Freddie Still Bullish on New-Home Sales

Freddie Still Bullish on New-Home Sales
Freddie Mac   article by Daily Real Estate News | March 5, 2018

House 1032New-home sales may have started 2018 by softening, but that hasn’t made Freddie Mac economists lose their optimism that the sector will be key to driving the housing market in 2018. New-home sales plunged 7.8 percent in January month over month, but economists remain hopeful.

“While existing home sales may struggle to top their best-in-over-a-decade 2017 performance, new home sales should provide enough growth to push total home sales in the U.S. modestly higher in 2018,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Housing construction continues to lag demand by a wide margin, so we expect to see housing starts grind higher in 2018.”

Freddie Mac economists also predict that tax reform recently enacted will have a limited influence on national home prices. Certain markets with higher average incomes and those with higher property tax rates may see an impact on home prices ranging up to 2 percentage points, Freddie Mac predicts.

Instead, economists predict the highest impact on home prices will come from rising mortgage rates. Freddie Mac has revised its forecasts on mortgage rates since its January Outlook. It now predicts the 30-year fixed-rate mortgage to average 4.6 percent for 2018, up from its 4.5 percent forecast in January.

Home prices are expected to continue to increase too. The most recent release of the Freddie Mac House Price Index shows U.S. house prices increased 7.1 percent from December 2016 and December 2017.

“With construction ramping up slowly to meet demand, house prices should continue to increase, though the pace of growth may moderate as higher interest rates pinch affordability and the tax bill shifts the balance between buy and rent,” says Kiefer.

Freddie Mac estimates that about $14.8 billion in net home equity was cashed out during the fourth quarter for the refinance of conventional prime-credit mortgages (adjusted for inflation in 2017 dollars). That does represent a decrease from $19 billion the year prior.

Source: “Will the New Tax Bill Dampen the Industry?” Freddie Mac Outlook (Feb. 27, 2018) and “Freddie Mac Still Predicts New Home Sales to Drive 2018 Growth,” HousingWire (Feb. 28,2 018); REALTOR® Magazine Online, Daily Real Estate News 030518

Most People Want Single-Family Homes

Most People Want Single-Family Homes
Article by Daily Real Estate News | March 15, 2016

2932 Polo Club 1The suburbs still reign in the eyes of buyers. A new NAR survey reveals that a majority of consumers looking to buy in the next six months want a single-family home outside of an urban area.

According to The Housing Opportunities and Market Experience (HOME) survey, a whopping 85 percent of owners and 75 percent of renters want to buy a single-family home. Just 15 percent of owners and 21 percent of renters are looking to buy in an urban area.

This demand for single-family homes, and the lack of inventory in many markets, underscore the need for builders to focus on creating new homes for the single-family suburban market.

“The American Dream for most consumers is not a cramped, 500-square-foot condo in the middle of the city, but instead a larger home within close proximity to the jobs and entertainment an urban area provides,” says Lawrence Yun, NAR chief economist. “While this is not a new discovery, supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first-time buyers and middle-class families.”

3_15_single_famLast year, the inventory of existing homes was around a four- to five-month supply, way below the six- to seven-month supply that most economists consider normal.

Despite ongoing inventory issues, most consumers still believe that now is a good time to buy a home. The survey showed that 82 percent of owners and 62 percent of renters are optimistic about now being a good time to buy, though renter optimism is down slightly.

4 Key Takeaways:

Size and location: Most households anticipate their next housing purchase will be of similar size and in a similar location to where they currently live, though renters and younger buyers said their next purchase will be bigger than their current home. Of those currently living in an urban area, just 39 percent would purchase their next place in a similar location.

Prices: Half of those surveyed said that home prices in their area have gone up in the last year, and forty-four percent believe that prices will continue to increase over the next six months.

Economy: 48 percent of people are optimistic about the state of the U.S. economy, down slightly from last quarter’s survey.

Selling: 56 percent of respondents say that now is a good time to sell a home.

Source: National Association of REALTORS®; REALTOR® Magazine Online 031516

Kenneth Bargers, REALTOR® | Pilkerton Realtors
(615) 512-9836 cellular (615) 371-2474 office kb@bargers-solutions.com email
www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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Housing Outlook for 2016: Expect Change

Housing Outlook for 2016: Expect Change
Article by Daily Real Estate News | December 28, 2015

Treed-Home-LotWhile change is coming to the mortgage market, Freddie Mac says in its 2016 housing forecast that it’s too soon to tell whether marketplace lending is the next Uber or just another flash in the pan.

