The number of new homes that broke ground during the month of July increased from the month before, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. Housing starts were up 2.1 percent to a seasonally adjusted annual pace of 1.21 million units, the highest level since February. Economists expected starts to fall to a 1.18 million-unit pace. July’s improvement not only beat economists’ expectations but is also welcome news for home buyers. That’s because any increase in the number of new homes being built adds for-sale inventory and helps moderate price increases and balance the market. Much of the concern about the current housing market revolves around the fact that the number of homes available for sale is lower than usual and hasn’t been keeping up with buyer demand. When there are more home buyers than there are homes available for sale, home prices rise. And, though current homeowners putting their homes up for sale can help boost inventory, new home construction is vital. Regionally, home building activity was strongest in the South and West. The Northeast and Midwest, on the other hand, both saw declines. More here.
Archive for August 2016
Builders Confident In New Home Market
One way to determine the health of any particular housing market is to gauge how many new homes are being built in the area. That’s because new homes add inventory to the market, which plays an important role in moderating price increases and giving buyers more options when looking for a house to buy. For this reason, the National Association of Home Builders surveys builders each month to get a feel for how the new home market is doing. The survey scores builders’ responses on a scale where any number above 50 indicates more builders view conditions as good than poor. In August, the survey found builder confidence up two points from the month before, reaching a score of 60. In particular, the index components measuring current sales conditions and future expectations both increased. Robert Dietz, NAHB’s chief economist, says the overall housing market should continue on an upward path through the end of the year. “Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” Dietz said. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.” More here.
Survey Says Many Boomers Would Like To Move
During their lifetime, the typical American will move 11 times, according to the U.S. Census Bureau. In fact, by age 30, the average person will have changed addresses six times already. But what about older Americans? Well according to a recent survey from Freddie Mac, there are a lot of Americans age 55 and older who say they’d like to move at least one more time. Among survey respondents, 63 percent said they’d prefer to age in place but nearly 40 percent said they’d like to move. Dave Lowman, Freddie Mac’s executive vice president of single-family business, says the way we age has changed and it could have a significant impact on housing trends in the future. “Consider that at age 55, our grandparents started moving to retirement and senior living communities,” Lowman writes. “By contrast, todays’ baby boomers are a vibrant, confident generation who are living longer and are definitely on the move.” Among the top factors influencing whether or not to move, older Americans named affordability, amenities, and less maintenance as their highest priorities. Other factors included living closer to other family members, downsizing, warmer weather, and living somewhere that is walkable and has access to public transportation. More here.
Home Prices Continue To Rise In Most Metros
The National Association of Realtors’ latest quarterly report found home prices up in 83 percent of the 178 metropolitan areas included in the study. In addition, the national median existing single-family home price was 4.9 percent higher in the second quarter than it was the year before. But though that’s seemingly bad news for buyers, it is an improvement over the first three months of 2016, when 87 percent of metros saw increasing prices and the median price was up 6.1 percent. Lawrence Yun, NAR’s chief economist, says buyers are active in the market but – since there are too few homes available for sale – prices are moving upward. “Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle-tier cities,” Yun said. “However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their homes up for sale, prices continued their strong ascent – and in many markets at a rate well above income growth.” Because there are fewer houses available for sale, 40 percent of listings sold at or above their list price. In fact, June set a record for the highest share of houses selling above list price. More here.
Mortgage Rate Drop Sparks Increased Demand
According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications spiked 7.1 percent last week due to falling mortgage rates. Average rates were down for 30-year fixed-rate mortgages with both conforming and jumbo balances, as well as loans backed by the Federal Housing Administration. On the other hand, the average contract interest rate for 15-year fixed rate mortgages was unchanged from the week before. Joel Kan, the MBA’s associate vice president of industry surveys and forecasts, says lingering economic concerns pushed rates lower. “With lingering concerns over a weak second quarter reading of US GDP growth, along with continuing anxiety over global growth and financial markets, rates edged lower for the second week in a row,” Kan said. Lower rates led to a spike in refinance activity, which was up 10 percent over the previous week. It also helped boost demand for loans to buy homes 3 percent higher than the week before. Purchase activity is now 13 percent higher than it was during the same week one year earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Does Walkability Affect Home Values?
