6.87 7.19 8.61 - 5 - 20
FIXED-RATE
15-YEAR
FHA 7.67 8.00 9.17 - 4 - 16
FIXED-RATE
30-YEAR
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
Sources: Federal Home Loan Mortgage Corporation; and Office of Housing, Department of Housing and Urban Development
%
National Data 20
P rivate mortgage insurers issued 268,800 policies or certificates of insurance on conventional mortgage loans
during the fourth quarter of 1995, down 6 percent from the third quarter, but up 11 percent from the fourth
quarter of 1994; these numbers are not seasonally adjusted. The U.S. Department of Veterans Affairs reported
the issuance of mortgage loan guaranties for 63,100 single-family properties in the fourth quarter of 1995, down
4 percent from the previous quarter and down 23 percent from the final quarter of 1994.
PMI and VA Activity*
FHA 1–4 Family Mortgage Insurance*
Applications for FHA mortgage insurance on 1–4 family homes were received for 215,000 ( not seasonally ad-
justed) properties in the fourth quarter of 1995, down 15 percent from the previous quarter, but up 54 percent
from the fourth quarter of 1994. Endorsements or insurance policies issued totalled 150,500, down 5 percent
from the third quarter of 1995 and down 11 percent from the fourth quarter of 1994. Endorsements for refinanc-
ing moved up to 18,600, up 36 percent from the third quarter of 1995, but down 36 percent from a year earlier.
Loans
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Loans^ Same Quarter
Previous
Year
APPLICATIONS 215.0 251.7 139.6 - 15 + 54
RECEIVED
TOTAL 150.5 159.0 168.9 - 5 - 11
ENDORSEMENTS
PURCHASE 131.9 145.3 140.0 - 9 - 6
ENDORSEMENTS
REFINANCING 18.6 13.7 28.9 + 36 - 36
*Thousands of properties. Source: Office of Housing, Department of Housing and Urban Development
TOTAL PMI 268.8 287.0 242.7 - 6 + 11
CERTIFICATES
TOTAL VA 63.1 65.8 82.4 - 4 - 23
GUARANTIES
Latest
Quarter
Previous
Quarter
% Change
From Previous
Quarter
% Change
From
Last Year
Same Quarter
Previous
Year
*Thousands of loans. Sources: PMI-Mortgage Insurance Companies of America; VA-Department of Veterans Affairs
