Low mortgage rates and record-low housing inventory has driven home price increases throughout the year. The National Association of Realtors is saying that the median single-family home price grew year over year in all 181 metro areas it tracks.
In the U.S., median existing single-family home prices rose 12% year over year to $313,500, NAR said. In 117 metros, there were double-digit price gains from one year ago. For added perspective, in Q2, only 15 metro areas had double-digit price gains.
What can help remedy high home prices? Finding a solution to the housing inventory crisis, NARs Chief Economist Lawrence Yun said.
By the end of Q3, 1.47 million existing homes were available for sale, which is 19.2% lower than the total inventory at the end of Q3 last year. As of September 2020, there were enough homes in inventory to last 2.7 months at the current sales pace.
“As home prices increase both too quickly and too significantly, first-time buyers will increasingly face difficulty in coming up with a down payment,” Yun said. “Transforming raw land into developable lots and new supply are clearly needed to help tame the home price growth.”
Some of the metros with the biggest gains in Q3 were Bridgeport, Conn., 27.3%; Crestview, Fla., 27.1%; Pittsfield, Mass., 26.9%; Kingston, N.Y., 21.5%; and Atlantic City, N.J., 21.5%.
According to NAR, the monthly mortgage payment on a typical single-family home rose to $1,059 in Q3. As of Thursday, the average U.S. mortgage rate for a 30-year fixed loan rose to 2.84%, Freddie Mac said.
“Favorable mortgage rates will continue to bring fresh buyers to the market,” said Yun. “However, the affordability situation will not improve even with low-interest rates because housing prices are increasing much too fast.”
The following graph shows the benchmark Census measures of home construction, the seasonally adjusted annual rates of single-family starts and single-family home sales. Starts account for the beginning of construction of homes, whether that construction is for a home already under a sales contract, being built for-sale, being built for-rent, or undertaken for a construction contract (a custom build on an owner’s lot). New home sales are signed sales contracts for new builds, whether that home has started or completed construction (new home sales is thus a counterpart to the NAR pending sales index, rather than existing home sales, which account for closed contracts).
The reason that starts outpace sales on the chart below is because, as noted above, starts represents all home builds. Thus, while the measure of new home sales represents only the more narrow for-sale class, housing starts also include custom builds and built-for-rent construction.
The consequences of the virus-induced 2020 downturn (the Great Disruption?) is seen clearly at the end of the graph, particularly the V-shaped nature of the impact on housing. While both measures have staged impressive rebounds, the sales measure has completely closed the gap between the two series.
However, the actual effect is larger. For an apples-to-apples comparison of the rates of for-sale construction and new home sales, we need to filter the starts series to remove custom builds and built-for-rent single-family construction. Using Census quarterly data of these construction types, I interpolated the quarterly data into monthly, seasonally adjusted data and then subtracted this new series from the existing Census data series. The new data series, single-family for-sale starts, allows for a precise comparison of the pace of home building in the for-sale sector relative to sales, as graphed below.
The new series is much closer to the sales data, with just occasional periods of notable difference amid the statistical noise. The adjusted data makes clear how great the current difference is between sales (red) and starts (blue). This gap is unprecedented in the 20 years of data presented here, and there is no comparable period in the data going back to 1963. Plotting the difference between the monthly rates of for-sale starts and sales yields the following series, which peaks in the most recent data.
The degree to which current new home sales are outpacing starts is clear in the above graph. These data are consistent with Census estimates and NAHB surveys that indicate builders are selling homes that have not begun construction in greater numbers. Indeed, the count of such home sales is up 69% compared to a year ago, an incredible jump. To place the current data into context, I smoothed the data using 6-month moving averages. While this dilutes somewhat the scale of the current gap, it shows three relevant periods over the last two decades where sales and for-sale starts disconnected.
As seen above, the first period occurred during the housing boom when for-sale starts exceeded sales, leading to an inventory overhang that was part of the housing crisis preceding the Great Recession. The second separation occurred as single-family starts plummeted during the Great Recession and sales, helped by the three stages of the federal home buyer tax credit, reduced excess inventory (new home months’ supply peaked at 11.1 during the spring of 2008).
These two prior periods happened in an overbuilt environment. The script is flipped today. Months’ supply for new homes is down to a lean 3.3, and existing home months’ supply (per NAR data) is at a very tight 2.8. Thus, the third period of separation between for-sale starts and new home sales occurring now is a signal of the degree to which home building will need to play catch-up with current demand.
As with other economic impacts related to the virus, prior trends have been accelerated. With home building, the last decade (the Long Recovery) was characterized by underbuilding due to supply-side limitations such as labor availability and law/regulatory cost impacts. The lagging pace of construction, relative to current sales, is an intense, compressed version of these general economic trends, with builders citing lumber and material issues as delaying some, current construction projects.
