New-Home Market Expected to Strengthen

New-Home Market Expected to Strengthen
Article by Daily Real Estate News | August 10, 2015

NAHB-LogoNew-home sales have been edging up since 2012, and the builder’s trade group predicts that sales will to continue to rise for the rest of the year and into 2016.

“Strong job gains are bolstering housing demand,” notes economists at the National Association of Home Builders’ Eye on Housing blog. “Rising builder confidence, housing starts, and low interest rates all point to continuing recovery in the housing sector, even as industry headwinds, including access to lots and labor, will produce bumps along the road.”

One bump came in the most recent Commerce Department report that showed sales of newly built single-family homes dropped 6.8 percent in June to a seven-month low. Builders believe a pick up is on the way.

For one, the National Association of REALTORS®’ Pending Home Sales Index recently showed contracts for existing-homes to be up 8.2 percent in June year-over-year. Builders believe that gains in existing home sales are key in helping the new-home market grow with move-up buyers as well as provide a boost to the remodeling market, NAHB notes.

“Home purchase activity will need to grow faster if ongoing declines in the home ownership rate are to reverse,” NAHB notes on its blog.

The recent demand for rental properties by would-be first-time home buyers has caused the home ownership rate to plunge to a 35-year low at 63.4 percent.

However, household formations has been on the rise. In the second quarter, total households were at slightly under 117.3 million, a year-over-year increase of 1.6 million.

“Growth in household formations should improve demand for both owner and renter housing,” NAHB notes.

Also, a strengthening economy during the second half of this year also should help the new-home market see a gain in sales, NAHB notes.

Source: “Eye on the Economy: Pace of Home Sales Weakens in June,” National Association of Home Builders’ Eye on Housing (Aug. 5, 2015); REALTOR® Magazine Online, Daily Real Estate News 081015

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Home Prices Reach an All-Time High

Home Prices Reach an All-Time High
Article by Daily Real Estate News | July 23, 2015

The rise in buyer demand combined with a limited number of homes for sale pushed the national median sales price above its 2006 peak and to a record high, according to the National Association of REALTORS®.

The median existing-home price for all housing types reached $236,400 in June – 6.5 percent above year ago levels and surpassing the peak median sales price set in July 2006 at $230,400.

jul15_fb_regional_ehs_juneAlong with a boost in home prices last month, existing-home sales also reached the highest pace in more than eight years. Lawrence Yun, NAR’s chief economist, calls this year’s spring buying season the strongest since the downturn.

“Buyers have come back in force, leading to the strongest past two months in sales since early 2007,” Yun says. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.”

Yun says that June’s sales also likely got a boost by the spring’s initial phase of rising mortgage rates. That “usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher,” Yun says.

Total sales of completed single-family, townhome, condo, and co-op transactions ticked up 3.2 percent last month to a seasonally adjusted annual rate of 5.49 million and are nearly 10 percent above year ago levels. Sales also are the highest pace since February 2007. All major regions of the U.S. saw sales move higher in June.

The number of homes for-sale across the country remains low, as housing inventories only saw a 0.9 percent increase in June to 2.30 million existing homes for-sale. Inventories are 0.4 percent higher than a year ago. Unsold inventory is at a 5-month supply at the current sales pace.

“Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,” says Yun. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.”

But with inventories still low, properties are selling faster. Forty-seven percent of homes sold in less than a month in June, according to NAR. Properties typically stayed on the market for 34 days in June, the shortest number of days since NAR began tracking in May 2011. Short sales had the longest days on the market with a median of 129 days, while foreclosures sold in 39 days. Non-distressed homes were on the market for 33 days.

Chris Polychron, NAR’s president, says that real estate professionals are reporting drastic imbalances of supply compared to buyer demand in several metro areas, most notably in the West.

“The demand for buying has really heated up this summer, leading to multiple bidders and homes selling at or above the asking price,” Polychron says. “Furthermore, tight inventory conditions are being exacerbated by the fact that some home owners are hesitant to sell because they’re not optimistic they’ll have adequate time to find an affordable property to move into.”

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 072315

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Contracts to Buy Homes Reaches 9-Year High

Contracts to Buy Homes Reaches 9-Year High
Article by Daily Real Estate News | June 30, 2015

2932 Polo Club 1Pending home sales continued to make gains last month, rising to the highest level since April 2006, according to the National Association of REALTORS®’ Pending Home Sales Index, a forward-looking indicator based on contract signings.

Large gains in pending home sales in the Northeast and West helped to offset small decreases in the Midwest and South.

NAR’s Pending Home Sales Index rose 0.9 percent in May to 112.6 in May. The index is at its highest level since April 2006 when it was 113.7.