“The current generation of marketplace lenders all may fail in the next economic downturn,” says Sean Becketti, Freddie Mac’s chief economist. “Regulators may impose higher standards on marketplace lenders. The cost advantages of marketplace lending may not extend to mortgage lending.”

But Becketti says the new year will undoubtedly bring changes: “Innovation is difficult to stop. New startups will look for ways to improve upon current marketplace lending business models. Large bank lenders may incorporate the most successful of the marketplace lending innovations. It’s difficult to say where all this will lead, but one prediction is indisputable. Expect change.”

Here are five more predictions for 2016 from the mortgage giant:

  1. The 30-year fixed-rate mortgage will likely average below 4.5 percent for 2016 on an annualized basis.
  2. Mortgage rates will gradually move higher posing an affordability challenge. But expect a strengthening labor market and pent-up demand to carry momentum into 2016.
  3. Home prices will likely moderate slightly to 4.4 percent in 2016, driven in part by the reduction in home buyer affordability and reduced demand as a result of Fed tightening.
  4. But industry activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16 percent year-over-year and total home sales to increase 3 percent.
  5. While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 122815

Kenneth Bargers, REALTOR® | Pilkerton Realtors
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www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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94% of Young Renters Want to Buy

94% of Young Renters Want to Buy
Article by Daily Real Estate News | December 17, 2015

REALTORlogoNearly all renters 34 years of age or younger questioned in a new survey from the National Association of REALTORS® say they want to own a home in the future. The survey, Housing Opportunities and Market Experience (HOME), tracks topical real estate trends, and asks consumers whether or not it’s a good time to buy or sell a home and about their expectations and experiences in the mortgage market.

“Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” says NAR Chief Economist Lawrence Yun, adding that market conditions are creating a “sizeable, pent-up demand for buying.”

Meet the New HOME Survey
From March 2015 until earlier this month, survey research firm TechnoMetrica Market Intelligence contacted U.S. households via random-digit dial (one-third via cell phones and two-thirds via land lines). Approximately 900 qualified households responded to the survey each month, adding up to a total of 9,034 household responses being represented in this iteration of the report. The association may add new questions to the survey as the need arises to gather data about timely topics impacting real estate. The next quarterly report of HOME Survey data is scheduled to be released by NAR on Tuesday, March 15, 2016.

Looking at renters overall, 83 percent say they want to own, and 77 percent believe homeownership is part of their American Dream.

The monthly survey, the results of which NAR will release quarterly, also fuels an index tracking the financial outlook of households. The Personal Financial Outlook Index has slowly trended upward since the tracking began in March, and in December reached its highest reading. While responses have been steadily becoming more positive overall within the index, the most optimistic segments were younger households, renters, and those in urban areas.

“Young adults, who make up the majority of all renter households, are typically more optimistic about their future,” says Yun. But, despite a sunnier view of their own prospects, only half of all respondents (both renters and owners) believe the economy is currently improving, and 44 percent think the economy is actually in a recession. Renters were slightly more optimistic about current economic conditions, with 57 percent believing the economy is improving. Yun says this “can be attributed to the fact that some areas have been slow to recover and wages have yet to grow in a meaningful way for far too many families.”

Thankfully, confidence in the economy is not a prerequisite for an interest in home ownership; 76 percent of renters who don’t think the economy is improving still want to eventually buy a home. Among all surveyed age groups, 84 percent believe owning a home is a good financial decision. A majority of both homeowners (82 percent) and renters (68 percent) say they believe that it’s a good time to buy a home, and 61 percent of current owners believe it is a good time to sell.

So what’s keeping some out of the market? The top two reasons given by renters for not currently owning was the inability to afford it (53 percent) and needing the flexibility of renting (19 percent). When asked what would likely be the main reason for buying in the future, 33 percent of renters cited getting married, starting a family, or retiring as a trigger. Another 26 percent said an improvement in their financial situation would make the difference.

Also, consumers are not nearly as bullish about the mortgage market as they are about housing. Around two-thirds of respondents predict it would be very or somewhat difficult to obtain a mortgage at this time, and 5 percent of renters surveyed had recently tried and failed to obtain financing for a home.

Source: “NAR HOME Survey: Desire to Buy Strong despite Affordability, Economic Concerns,” Realtor.org (Dec. 17, 2015); REALTOR® Magazine Online, Daily Real Estate News 121715

Kenneth Bargers, REALTOR® | Pilkerton Realtors
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www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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Housing Has ‘Best Quarter in Nearly a Decade’

Housing Has ‘Best Quarter in Nearly a Decade’
Article by Daily Real Estate News | November 13, 2015

REALTORlogoHome prices are showing signs of slowing to a healthier pace, according to the National Association of REALTORS®’ latest quarterly housing report.

