Builder Confidence Holds Firm | Bedford Real Estate

Builder confidence in the market for newly-built single-family homes remained on firm ground in January, down two points to a level of 67 from a downwardly revised December reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

The solid reading is consistent with building expectations heading into the new year. NAHB expects 10 percent growth in single-family construction in 2017, adding to the gains of 2016. However, ongoing industry concerns include rising mortgage interest rates as well as a lack of lots and access to labor.

The HMI rose sharply in December as the election results raised hopes among builders that a new Congress and administration will help create a better business climate for small businesses, particularly with respect to improving regulatory costs, which increased more than 29% over the last five years.

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 retreated in January. The component gauging current sales conditions fell three points to 72, the index charting sales expectations in the next six months registered a two-point decline to 76 and the component measuring buyer traffic edged one-point lower to 51.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 52 and the Midwest posted a three-point gain to 64. The South and West each held steady at 67 and 79, respectively.

 

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http://eyeonhousing.org/2017/01/builder-confidence-holds-firm-in-january-2/

Builders Satisfy Demand for Open Floor Plans | Pound Ridge Real Estate

According to a recent NAHB article, open floor plans are popular among home buyers, and the design of new single-family homes tends to be, if anything, even more open. For example, in a 2015 NAHB survey, 70 percent of recent and prospective homebuyers said they preferred a home with either a completely or partially open kitchen-family room arrangement with 32 percent preferring the arrangement completely open).

When a similar question was asked in the September 2016 survey for the NAHB/Wells Fargo Housing Market Index, an even higher 84 percent of builders said that, in the typical single-family homes they build, the kitchen-family room arrangement is completely or partially open. Over half (54 percent) said it is completely open. Both surveys defined completely open as essentially combining two areas into the same room, and partially open as areas separated by a partial wall, counter, arch, or something else less than a full wall.

Of the remaining possibilities, 16 percent of buyers want the kitchen and family rooms in separate areas of the house, and 6 percent of builders say this is how their typical homes are designed. Eleven percent of buyers want the two areas side-by-side but separated by a wall, while only 2 percent of builders design their typical homes this way. And 4 percent of buyers prefer a home without a family room, while 9 percent of builders do not include a family room in their typical homes.

The same surveys show that 45 percent of home buyers favor a completely open kitchen and dining area arrangement, while an even higher 51 percent of builders design their typical single-family homes this way.

However, 41 percent of buyers want a home with a kitchen and dining area that are partially open to each other, while only 24 percent of builders design their typical homes this way. As a result, the 86 percent of buyers who want either a completely or partially open kitchen and dining area is actually higher than the 75 percent of builders who provide the completely or partially open design. This occurs in part because 12 percent of builders locate the kitchen and dining rooms in separate areas of the house, while only 3 percent of buyers say they want their homes this way

There are no hard data on the openness of floor plans in existing homes. However, in the survey for the first quarter 2016 Remodeling Market Index, professional remodelers reported that 40 percent of their projects involved making the floor plan more open by removing interior walls/pillars/arches, etc., indicating that the floor plans of existing homes are often not as open as their owners would like.

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http://eyeonhousing.org/2017/01/builders-satisfy-demand-for-open-floor-plans/

Lumber prices on the rise | Bedford Corners Real Estate

The price of softwood lumber rose by 2.3% in December, while prices paid for ready-mix concrete, gypsum products, and OSB all fell, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics.  Ready-mix concrete, gypsum products and OSB prices fell by 0.1%, 0.2%, and 1.3%, respectively. The 2.3% increase in the softwood lumber price index is the largest monthly increase since April 2016.

Over the course of 2016, softwood lumber prices rose nearly 8.7% while prices paid for OSB spiked by 13.8%.  In November, the cost of ready-mix concrete and gypsum products rose 3.5% and 5.0%, respectively, on a year-over-year basis.

In contrast to the price of softwood lumber–which has been relatively stable over the last two years–OSB prices have risen almost 30% during the same period.  OSB prices leveled off in August 2016, but remain near their two-year high.

The economy-wide PPI increased 0.3% in December, 80% of which was driven by a 0.7% rise in prices paid for goods. Prices for final demand services rose only 0.1%.  A 0.3% increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued a positive trend that started with a 0.2% increase in November.  Prices for core goods less trade services climbed 0.1% and rose 1.7% in 2016, far outpacing the 0.3% rise seen in 2015.

Sixty percent of the rise in prices for goods—the fourth straight increase—was due to the increase in prices of final demand energy.   Gasoline prices alone (+7.8%) accounted for nearly half of the increase.  In contrast, prices of fruit and residential electric power led declines among goods. The increase in prices for final demand services was led by securities brokerage, investment advice, and related services, which advanced 4.4%.

