Nationally: Contract Signings Start Spring Season on High Note

Nationally: Contract Signings Start Spring Season on High Note
National Association of REALTORS®
article by Daily Real Estate News | March 28, 2018

Pending home sales reversed course in February, increasing in most areas of the country even as a shortage of homes for sale and higher home prices struck many markets, the National Association of REALTORS® reported Wednesday.

NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—increased 3.1 percent month over month in February to a reading of 107.5. Despite the uptick, the index remains 4.1 percent below a year ago.

“Contract signings rebounded in most areas in February, but the gains were not targeted enough to keep up with last February’s level, which was the second highest over a decade (at 112.1),” says Lawrence Yun, NAR’s chief economist. “The expanding economy and healthy job market are generating sizable homebuyer demand, but the minuscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.”

February-PHSYun says the top wild cards for the housing market in the coming months will be how both buyers and potential sellers adjust to the increase in mortgage rates and home prices. Besides higher borrowing costs, home prices nationwide also are up 5.9 percent so far in 2018, according to NAR. Some homeowners who currently have a low mortgage rate may grow even more reluctant to sell out of fears of having to buy another home at higher borrowing costs and higher home prices.

“Homeowners are already staying in their homes at an all-time high before selling, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch,” Yun says. “Even if new-home construction starts pick up at a faster pace this year, as expected, existing sales will fail to break out if these record-low supply levels do not recover enough to meet demand.”

Contract signings last month rose by the largest amounts in the Northeast, up 10.3 percent month over month, but still below 5.1 percent a year ago. Yun cautions that the Northeast region will likely see some volatility in contracts at least through March, due to multiple winter storms over the last few weeks that have likely stalled some contract signings there.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 032818

Home Sales Rebound in Kickoff to Spring

Home Sales Rebound in Kickoff to Spring
National Association of REALTORS®
article by Daily Real Estate News | March 21, 2018

Feb-EHSLow inventory levels and accelerating home prices couldn’t put a lid on existing-home sales in February. Following two consecutive months of declines, existing-home sales rebounded 3 percent in February month over month and reached a seasonally adjusted annual rate of 5.54 million, the National Association of REALTORS® reported Wednesday. Sales of existing homes, which include single-family homes, townhomes, condos, and co-ops, are now 1.1 percent higher than a year ago.

“A big jump in existing-home sales in the South and West last month helped the housing market recover from a two-month sales slump,” says Lawrence Yun, NAR’s chief economist. “The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

5 Housing Indicators to Gauge the Market

Here’s a closer look at findings from NAR’s latest housing report.

Home prices: The median existing-home price for all housing types was $241,700 in February, up 5.9 percent from a year ago.

Inventories: The number of homes for sale at the end of February increased 4.6 percent to 1.59 million. That is still 8.1 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace.

All-cash sales: All-cash sales comprised 24 percent of transactions in February, the highest since last February (27 percent). Individual investors tend to account for the biggest bulk of all-cash sales. They purchased 15 percent of homes in February, unchanged from a year ago.

Distressed sales: Foreclosures and short sales made up 4 percent of sales in February, down from 7 percent a year ago. Broken out, 3 percent of February sales were foreclosures and 1 percent were short sales.

Days on the market: Forty-six percent of homes sold last month were on the market for less than a month. Overall, properties stayed on the market for an average of 37 days in February, down from 45 days a year ago. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply,” says Yun. “To fully satisfy demand, most markets right now need a substantial increase in new listings.”

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 032118

NAR’s Yun: Housing Starts Are ‘Vastly Inadequate’

NAR’s Yun: Housing Starts Are ‘Vastly Inadequate’
National Association of REALTORS®
article by Daily Real Estate News | March 19, 2018

House 1035Fewer new homes were in the pipeline in February, as housing starts for combined multifamily and single-family homes plunged 7 percent month over month, the U.S. Commerce Department reports. Housing production for the month was at a seasonally adjusted annual rate of 1.24 million units.

“The fall in housing starts in February is a movement in the wrong direction,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “The key to economic prosperity at this juncture of economic expansion is to produce more new homes. That will help with job creation and reduce the swift price appreciation in several markets.”

