Category Archives: home sales

Money Matters Hold Back Housing Sentiment

The number of Americans who say it’s a good time to sell a house rose 5 percent in June, according to Fannie Mae’s monthly Home Purchase Sentiment Index. That represents an all-time survey high. Combined with a 3 percent bump in the number of survey respondents who said it was a good time to buy a house, the results seem to show an increasing optimism about the real estate market. But though participants may see opportunity, concerns about their personal income and the direction of the overall economy may be holding them back. In fact, money worries led to a 2.1 percent drop in overall sentiment from the previous month’s highs. “The HPSI’s pullback in June from last month’s survey-high reading suggests a slight weakening in the 12-month outlook for housing activity,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “Pending home sales have pulled back in the face of continued home price growth, and we’re seeing some softening in the higher priced components of the market. Growing pessimism about the overall direction of the economy gives us further pause as it now stands at the highest level we’ve seen in our National Housing Survey in the last two years.” According to Duncan, real improvement will require more affordable homes available for sale and a significant boost in Americans’ income growth perceptions. More here.


Low Inventory Presents Challenge For Buyers

Home buyers looking to buy a house this year have been met with a more challenging housing market than in years past. Following the housing crash, supply outweighed demand and the market favored buyers. With more homes than buyers, prices were low and buyers had all the negotiating power. This year, on the other hand, higher home prices, fewer choices, and more competition from other buyers have led to increasing concerns about affordability and the likelihood of finding the right house. According to a recent gathering of housing economists at the annual convention of the National Association of Real Estate Editors, low inventory is at the root of all of these issues. That’s because, when there are more buyers than there are homes for sale, home prices increase and sellers have the upper hand. Speakers at the convention, including the National Association of Realtors’ chief economist, Lawrence Yun, and Realtor.com’s, Jonathan Smoke, pointed to inventory as key to balancing the market and helping moderate home price increases. “One thing holding back the market is supply,” Smoke said. “Inventory continues to be constrained despite demand.” Yun agreed, calling inventory, “grossly inadequate.” Fortunately, high buyer demand and still-low mortgage rates have helped affordability levels and kept home sales numbers up despite low inventory in many markets. More here.


Metro Housing Markets Improve Year-Over-Year

According to Freddie Mac’s Multi-Indicator Market Index – which measures how far individual housing markets have rebounded since their post-recession lows – nearly 100 percent of the nation’s top metropolitan areas have shown year-over-year improvement. Additionally, 49 of 50 states have also posted positive annual gains. Len Kiefer, Freddie Mac’s deputy chief economist, says the nation’s housing markets continue to improve and, if global economic uncertainty keeps mortgage rates low for an extended period, there may be more gains to come. “Seven years into the recovery from the Great Recession, most of the nation’s housing markets remain below their historical benchmarks, but continue to grind higher month-by-month,” Kiefer said. “Nationally, MiMi in April 2016 is 84.1, a 7.37 percent year-over-year increase and the 48th consecutive month of year-over-year increases … If global factors like the Brexit put significant downward pressure on long-term mortgage rates, the U.S. housing market could benefit from increased affordability, helping to partially offset the impact of house prices, which are rising around six percentage points year over year nationally.” Compared to last year, the most improved metro areas included Orlando, Tampa, Denver, Cape Coral, and Portland. More here.


Pending Sales Down After Consecutive Gains

The National Association of Realtors Pending Home Sales Index tracks the number of contracts to buy homes signed each month. The Index’s focus on signings, not closings, means it is often a good indicator of future home sales. In May, the Index fell 3.7 percent. It was the first monthly decline after three consecutive months of increases. It was also the first time in two years that results dropped below year-before levels. But despite the seemingly bad news, May’s reading was still the third highest in the past year. Lawrence Yun, NAR’s chief economist, said there are not enough homes available for sale to keep up with the level of demand. “With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” Yun said. “Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.” All four regions of the country experienced month-over-month declines, according to May’s report. More here.


Survey Finds Home Prices On The Rise

The S&P/Case-Shiller U.S. National Home Price Index is considered the leading measure of U.S. home prices. Released monthly, the index looks at home price movement on both a monthly and annual basis. According to the most recent release, home prices are up 5 percent over last year’s level. David Blitzer, managing director and chairman of the index committee at S&P Down Jones Indices, says prices continue to rise, though there is some uncertainty on the horizon. “The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5 percent or greater annual rate for six consecutive months,” Blitzer said. “The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook. One result is that an increasing number of cities have surpassed the high prices seen before the Great Recession … However, the outlook is not without a lot of uncertainty and some risk.” According to Blitzer, economic uncertainty caused by events in Europe and the U.S. election could have an effect in the coming months. In addition, the index found prices beginning to soften in some markets. For example, the latest release shows 16 of the 20 cities included in the index having experienced either a price decrease or smaller increases on a month-over-month basis. More here.


