Nationally: Has the Inventory Crunch Begun to Subside?

Nationally: Has the Inventory Crunch Begun to Subside?
National Association of REALTORS® | July 30, 2018

Nashville June2018InventoryContract signings rose in all four major regions across the U.S. last month, a sign that dwindling home sales—which have plagued the market at an unusual time of year this summer—will reverse course in the coming months, the National Association of REALTORS® reports.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 0.9 percent month over month in June to a reading of 106.9. “After two straight months of declines in pending home sales, home shoppers in a majority of markets had a little more success finding a home to buy last month,” says NAR Chief Economist Lawrence Yun. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates. Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”

Despite last month’s rise, contract signings are still down 2.5 percent compared to a year ago, NAR reports. Nevertheless, Yun says the worst of the supply crunch may now have passed. In June, existing inventory was up slightly on an annual basis, marking the first increase in three years. Several large metros saw year-over-year surges in inventory levels last month:

  • Portland, Oregon.: +24 percent
  • Providence, Rhode Island: +20 percent
  • Seattle, Washington: +19 percent
  • Nashville, Tennessee: +17 percent
  • San Jose, California: +15 percent

“Home price growth remains swift, and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” Yun says. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”

Source: National Association of REALTORS®; REALTOR® Magazine 073018

Nationally: New-Home Sales May Be in Trouble

Nationally: New-Home Sales May Be in Trouble
National Association of Home Builders | July 26, 2018

House 1057Sales of newly built single-family homes plunged to an eight-month low last month at a time when sales should be at their highest points of the year. New single-family home sales dropped 5.3 percent month-over-month in June to a seasonally adjusted annual rate of 631,000, the Commerce Department reported Wednesday. This marks the lowest monthly annualized sales pace since October 2017.

Builders say ongoing supply constraints are being exacerbated by recent tariff disputes, which are raising the costs of building materials. In April 2017, the Trump administration imposed anti-subsidy duties on imports of Canadian softwood lumber. Builders have said that move has significantly raised the cost of building a new home.

“Uncertainty caused by tariffs and the talk of trade wars are making home buyers more cautious, and builders are taking note of this situation,” says Randy Noel, chairman of the National Association of Home Builders. “Not only are consumers and builders concerned about the current lumber tariffs but also the next round of proposed tariffs on a number of goods and services.”

The median sales price of new homes dropped to $302,100 in June, 4.2 percent lower than a year prior. “That prices were lower likely shows the dominance of homes sold in the South—where prices are lower—than a lack of demand,” Robert Frick, corporate economist for Navy Federal Credit Union in Vienna, Va., told Reuters.

While new-home sales underperformed in June, the builders’ trade group still sees “solid demand for new-home construction.” New-home sales were up in the first half of 2018 and remain 6.8 percent higher on a year-to-date basis compared to last year, says Robert Dietz, NAHB’s chief economist.

But a shortage of new construction persists. In June, the stock of new homes rose to a nine-year high of 301,000 units, but supply is still just over half of what it was at the peak of the housing boom in 2006.

Source: The National Association of Home Builders and “U.S. New Home Sales at Eight-Month Low, Housing Slowing,” Reuters (July 25, 2018); REALTOR® Magazine 072618

Nationally: Sky-High Home Prices Shatter Ceiling Again

Nationally: Sky-High Home Prices Shatter Ceiling Again
National Association of REALTORS® | July 23, 2018

Ongoing inventory shortages helped to push the median sale price for existing homes to another all-time high in June, the National Association of REALTORS® reports. The median price for all housing types was $276,900, surpassing a previous record set in May. Home prices have surged 5.2 percent since a year ago.

June2018NARsnapshotThe mix of low inventory and high home prices may have had influence on existing-home sales in June, which fell for the third consecutive month. Total existing-home sales, which include completed transactions for single-family homes, townhomes, condos, and co-ops, declined 0.6 percent to a seasonally adjusted annual rate of 5.38 million. Sales are now 2.2 percent lower than a year ago, with drops in the South and West offsetting gains in the Northeast and Midwest.

“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” says NAR Chief Economist Lawrence Yun. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and, in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”

Here’s a closer look at key indicators from NAR’s June housing report:

  • Inventory: Total housing inventory rose 4.3 percent to 1.95 million existing homes available for sale, which is 0.5 percent higher than a year ago. That marks the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace.
  • Days on the market: Fifty-eight percent of homes sold in June were on the market less than a month. Properties, on average, stayed on the market for 26 days, down from 28 days a year ago. “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” Yun says. “Furthermore, it remains to be seen if this modest increase will stick given the fact that the robust economy is bringing more interested buyers into the market and new-home construction is failing to keep up.”
  • First-time buyers: First-time buyers comprised 31 percent of sales, down from 32 percent a year ago.
  • All-cash sales: All-cash transactions made up 22 percent of transactions, up from 18 percent a year ago. Individual investors account for the biggest bulk of cash sales. Investors comprised 13 percent of home sales in June, unchanged from a year ago.
  • Distressed sales: Foreclosures and short sales made up 3 percent of sales, the lowest since NAR began tracking such data in October 2008. Distressed sales are down 4 percent from a year ago. Broken out, 2 percent of sales were foreclosures, and 1 percent were short sales.


Source: National Association of REALTORS®; REALTOR® Magazine 072318

Greater Nashville: June Temperatures Bring Healthy Home Sales

Greater Nashville: June Temperatures Bring Healthy Home Sales
Greater Nashville REALTORS® | Press Release; July 9, 2018

NASHVILLE, Tenn. (July 9, 2018) – There were 4,036 home closings reported for the month of June, according to figures provided by Greater Nashville REALTORS®. This figure represents a 3.8 percent increase compared to the 3,887 closings in June 2017.