A total of 1.2 million homes were constructed last year, which Yun calls “vastly inadequate.” February’s figure is just barely above year-ago levels, he adds. “It’s not enough,” Yun says. “While relaxing regulations on small-sized community banks may spur more construction loans for building, labor shortages in the industry continue to stunt overall activity.”

Multifamily production plunged 26.1 percent in February to a seasonally adjusted annual rate of 334,000 units, while single-family starts eked out a 2.9 percent gain to 902,000 units. Still, rising buyer demand, along with record-low inventory, has prompted calls from many in the real estate industry for builders to add more new homes.

Randy Noel, chairman of the National Association of Home Builders, says developers are trying to manage rising construction costs to keep home prices competitive. NAHB Chief Economist Robert Dietz says the uptick in single-family production in February follows the organization’s 2018 forecast for gradual, modest strengthening in the new-construction market.

Combined single-family and multifamily home production rose by the highest amount in the Midwest last month, up 7.6 percent month over month. However, housing starts dropped 12.9 percent in the West, 7.3 percent in the South, and 3.5 percent in the Northeast.

Source: National Association of REALTORS® and National Association of Home Builders; REALTOR® Magazine Online, Daily Real Estate News 031918

Mortgage Rates Tick Up for 9th Straight Week

Mortgage Rates Tick Up for 9th Straight Week
Freddie Mac   article by Daily Real Estate News | March 9, 2018

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Borrowers were once again faced with rising mortgage rates this week. The 30-year fixed-rate mortgage continues to be at its highest average in four years.

“The 10-year Treasury yield has been bouncing around in a narrow 15 basis point range for the last month,” explains Len Kiefer, Freddie Mac’s chief economist. “While the yield on the 10-year Treasury is currently below the high of 2.95 percent reached two weeks ago, mortgage rates are up for the ninth consecutive week. The U.S. weekly average 30-year fixed mortgage rate rose 3 basis points to 4.46 percent in this week’s survey, its highest level since January 2014.”

Lawrence Yun commented this morning on the likely impact of the surprising job numbers on mortgages.

“The strong job growth assures at least three interest rate hikes by the Federal Reserve in 2018. Because of the low unemployment rate, further normalization in monetary policy should be expected in 2019 as well, meaning another three or four rate hikes next year. Mortgage rates will therefore rise and rise—that in itself hurts housing affordability,” Yun said. “But factors that can help with affordability are more income to households (possibly a second income earner getting a job) and if home prices can finally moderate. For slower home price growth, more home construction is needed. Job openings in the construction industry remain at historic highs. It is now a matter of providing necessary skills to go into the industry.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 8:

  • 30-year fixed-rate mortgages: averaged 4.46 percent, with an average 0.5 point, increasing from last week’s 4.43 percent average. Last year at this time, 30-year rates averaged 4.21 percent.
  • 15-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, increasing from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.42 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.63 percent, with an average 0.4 point, rising from last week’s 3.62 percent average. A year ago, 5-year ARMs averaged 3.23 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 030918

Greater Nashville: Decreased Inventory Options Keep Home Buyers at Bay in February

Greater Nashville: Decreased Inventory Options Keep Home Buyers at Bay in February
Press Release by Greater Nashville REALTORS® | March 7, 2018

House 1033NASHVILLE, Tenn. (March 7, 2018) – There were 2,466 home closings reported for the month of February, according to data provided by Greater Nashville REALTORS®.

This represents a decrease of 1.6 percent from the 2,507 closings reported in February 2017. Year-to-date closings through February 2018 are 4,764, a 3.1 percent decrease from the 4,918 closings reported through February 2017.

“The winter months of December, January and February had an available housing supply of about 1.3 months available, causing some buyers to elect to wait until the potential for a larger inventory selection in spring to purchase a home,” said Greater Nashville REALTORS President Sher Powers. “A less than two percent drop in sales reflects a symptom that a thriving city will experience as more people want to live here.”