Americans See Housing As Key To Security

A recent survey from the MacArthur Foundation found Americans overwhelmingly feel that affordable housing is an important part of achieving economic security. In fact, 85 percent of respondents said it was very important to achieving a secure, middle-class lifestyle. The only thing that ranked higher was a good job. Still, a majority of participants also said affordability was a problem in America and that it is more difficult to find an affordable place to live now than it was for previous generations. Julia Stasch, president of the MacArthur Foundation says too many Americans feel their dreams of owning a home are unattainable. “Too many Americans today believe the dream of a decent, stable home, and the prospects for social mobility, are receding,” Stasch said. “Having a decent, stable, affordable home is about more than shelter. It is at the core of strong, vibrant, and healthy families and communities. This survey demonstrates that the public wants action to address the nation’s real and pervasive housing affordability challenges.” The feeling that something should be done to address the issue is strong, with 86 percent of renters and 71 percent of homeowners agreeing that elected leaders should be making affordable housing a priority. More here.


Sales Of Newly Built Homes Fall In May

New home sales fell in May, according to new numbers released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. After soaring to an 8-year high the month before, sales dropped lower than economists expected, falling 6 percent from April. But despite the decline, sales remain 8.7 percent above last year’s level. Regionally speaking, the report showed significant differences between sales in some parts of the country compared to others. For example, new home sales tumbled 33 percent in the Northeast, while gaining 12.9 percent in the Midwest. The South, on the other hand, was nearly unchanged from the previous month and the West saw a double-digit decline. Also in the report, the median price of a new home rose to $290,400; the average price was $358,900. In recent years, both new home sales and construction have shown great improvement. Much of that improvement has taken place at the higher end of the market, however, raising the price of a typical new home. An increase in the number of new homes built at affordable prices would be good news for the overall market, as it would help relieve upward pressure on prices while providing home buyers with more choices. More here.


Existing Home Sales Hit 9-Year High

New estimates from the National Association of Realtors show home sales at their highest annual pace since February 2007. In fact, sales of previously owned homes increased 1.8 percent in May, marking the third consecutive monthly sales gain. Lawrence Yun, NAR’s chief economist, says most of the sales activity is from repeat buyers. “This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” Yun said. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.” Regional results show sales up in the South, West, and Northeast. The Midwest, on the other hand, saw a 6.5 percent decline – though sales remain 3.2 percent above last year’s level. Also in the report, the number of homes available for sale rose in May. At the current sales pace, unsold inventory represents a 4.7-month supply. Typically, a six month supply is considered a healthy market. More here.


Housing Market Improves Despite Jobs Dip

An improving job market has been one of the many positive economic trends credited with helping lift the housing market over the past few years. Analysts believed real estate would overcome periods of volatility and continue to show long-term improvement based on the fact that more Americans were finding work and reporting higher incomes. In May, however, a weaker-than-expected jobs report made news at a time when the housing market was beginning to pick up. So should you expect a downturn if employment begins to weaken? According to Fannie Mae’s monthly forecast from their Economic & Strategic Research Group, not necessarily. In fact,the group didn’t adjust their forecast for economic growth this year and Doug Duncan, Fannie Mae’s chief economist, says the housing market is getting stronger. “Housing activity is gaining strength heading into the summer, with pending home sales rising to a decade high. In addition, new home sales surged to an expansion best, a positive for single-family homebuilding, especially since only a small share of new homes for sale are completed and ready to occupy,” Duncan said. “However, recent pullbacks in construction hiring, likely due to a shortage of skilled workers, could weigh on the outlook for the sector. With little improvement in the current housing supply so far, we expect only moderate housing expansion this year.” Duncan also said that, though the Fed decided not to raise interest rates at their latest meeting, he expects they will likely raise rates again at some point this year. More here.


New Residential Construction Flat In May

Housing starts refer to the number of homes that broke ground during the month. The U.S. Census Bureau and the Department of Housing and Urban Development track starts – along with building permits and housing completions – as part of their monthly New Residential Construction report. According to the most recent release, privately-owned housing starts were virtually unchanged in May from one month earlier. However, regional results show the number of single-family homes that broke ground in the South, West, and Northeast actually increased over the month before. In fact, home construction spiked 12.7 percent in the Northeast alone. But overall results suffered, despite solid gains elsewhere, due to a nearly 15 percent drop in the Midwest. Still, analysts point to the fact that authorized building permits increased and home builders are feeling more confident as evidence that, despite not gaining ground in May, residential construction is still poised for continued gains. And a closer look at the numbers reveals that both housing starts and building permits are, in fact, about 10 percent higher than they were last year. New residential construction is an important indicator for the housing market because, as more new homes are built, the total number of homes available for sale increases which helps moderate prices, balance the market, and provide more choices for buyers. More here.