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

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

Nationally: Why Sales Fell Short at Year’s End

Nationally: Why Sales Fell Short at Year’s End
National Association of REALTORS®   article by Daily Real Estate News | January 24, 2018

Existing-home sales in 2017 surged to the best year for sales in 11 years, the National Association of REALTORS® reported Wednesday.

Total existing-home sales—which include completed transactions for single-family homes, townhomes, condos, and co-ops—rose 1.1 percent in 2017 to a 5.51 million sales pace. The sales pace surpassed 2016’s 5.45 million, which had been the highest pace since 2006.

However, the end-of-the-year sales numbers were overcast somewhat by a slower sales pace in December. Existing-home sales decreased 3.6 percent in December month over month to a seasonally adjusted annual rate of 5.57 million.

“Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multistreak of exceptional job growth, which ignited buyer demand,” says Lawrence Yun, NAR’s chief economist. “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”

Closings scaled back in most areas of the country in December due to affordability and inventory woes, Yun adds. “Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale,” Yun says.

Market Snapshot for December

Here are some key highlights from NAR’s latest housing report:

  • Home prices: The median existing-home price for all housing types in December was $246,800, which is 5.8 percent higher than a year ago.
  • First-time buyers: First-time home purchasers comprised 32 percent of sales in December, up from 29 percent in November.
  • Days on the market: Forty-four percent of homes sold in December were on the market for less than a month. Properties typically stayed on the market for 40 days in December, down from 52 days a year ago.
  • All-cash transactions: All-cash sales comprised 20 percent of transactions in December, which is down slightly from 21 percent a year ago. Individual investors, who make up the bulk of cash sales, accounted for 16 percent of the homes sold in December, up from 14 percent a year ago.
  • Distressed sales: Foreclosures and short sales made up 5 percent of sales in December, down from 7 percent a year ago. Broken out, 4 percent of December’s sales were foreclosures and 1 percent were short sales.
  • Inventory: Total housing inventory fell 11.4 percent in December to 1.48 million existing homes available for sale. Inventory is now 10.3 percent lower than a year ago. Unsold inventory is at a 3.2-month supply at the current sales pace, which is the lowest level since NAR began tracking such data in 1999.

“The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains—at 5.8 percent nationally in 2017—doubled the pace of income growth and were even swifter in several markets,” Yun explains.

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Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 012418

Nationally: Contract Signings Post First Gains Since June

Nationally: Contract Signings Post First Gains Since June
National Association of REALTORS® | December 27, 2017

Pending home sales eked out a small increase in November on both a monthly and annualized basis. The increase was enough to make it the highest gain in contract signings since June as well, the National Association of REALTORS® reported Wednesday.

But will it last? Existing-home sales and price growth are expected to slow heading in 2018 due to the impact from altered tax benefits of homeownership affecting some high-cost areas, according to NAR.

NAR’s Pending Home Sales Index—a forward-looking indicator based on contract signings—inched up 0.2 percent month over month. NAR’s index reached a reading of 109.5 in November and is at its highest reading since June (110). The index is 0.8 percent higher than a year ago.

“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” says Lawrence Yun, NAR’s chief economist. “However, new buyers coming into the market are finding out quickly that their options are limited and competition is robust. REALTORS® say many would-be buyers from earlier this year, stifled by tight supply and higher prices, are still trying to buy a home.”

Existing-home sales are up 5.8 percent—more than double wage growth. Inventories remain tight at a 3.4-month supply of homes on the market, which is the lowest since NAR began tracking in 1999.

“The strengthening economy, and expectation that more millennials will want to buy, serve as promising signs for solid homebuying demand next year, while also putting additional pressure on inventory levels and affordability,” Yun says. “Sales do have room for growth in most areas, but nationally, overall activity could be slightly negative. Markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home.”

Yun forecasts that existing-home sales will finish 2017 at around 5.54 million, which is an increase of 1.7 percent from 2016 (5.45 million). The national median existing-home price for 2017 is expected to increase to around 6 percent.

Yun projects that in 2018, existing-home sales will see little change, declining just 0.4 percent to 5.52 million. He also forecasts that price growth will moderate to around 2 percent.

November PHS Infographic

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 122717

NAR: Homes Selling Faster Than Ever

NAR: Homes Selling Faster Than Ever
National Association of REALTORS®   article by Daily Real Estate News | December 22, 2017

The time homes spent on the market hit an all-time low in 2017 at just three weeks, the National Association of REALTORS® reports. A low inventory of homes for sale mixed with strong buyer demand has helped to keep market times low from 2014 to 2017.

During the height of the housing boom from 2001 to 2005, homes sold within a month of being listed. But as the housing market began to slow in 2006, the median time jumped to six weeks, and then to 10 weeks by 2009.

Tight inventories and a lack of construction of homes has helped to keep homes selling faster in recent years, NAR notes.

NARgraphic

Source: “Drop in Time on Market to Sell a Home,” National Association of REALTORS® Economists’ Outlook blog (Dec. 21, 2017); REALTOR® Magazine Online, Daily Real Estate News 122217