There were 3,307 sales pending at the end of the month, compared with 2,899 pending sales at this time last year. The average number of days on the market for a single-family home was 36 days.

The median residential price for a single-family home during February was $289,093, and for a condominium, it was $214,250. This compares with median residential and condominium prices of $258,950 and $192,400, respectively, at this time last year.

Inventory at the end of February was 8,359, down from 8,464 in February 2017.

“As spring approaches, housing inventory is expected to increase, as will housing competition,” said Powers. “The desirability of living in Greater Nashville has caused limited supply, particularly in the entry level and up to the median point price ranges. This is an opportunity to have conversations with affordable housing providers regarding new construction, infill and density.”

Source: Greater Nashville REALTORS® Press Release 030718

Climbing Mortgage Rates Reach 4-Year High

Climbing Mortgage Rates Reach 4-Year High
Freddie Mac   article by Daily Real Estate News | February 16, 2018

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Mortgage rates continued to inch higher this week, marking the sixth consecutive week for borrowing cost increases for home shoppers.

“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January, two-tenths of a percentage point higher than the consensus forecast,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “Inflation measures were broad-based, cementing expectations that the Federal Reserve will go forward with monetary tightening later this year. Following this news, the 10-year Treasury reached its highest level since January 2014, climbing above 2.90 percent. Mortgage rates have also surged.”

After jumping 10 basis points last week, the 30-year fixed-rate mortgage rose 6 basis points to 4.38 percent, its highest level since April 2014.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 15:

  • 30-year fixed-rate mortgages: averaged 4.38 percent with an average 0.6 point, rising from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 4.15 percent.
  • 15-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.5 point, increasing from last week’s 3.77 percent average. A year ago, 15-year rates averaged 3.35 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.63 percent, with an average 0.4 point, rising from last week’s 3.57 percent average. A year ago, 5-year ARMs averaged 3.18 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 021618

Nationally: More Markets Hitting Record-High Home Prices

Nationally: More Markets Hitting Record-High Home Prices
article by Daily Real Estate News

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It’s a good time to be a homeowner: Nearly two-thirds of housing markets across the country saw home prices at all-time highs in the fourth quarter of 2017, the National Association of REALTORS® reported Tuesday.

The national median existing single-family home price in the fourth quarter was $247,800, up 5.3 percent from a year ago. Ninety-two percent of the markets measured by NAR saw an uptick in single-family home prices. Twenty-six metros—or 15 percent—saw double-digit increases. Home prices are now at their all-time high in 64 percent of the markets NAR tracked.

“A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” says Lawrence Yun, NAR’s chief economist. “Remarkably, home prices have risen a cumulative 48 percent since 2011, yet during this same time frame, incomes are up only 15 percent. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”

By Region Here’s a closer look at how existing-home sales fared in the fourth quarter of 2017:

Northeast: Existing-home sales increased 10.1 percent in the fourth quarter but are 0.4 percent below levels a year ago. Median single-family home price: $268,100, a 4.2 percent increase from a year ago.

Midwest: Existing-home sales rose 6 percent in the fourth quarter and are 2.3 percent higher than a year ago. Median single-family home price: $193,800, up from 7.2 percent a year ago.

South: Existing-home sales increased 3.8 percent in the fourth quarter and are 1.8 percent higher than the fourth quarter of 2016. Median single-family home price: $221,600, up 5 percent from a year ago.

West: Existing-home sales reached an annualized rate of 1.23 million, which is unchanged from the third quarter. Sales were up just 0.3 percent from a year ago. Median single-family home price: $374,400, up 7.2 percent from the fourth quarter of 2016.

The increase in home prices is “certainly great news for homeowners, and especially for those who were at one time in a negative equity situation,” Yun adds. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

At the end of the fourth quarter, there were 1.48 million existing homes available for sale, which is 10.3 percent lower than a year ago.

“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” says Yun. “In areas where homebuilding has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”

The national family median income increased to $74,492 in the fourth quarter. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $55,585; a 10 percent down payment would require an income of $52,659; and a 20 percent down payment would require a $46,808 income, NAR reports.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 021318