“The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” says Lawrence Yun, NAR’s chief economist. “It’s very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive.”

Yun says this year’s strong sales are causing home prices to rise to an “unhealthy and unsustainable pace.”

“Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages,” says Yun. “Without meaningful gains in new and existing supply, there’s no question the goalpost will move further away for many renters wanting to become home owners.”

Here’s a closer look at how the Pending Home Sales Index performed regionally in May:

  • Northeast: rose 6.3 percent to 93.9 last month and is 10.6 percent above a year ago.
  • Midwest: fell 0.6 percent to 111.4 but remains 7.8 percent above year ago levels.
  • South: dropped 0.8 percent to 127.8 but are still 10.6 percent above last May.
  • West: rose 2.2 percent to 104.5 in May and are 13 percent above a year ago.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 063015

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First-Time Buyers Fuel Latest Sales Boost

First-Time Buyers Fuel Latest Sales Boost
Article by Daily Real Estate News | June 22, 2015

REALTORlogoExisting-home sales rose in May to their highest pace in nearly six years, largely attributed to a big rise in the number of first-time home buyers, according to the National Association of REALTORS®’ latest housing report, released Monday. All major regions saw sales increases in May, with the Northeast seeing the most notable rise.

Existing-home sales – measured as completed transactions of single-family homes, townhomes, condos, and co-ops – climbed 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. Sales are 9.2 percent above last year at this time.

The market share of first-time home buyers rose to 32 percent of transactions in May, matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers, NAR reports.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low downpayment programs,” says Lawrence Yun, NAR’s chief economist. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

As the supply of homes remain tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation, Yun notes. “Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above 4 percent,” Yun says.

5 Stats to Gauge the Market

Here’s an overview on key market conditions from NAR’s latest existing-home sales report:

  1. Inventory: Total housing inventory rose 3.2 percent to 2.29 million existing homes available for sale by the end of May. That is 1.8 percent higher than a year ago. Unsold inventory currently is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.
  2. Home prices: The median existing-home price for all housing types was $228,700 in May – nearly 8 percent above May 2014 home prices.
  3. Days on the market: Properties typically stayed on the market for 40 days in May, up from 39 days in April. Still, that marks the third shortest time since NAR began tracking days on the market in May 2011. Forty-five percent of homes sold in May were on the market for less than a month.
  4. All-cash sales: All-cash sales comprised 24 percent of transactions in May, down considerably from a year ago when they made up 32 percent of transactions. Individual investors, who account for the bulk of cash sales, purchased 14 percent of homes last month, down from 16 percent a year ago. Sixty-seven percent of investors paid cash in May.
  5. Distressed sales: Foreclosures and short sales remained at 10 percent for the third consecutive month in May. Distressed sales are below the 11 percent share a year ago. Seven percent of May sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in May while short sales were also discounted 16 percent.

Regional Breakdown

The following is a snapshot of how existing-home sales fared across the country in May:

  • Northeast: existing-home sales rose 11.3 percent to an annual rate of 690,000. Sales are now 11.3 percent above a year ago. Median price: $269,000, up 4.8 percent above May 2014 levels.
  • Midwest: existing-home sales rose 4.1 percent to an annual rate of 1.27 million in May. Sales are 12.4 percent above May 2014. Median price: $181,900, up 9.4 percent from a year ago.
  • South: existing-home sales increased 4.3 percent to an annual rate of 2.18 million in May, and are 6.9 percent above year ago levels. Median price: $198,300, up 8.2 percent from a year ago.
  • West: existing-home sales increased 4.3 percent to an annual rate of 1.21 million in May, and are 9 percent above a year ago. Median price: $324,000, up 10.2 percent above May 2014.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 062215

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Visual Inspections Key to Garage Door Safety

Visual Inspections Key to Garage Door Safety
Courtesy of Nashville Home Inspections | June 2015 Monthly Tip

Garage-3As long as garage doors go up and down… and do so in a reasonably quiet fashion… most homeowners don’t give this important entryway much thought. But get locked out of the front door, or have the garage door freeze in place (up and down) and it will loom front and center on everyone’s mind. Not only are ingress and egress blocked, but cars, bikes, lawn mowers and other equipment may be inaccessible.

Experts make several suggestions when it comes to garage door maintenance. The first and easiest one is a visual inspection that can be carried out monthly or bimonthly by standing inside the garage with the door closed. A visual examination of the garage door springs, cables, rollers, pulleys and mounting hardware may reveal signs of wear or damage. Things to notice in particular are cable wear or fraying, loose hardware anything that doesn’t look – or sound right. At this point, closer inspection by a professional may be warranted.