When potential home buyers are surveyed about the amenities and features they most desire in their new home and neighborhood, walkability is often high on the list. Having a house within walking distance to parks, shops, restaurants, schools and jobs is consistently coveted by buyers but not all that commonly found. In fact, a recent analysis found less than 2 percent of active listings had a “Walk Score” of 90 or higher. So, if walkability is so rare, does it affect a home’s price? In short, yes. The data showed an average increase of $3,250 per Walk Score point, though the effect was more pronounced in some areas than others. For example, in San Francisco a more walkable neighborhood increased a comparable home’s value by $187,630, while in Phoenix a similar increase in walkability only added $15,700 in value. There was even one area where proximity to businesses and services wasn’t a boost to home values. In Orange County, Calif., a walkable neighborhood had little to no effect on values due to a preference for privacy. Still, with 46 percent of older buyers and 56 percent of Millennials saying they’d prefer to buy in a walkable community, these homes – if you can find one – will more than likely be selling at a premium. More here.
Americans Say They Prefer Buying To Renting
Fannie Mae’s most recent Home Purchase Sentiment Index finds Americans feeling more optimistic about both the housing market and their income. In fact, the index set a new all-time high in July with each of the six components increasing from the month before. Perhaps most notably, the number of respondents who said they’d prefer to buy if they were going to move jumped to 67 percent, while the number who said they would rent set a new all-time low at 26 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the trend is being led by younger Americans. “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers,” Duncan said. “Whether the shift in sentiment in July toward buying rather than renting on their next move holds up or is a temporary reaction to their view that rents are on the rise and mortgage rates will be lower, we will see. However, we are getting set to release some additional research in early August showing evidence of a broader move by older millennials in the direction of ownership.” More here.
Majority of Home Sellers Say Now’s The Time
In today’s real estate market, inventory is the big story. That’s because there are too few homes for sale in many markets across the country. And, when there are fewer homes for sale, competition among buyers heats up and current homeowners can be choosy when deciding which buyer to sell to. In other words, when there are more prospective buyers than there are homes for sale, prices go up. That’s a seller’s market. And according to one recent survey, current homeowners are starting to catch on. In fact, a survey of 1,700 homeowners found 52 percent thought now was a good time to sell in their neighborhood. Last year, just 34 percent of respondents said it was a good time to sell. In addition, there was a 14 percent increase in the number of participants who said sellers have more power than buyers in today’s market. But though a competitive market and confident sellers may seem like bad news for buyers, the more current homeowners who decide to take advantage of current conditions and put their homes up for sale, the more inventory will rise. As that happens, there will be more homes to choose from and price increases will begin to slow. More here.
Housing Trends Improve In Nearly Every State
The residential real estate market’s rebound following the housing crash has been gradual, with month-over-month volatility sometimes masking the fact that things were getting better one small step at a time. Year-over-year results, on the other hand, have consistently revealed the slow upward grind of housing markets across the country. As proof of that, Freddie Mac’s most recent Multi-Indicator Market Index – which compares current conditions to long-term norms in each of the 50 states and the top 100 metropolitan areas – found that 88 percent of metros are showing an improving three-month trend. Additionally, 46 of 50 states are trending upward. Len Kiefer, Freddie Mac’s deputy chief economist, says the improvement has been consistent, if varied from region to region. “Nationally, MiMi in May registered 85, a 7.3 percent year-over-year increase and the 49th consecutive month of year-over-year increases,” Kiefer said. “Many of the Western markets continue to see strong home sales. However, it’s the Southern states where MiMi continues to register some of the strongest gains buoyed by an improving employment picture. For example, the majority of Southern states showed stronger employment growth than the national average and all of the eight markets in Florida that MiMi tracks are now back to their historic benchmark levels of housing activity.” More here.
How Real Estate Apps Have Buyers Hooked
New research from Google shows Americans spend an average of 55 minutes per visit when using real estate apps on their smartphones. The data – aimed at better understanding how buyers use technology during their house hunt – shows scanning through available homes for sale and looking at prices in different neighborhoods has become something of a past time, and not just for active buyers. In fact, the research shows that 64 percent of respondents said they keep checking homes for sale after they’ve made a purchase and one out of every five people looking at houses on real estate apps and websites aren’t actually in the market to buy. Additionally, nearly 70 percent said shopping for real estate online or on their phone was fun. The study highlights how new technology has changed how Americans shop for homes. John Thorton, a partner in Google’s real estate business, says apps and online listings have us hooked. “Customers roll over in the morning and start looking at real estate listings [on their phone],” Thorton said. Among the study’s other highlights, people begin looking at real estate sites an average of three years before they actually buy a home. More here.