“The market is heating up. With the rising temperatures, we are seeing homes sell in an average of 26 days and for a slightly higher selling price than in previous months,” said Greater Nashville REALTORS® President Sher Powers. “We continue to see inventory increase, which is very exciting for buyers in the months ahead.”

Data for the second quarter of 2018 showed 11,222 closings, up .6 percent from the 11,155 closings during the second quarter of 2017.

There were 3,379 sales pending at the end of June, compared with 3,914 pending sales at this time last year. The average number of days on the market for a single-family home was 26 days.

The median residential price for a single-family home during June was $314,900 and for a condominium it was $221,850. This compares with last year’s median residential and condominium prices of $293,753 and $199,350 respectively.

Inventory at the end of June was 11,087, a more than 25 percent increase from 8,842 in June 2017.

“Currently REALTORS® across the country are focused on the renewal of the National Flood Insurance Program (NFIP),” stated Powers. “If Congress doesn’t reauthorize the program, it will expire on July 31 denying necessary insurance coverage to homeowners and buyers in more than 20,000 communities nationwide. Middle Tennessee is all too familiar with what flooding can do to an area, and more flooding disasters without insurance will be another blow to a national market already struggling to provide housing for all those who want it.

We urge Congress to extend the NFIP and pass meaningful reforms to ensure the long-term viability of the program.”

View June 2018 Market Graphic Infographic

### About Us: Greater Nashville REALTORS® is one of Middle Tennessee’s largest professional trade associations and serves as the primary voice for Nashville-area property owners. REALTOR® is a registered trademark that may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict code of ethics. ###

Source: Greater Nashville REALTORS®, Press Release 070918

Falling Mortgage Rates Offer Affordability Relief

Falling Mortgage Rates Offer Affordability Relief
Freddie Mac | June 29, 2018

Mortgage rates declined this week, marking the fourth drop in the past five weeks, Freddie Mac reports.

“The decrease in borrowing costs is a nice slice of relief for prospective buyers looking to get into the market this summer,” says Sam Khater, Freddie Mac’s chief economist. “Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis points higher than this week a year ago.”

Overall, Khater says the economy and the housing market are on “solid footing” this summer, which should support continued strength in housing demand. “Home price growth is still high, but is expected to moderate, and while sales activity has slowed, it’s primarily because of stubbornly low supply,” Khater says.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 28:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, falling from last week’s 4.57 percent average. Last year at this time, 30-year rates averaged 3.88 percent.
  • 15-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.5 point, which is unchanged from a week ago. Last year at this time, 15-year rates averaged 3.17 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.87 percent, with an average 0.3 point, rising from last week’s 3.83 percent average. A year ago, 5-year ARMs averaged 3.17 percent.

Source: Freddie Mac; REALTOR® Magazine 062918

Yun: Spring Was the Season of ‘Unmet Expectations’

Yun: Spring Was the Season of ‘Unmet Expectations’
National Association of REALTORS® | June 27, 2018

1806_May_PHSFor the fifth consecutive month, pending home sales dropped in May—a sign that the recently ended spring buying season didn’t live up to the hype typical for real estate’s traditionally busiest time of year, the National Association of REALTORS® reported Wednesday. Contract signings also eased last month, and a significant sales decline in the South offset gains in other regions of the country.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 0.5 percent in May to a reading of 105.9. The index is down 2.2 percent on an annual basis. NAR Chief Economist Lawrence Yun says this year’s spring buying season will be remembered as one of “unmet expectations,” with pending home sales at the second lowest level in the past year. He says inventory shortage is the main culprit. “REALTORS® in most of the country continue to describe their markets as highly competitive and fast-moving, but without enough new and existing inventory for sale, activity has essentially stalled,” Yun says.

However, buyer demand hasn’t slowed, which is evident in quicker sales and strong price growth, Yun says. The troubling reality is that gains in home prices continue to outpace income growth, housing inventory has fallen for 36 consecutive months, and listings typically go under contract in just over three weeks.

“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market,” Yun says. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”

Source: National Association of REALTORS®; REALTOR® Magazine Online 062718

Nationally: New-Home Sales Jump to Highest Level of 2018

Nationally: New-Home Sales Jump to Highest Level of 2018
National Association of Home Builders | June 26, 2018

The month of May saw a record number of new-home purchases. Sales of newly built single-family homes increased 6.7 percent in May to a seasonally adjusted annual rate of 689,000 units, the Commerce Department reported Monday. It marks the highest number of new-home sales of the year and the second highest in sales since the Great Recession.


“Sales numbers continue to grow, spurred on by rising home equity, job growth, and reports of a greater number of millennials entering the single-family housing market,” says Randy Noel, chairman of the National Association of Home Builders.

The inventory of new homes for sale was 299,000 in May—a 5.2-month supply at the current sales pace. The median sales price for a new home last month was $313,000.

“We saw a shift to more moderately priced home sales this month, which is an encouraging sign for newcomers to the market,” says Michael Neal, the NAHB’s senior economist. “Since the end of the Great Recession, inventory has tracked the pace of sales growth. While we expect continued gains in single-family housing production, inventory may be partially constrained by ongoing price increases for lumber and other construction materials.”

New-home sales posted the largest increase in the South last month, rising 17.9 percent month over month and reaching a post-recession high. Sales remained unchanged in the Midwest, while sales fell 10 percent in the Northeast and 8.7 percent in the West.

Source: National Association of Home Builders; REALTOR® Magazine Online 062618