 

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http://eyeonhousing.org/2017/01/osb-prices-climb-14-in-2016/

Age of Housing Stock by State | Chappaqua Real Estate

According to the latest data from the 2015 American Community Survey (ACS), the median age of owner-occupied homes is 37 years. The age of housing stock is not evenly distributed across the United States. Among the states, New York has the oldest homes with a median age of 57 years old, followed by Massachusetts at 53 years. The median age of homes in the District of Columbia, which is entirely urban, is 75 years. The newest homes are in the West. The median age of homes in Nevada is only 20 years, followed by Arizona where half of all owner-occupied homes were built in the last 24 years ago.

The geographic distribution of the age of the owner-occupied housing stock is strongly correlated with population changes from 2000 to 2015. The population changes, including both natural growth and net migration, signal the rising demand for housing. States with faster population growth tend to have newer housing stock.

The age of the housing stock is an important remodeling market indicator. Older houses are less energy-efficient than new construction and ultimately will require remodeling and renovation in the future.

 

 

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http://eyeonhousing.org/2017/01/age-of-housing-stock-by-state/

The Aging Housing Stock | Armonk Real Estate

The American housing stock continues to age, especially since residential construction grew at a modest pace after the Great Recession. The median age of owner-occupied housing increased to 37 years in 2015 from 31 years a decade ago. This housing stock aging trend signals a growing market for remodelers, as older structures normally require additional remodeling and renovations. It also implies a rising demand for new construction over the long run.

As of 2015, more than half of the US owner-occupied housing stock was built before 1980, with around 38% built before 1970. Owner-occupied homes constructed after 2000 make up 19% of the owner-occupied housing stock, and homes built after 2010 account for only 3% of the owner-occupied housing stock.

The share of housing stock built 45 year ago or earlier increased significantly from 32% in 2005 to 38% in 2015. However, the share of new construction built within past 5 years declined to 3% in 2015, compared to 9% in 2005.

According to the 2015 ACS, homeowners with higher family incomes tend to live in the newer residential units. In 2015, the average household income for owner-occupied homes built after 2010 was $ 121,577, which was higher than $86,328 average family income for those living in homes built before 1969. Moreover, younger homeowners are more likely to live in newer homes. Homes built after 2010 are headed by homeowners with a median age of 44 years, compared to homes built prior to 1969 and owned by householders with a median age of 58. It implies a growing market for renovations allowing older homeowners to age in place.

 

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http://eyeonhousing.org/2017/01/the-aging-housing-stock-3/

 

Home Price Gains Continue | Mt Kisco Real Estate

The Case-Shiller (CS) National Home Price Index, released by S&P Dow Jones Indices, continued to rise in October. The CS Home Price Index rose at a seasonally adjusted annual growth rate of 10.7%, up from 10.1% last month. Due to tight inventory and high demand, house prices have accelerated since May and reached the pre-recession peak of 2006.

Along with the increases in national home prices, local home prices also increased in varying degrees in October. Figure 2 shows the annual growth rate of home prices for 20 major U.S. metropolitan areas.

All of the 20 metro areas had positive home price appreciation, ranging from 3.5% to 18.3%. Atlanta had the highest home price appreciation at 18.3%, while Chicago had the lowest but still positive growth at 3.5%. Home price appreciation in seven of the 20 metro areas was higher than the national level of 10.7%. Those markets are Atlanta (18.3%), Cleveland (16.7%), Tampa (15.1%), Dallas (12.6%), San Francisco (12.4%), Washington DC (11.4%) and Boston (11.1%).

 

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Single-Family Construction Up | North Salem Real Estate

NAHB analysis of Census Construction Spending data shows that total private residential construction spending fell 0.7% in November to a seasonally adjusted annual rate of $462.9 billion.

Multifamily construction spending slowed for the first time since July to a seasonally-adjusted annual rate of $61.9 billion, down 2.9% from the revised October estimate. Despite the slowdown, multifamily spending was still 10.7% higher than the rate one year prior.  In contrast, single-family construction spending increased by 1.7% over the month, posting its second consecutive gain. However, single-family construction spending still slipped down by 0.9% over November 2015. Though not as pronounced as the drop-off in multifamily construction spending, home improvements still fell by a substantial 3.5%. On a year-over-year basis, spending on home improvements increased by 6.8%.

The NAHB construction spending index shown in the graph below illustrates the recent convergence, though small, of single-family spending with that of multifamily and home improvements.

The pace of private nonresidential construction spending increased by 2.5% over the month, more than offsetting the 2.1% October decline, reaching a pace 6.4% higher than one year ago. The primary drivers of this month-over-month increase were spending on structures to be used for lodging (+6.9%) and religious (+9.8%) purposes.