Garage-1It is easy today to take the operation of an automatic garage door for granted. In fact, automatic doors were a rarity fifty years ago, and when first included in new construction, not always installed with safety in mind. A federal law, enacted in 1992, changed that, requiring all doors manufactured after January 1, 1993, to be equipped with a reversing mechanism and a sensor to prevent entrapment. The U.S. Consumer Product Safety Commission (CPSC) prompted the law to reduce the number of deaths to children who become entrapped under garage doors with automatic openers.

If an automatic door does not include these features, it is recommended that the system be replaced for safety reasons. Doors that are equipped with pressure sensors can be tested by placing a 2 x 4 on the ground underneath the closing door. This will allow the door to press against an unyielding object. If the door does not automatically reverse direction, the door should be immediately serviced by a trained technician. Testing the force it takes to reverse the door can be done by holding the bottom of the door with hands outstretched and firm. If the door continues to close, the sensor could be set too high and there may be an issue.

To test the photo eye sensor, if that is the system in the garage door, waving an object such as a broomstick in front of one of the door’s photo eyes should cause the door to reverse direction. If the door continues downward, and cleaning the eye with a cloth does not help, a technician should be enlisted.

Depending on the age of the garage door, it may come with self-lubricated or plastic parts that need no oil. In an older door, that may not be the case. After using a leaf blower to remove any debris trapped in the door tracks (this can also be done using a rag or brush), a small amount of spray lubricant applied to door hinges, rollers and tracks may keep the mechanism sliding smoothly.

The rubber seal on the bottom of the garage door is an important line of defense against rodents and other pests, as well as dirt, debris or moisture. If the rubber seal has hardened or chipped, the seal should be replaced. This can be done for under $100.

Although it’s easy to forget, it never hurts to clean and inspect the interior door leading into the house in an attached garage. This should be done at least every other year, if not every year. To keep energy from escaping into and out of the garage, this door should be properly weather-stripped with a threshold seal that fits snugly against the bottom of the door.

Most building codes require this door to be fire-rated and self-closing. If the door is damaged or put in place before more stringent fire codes were enacted, a new fire-rated door can be purchased and installed. Check with your local municipality for exact building codes.

Source: John Watkins, Nashville Home Inspection; June 2015 Monthly Tip eblast distribution

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Builder Confidence Hits Yearly High in June

Builder Confidence Hits Yearly High in June
Press Release by National Association of Home Builders | June 15, 2015

NAHB-Logo(June 15, 2015) Builder confidence in the market for newly built, single-family homes in June rose five points to a level of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. This is the highest reading since September 2014.

“Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

“The HMI indices measuring current and future sales expectations are at their highest levels since the last quarter of 2005, indicating a growing optimism among builders that housing will continue to strengthen in the months ahead,” said NAHB Chief Economist David Crowe. “At the same time, builders remain sensitive to consumers’ ability to buy a new home.”

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.

All three HMI components posted healthy gains in June. The component gauging current sales conditions jumped seven points to 65, the index charting sales expectations in the next six months increased six points to 69, and the component measuring buyer traffic rose five points to 44.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each rose three points to 60 and 44, respectively. The West posted a two-point gain to 57 while the Midwest dropped by one point to 54.

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); Builder Confidence Hits Yearly High in June, Press Release 061515

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Housing on Track for Best Year Since 2006

Housing on Track for Best Year Since 2006
Article by Daily Real Estate News | June 11, 2015

Realtor-comThe residential real estate market, now at its midpoint in 2015, is on track for its best year since the peak of the housing bubble in 2006, notes realtor.com® chief economist Jonathan Smoke. But as Smoke is quick to point out, this time it’s not a housing bubble.

That’s because job growth is fueling the most recent climb in demand for homes. More than 3 million jobs have been created in the past 12 months.

As job growth increases, demand has followed. Homes are selling more quickly. The median age of inventory from homes on the market nationwide in May was 66 days – eight days faster than last year. Some markets are even seeing inventory move in just 18 to 45 days too, realtor.com® notes.

“A rapidly declining age of inventory signals that demand is growing more rapidly than supply,” Smoke writes in commentary at realtor.com®. “Indeed, we’ve had 32 months in a row of existing-home inventory at less than a six months’ supply. That’s why we’re also seeing above-normal price appreciation.”

Median home prices rose 9 percent in April year-over-year. Home owners are seeing strong gains in equity lately.

At the real estate’s market current level of growth, total home sales this year could near 6 million, which is near the peak seen in 2006, Smoke notes.

Source: “Midyear Report: The Housing Market Is on Track for Its Best Year Since 2006 (and it Ain’t a Bubble),” realtor.com® (June 10, 2015); REALTOR® Magazine Online, Daily Real Estate News 061115

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