In fact, Lawrence Yun, NAR’s chief economist, says there’s no question the housing market in the third quarter had its best quarter in nearly a decade.

Oct2015-salesimage“The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” Yun says. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.”

Nationwide, the existing single-family home price in the third quarter was $229,000, up 5.5 percent from the third quarter of 2014.

Meanwhile, existing-home sales, including single-family and condo sales, rose 3.4 percent to a seasonally adjusted annual rate of 5.48 million in the third quarter. Existing-home sales are 8.3 percent higher than a year ago, shows NAR’s report.

Sales had the potential to move higher last quarter given the drop in mortgage rates and favorable economic conditions, Yun says.

“Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers, especially first-time buyers, are able to afford,” says Yun.

The median existing single-family home price rose in 87 percent of tracked markets, with 154 out of 178 metro areas showing gains, according to closings in the third quarter compared to a year ago. Only 24 areas, or 13 percent, of tracked areas recorded lower median prices from a year earlier.

“Many of the metro areas with the fastest price appreciation over the past year were in the South – particularly in Florida,” says Yun. “A combination of solid job gains, above average shares of vacation and foreign buyers and little new construction being added was behind these areas’ faster price growth.”

With inventory levels nationwide, 2.21 million existing homes were available were sale by the end of the third quarter, under the 2.28 million homes for sale at the end of the third quarter one year ago, NAR’s report shows. The average supply in the third quarter was 4.9 months, down from 5.5 months a year ago.

The pool of potential buyers still outweighs what’s available for sale in many markets this fall, says NAR’s 2015 President Chris Polychron.

“REALTORS® are still reporting that many homes are going under contract more quickly than what’s typical this time of year,” Polychron says. “While this is certainly beneficial to home owners looking to sell, some are still reluctant to list out of concerns they’ll have limited time and choices during their own home search.”

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 111315

Kenneth Bargers, REALTOR® | Pilkerton Realtors
(615) 512-9836 cellular (615) 371-2474 office kb@bargers-solutions.com email
www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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Are Higher Home Prices Spooking Buyers?

Are Higher Home Prices Spooking Buyers?
Article by Daily Real Estate News | September 29, 2015

HouseForSaleContracts to buy homes dropped nationwide in August, as home prices continued to inch upward, the National Association of REALTORS® reports. Modest increases in pending home sales in the West were offset by declines in all other regions last month.

NAR’s Pending Home Sales Index – a forward-looking indicator based on contract signings – retreated 1.4 percent in August to a 109.4 reading. Despite the drop, pending home sales remain 6.1 percent above August 2014 levels.

PendingSalesAug2015Buyer demand is continuing to outpace the housing supply and it’s also prompting home prices to increase in many markets across the country, says Lawrence Yun, NAR’s chief economist.

“Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” Yun says. “Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.”

Yun predicts that sales will maintain their current pace in the months ahead. But, he cautions, there are several headwinds that could impact housing.

“The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being,” Yun says. “Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales.”

Still, NAR says the national median existing-home price will likely rise 5.8 percent this year, reaching $220,300. Also, existing-home sales likely will rise 7 percent to around 5.28 million – 25 percent below the prior peak set in 2005.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 092915

Kenneth Bargers, REALTOR® | Pilkerton Realtors
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www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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Builder Confidence Continues to Rise

Builder Confidence Continues to Rise
Article by National Association of Home Builders | September 16, 2015

NAHB-LogoBuilder confidence in the market for newly constructed single-family homes continued its steady rise in September with a one point increase to a level of 62 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It is the highest reading since October 2005.

“The HMI shows that single-family housing is making solid progress, said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. “However, our members continue to tell us that they are concerned about the availability of lots and labor.”

“NAHB is projecting about 1.1 million total housing starts this year,” said NAHB Chief Economist David Crowe. “Today’s report is consistent with our forecast, and barring any unexpected jolts, we expect housing to keep moving forward at a steady, modest rate through the end of the year.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Two of the three HMI components posted gains in September. The index measuring buyer traffic increased two points to 47, and the component gauging current sales conditions rose one point to 67. Meanwhile, the index charting sales expectations in the next six months dropped from 70 to 68.

Looking at the three-month moving averages for regional HMI scores, the West and Midwest each rose one point to 64 and 59, respectively. The South posted a one-point gain to 64 and the Northeast dropped one point to 46.

### Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com. ###

Source: National Association of Home Builders, NAHB Article 091615
Kenneth Bargers, REALTOR® | Pilkerton Realtors
(615) 512-9836 cellular (615) 371-2474 office kb@bargers-solutions.com email
www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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