 

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http://eyeonhousing.org/2017/01/single-family-construction-up-in-november/

Pending sales drop | Waccabuc Real Estate

The Pending Home Sales Index decreased 2.5% in November 2016 to its lowest level since January 2016, and is 0.4% below November 2015. The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts reported by the National Association of Realtors (NAR), decreased to 107.3 in November 2016 from 110.0 the previous month.

The PHSI increased 0.6% in the Northeast, but fell 1.2% in the South, 2.5% in the Midwest and 6.7% in the West. Year-over-year, the PHSI increased 5.7% in the Northeast, but decreased 1.0% in the West, 1.3% in the South and 2.4% in the Midwest.

NAR recently reported a decline in confidence among renters who are contemplating the best time to buy a home. The election boosted the U.S. 10-year Treasury note from 1.83% the day before the election to 2.54% on December 28, 2016, and mortgage rates followed quickly. The Freddie Mac Weekly Survey reported a 30-year commitment rate of 3.54% on November 3, which increased to 4.30% for the week ending December 22, 2016. However, November existing sales continued a solid year-end path, and total 2016 existing sales are expected to reach the highest level since 2006. As the economy adds jobs, increased demand among first-time buyers will help fuel existing sales into 2017.

 

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http://eyeonhousing.org/2017/01/pending-sales-retreat-2/

Where are the Nation’s Second Homes? | South Salem Real Estate

According to NAHB estimates, the total count of the second home stock reached 7.5 million in 2014, an increase of 0.6 million over 2009 when NAHB Economics last produced these estimates. The share of second homes among the total housing stock also increased from 5.4% to 5.6%.

It is worthwhile to understand the patterns of second homes because they could have a significant economic impact on local housing markets and thus have important policy implications. This analysis focuses on the number and the location of second homes qualified for the home mortgage interest deduction using the Census Bureau’s 2014 American Community Survey (ACS).

The county with the largest share of second homes is Hamilton County, NY with 79.3%, followed by Forest County (74%), PA, and Rich County (72.7%), UT. As one might expect, the top 10 counties with the largest share of second homes are mostly tourist destinations.

Slide1

In-depth analysis, however, shows that the concentration of second homes is not simply restricted to conventional locations like beachfront areas. There were 913 counties spread over 49 states, where second homes accounted for at least 10% of the local housing stock. Only Connecticut and Washington D.C. were exceptions. 357 counties, 11% of all counties in the U.S., had at least 20% of housing units that were second homes.

27 counties in 14 states had over half of housing units qualified as second homes. Of these counties, five counties are in Michigan, four in Colorado and Wisconsin, two in California, Massachusetts, Pennsylvania, Utah, and one county each in Idaho, Missouri, North Carolina, New Jersey, New Mexico, and New York. These national patterns are mapped below.

sechome

Of course, the geographic locations of second homes also correspond to population density. Counties with more than 25,000 second homes are mostly located in or near metropolitan areas. The table below lists the top 10 counties with the most second homes. States with at least one such county are Arizona, Florida, California, Massachusetts, Illinois, New York, New Jersey, Nevada, South Carolina, Delaware, Texas, Michigan, and Maryland.

Slide2

sechome_num

NAHB estimates are based on the definition used for home mortgage interest deduction: a second home is a non-rental property that is not classified as taxpayer’s principal residence. Examples could be: (1) a home that used to be a primary residence due to a move or a period of simultaneous ownership of two homes due to a move; (2) a home under construction for which the eventual homeowner acts as the builder and obtains a construction loan (Treasury regulations permit up to 24 months of interest deductibility for such construction loans); or (3) a non-rental seasonal or vacation residence. However, homes under construction are not included in this analysis because the ACS does not collect data on units under construction.

 

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http://eyeonhousing.org/2016/12/top-posts-of-2016-where-are-the-nations-second-homes/

Mortgage rates average 4.09% | Waccabuc Real Estate

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average mortgage rates moving lower for the third consecutive week.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.09 percent with an average 0.5 point for the week ending Jan. 19, 2017, down from last week when it averaged 4.12 percent. A year ago at this time, the 30-year FRM averaged 3.81 percent.
  • 15-year FRM this week averaged 3.34 percent with an average 0.5 point, down from last week when it averaged 3.37 percent. A year ago at this time, the 15-year FRM averaged 3.10 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.21 percent this week with an average 0.4 point, down from last week when it averaged 3.23 percent. A year ago, the 5-year ARM averaged 2.91 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“After trending down for most of the week, the 10-year Treasury yield rose following the release of the CPI report. In contrast, the 30-year mortgage rate fell three basis points to 4.09 percent, the third straight week of declines.”