Because builders do not want to contract home sales that they will not be able to deliver effectively, the current, historic gap between elevated sales volume and improving if relatively lower construction rates means that the pace of growth for new home sales will need to slow and/or the rate of home building will need to increase to balance the market. Strong levels of the NAHB/Wells Fargo HMI measure of home builder confidence are consistent with this expectation, for starts at least.
In the meantime, the current gap between for-sale starts and sales is unprecedented. Moreover, this gap is not the only historic, current data reading of the housing industry. The NAHB/Wells Fargo HMI reached a data series high in September.
And the gap between median newly-built and existing home prices, which peaked near $95,000 three years ago, has closed and inverted. According to NAR data, the median price for a resale single-family home was $315,000, higher than the Census reported median of $312,800 for newly-built homes. That inversion has only occurred one other time over the last two decades (June 2005).
In sum, low levels of existing inventory, rising resale prices relative to new construction, strong builder confidence, and sales exceeding for-sale starts point to solid levels of home construction in the months ahead.
Home building sustains jobs (approximately 2.9 per home built and 0.75 per $100,000 in remodeling), which means more residential construction employment gains in the near-term. In fact, over the next two to three months residential construction will likely post a year-over-year gain for employment, a notable sign of strength for housing in the recovering economy.
Proof that the local home sales market is very strong despite the COVID pandemic can be found in the latest statistics released today by the National Association of Realtors. NAR reports that existing-home sales in the Northeast rose by a record 30.6% in the month of July.
NAR reported that nationwide home sales continued on a strong, upward trajectory in July, marking two consecutive months of significant sales gains. Each of the four major regions attained double-digit, month-over-month increases, although the Northeast was the only region to show a year-over-year decline.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 24.7% from June to a seasonally-adjusted annual rate of 5.86 million in July. The previous record monthly increase in sales was 20.7% in June of this year. Sales as a whole rose year-over-year, up 8.7% from a year ago (5.39 million in July 2019).
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
The median existing-home price for all housing types in July was $304,100, up 8.5% from July 2019 ($280,400), as prices rose in every region. July’s national price increase marks 101 straight months of year-over-year gains. For the first time ever, national median home prices breached the $300,000 level.
Total housing inventory at the end of July totaled 1.50 million units, down from both 2.6% in June and 21.1% from one year ago (1.90 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, down from 3.9 months in June and down from the 4.2-month figure recorded in July 2019.
Yun notes these dire inventory totals have a substantial effect on sales.
“The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” he said. “More homes need to be built.”
Last week, NAR released its latest data for metro home prices, which found that in 2020’s second quarter, median single-family home prices saw a 96% increase when compared to a year earlier.
Properties typically remained on the market for 22 days in July, seasonally down from 24 days in June and from 29 days in July 2019. Sixty-eight percent of homes sold in July 2020 were on the market for less than a month.
First-time buyers were responsible for 34% of sales in July, down from 35% in June 2020 and up from 32% in July 2019. NAR’s 2019 Profile of Home Buyers and Sellers, released in late 2019, revealed that the annual share of first-time buyers was 33%.
Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in July, up from both 9% in June 2020 and from 11% in July 2019. All-cash sales accounted for 16% of transactions in July, equal to the percentage in June 2020 and down from 19% in July 2019.
Distressed sales—foreclosures and short sales—represented less than 1% of sales in July, down from 3% in June up from 2% in June 2019.
“Homebuyers’ eagerness to secure housing has helped rejuvenate our nation’s economy despite incredibly difficult circumstances,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco. “Admittedly, we have a way to go toward full recovery, but I have faith in our communities, the real estate industry and in NAR’s 1.4 million members, and I know collectively we will continue to mount an impressive recovery.”
Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in July were Topeka, KA; Rochester, NY; Burlington, NC; Columbus, OH and Reading, PA.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.02% in July, down from 3.16% in June. The average commitment rate across all of 2019 was 3.94%.
Single-family and Condo/Co-op Sales
Single-family home sales sat at a seasonally-adjusted annual rate of 5.28 million in July, up 23.9% from 4.26 million in June, and up 9.8% from one year ago. The median existing single-family home price was $307,800 in July, up 8.5% from July 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 580,000 units in July, up 31.8% from June and equal to a year ago. The median existing condo price was $270,100 in July, an increase of 6.4% from a year ago.
“Luxury homes in the suburbs are attracting buyers after having lagged the broader market for the past couple of years,” Yun said. “Single-family homes are continuing to outperform condominium units, suggesting a preference shift for a larger home, including an extra room for a home office.”
For the second consecutive month, sales for July increased in every region and median home prices grew in each of the four major regions from one year ago.
July 2020 existing-home sales in the Northeast rocketed 30.6%, recording an annual rate of 640,000, a 5.9% decrease from a year ago. The median price in the Northeast was $317,800, up 4.0% from July 2019.
Existing-home sales jumped 27.5% in the Midwest to an annual rate of 1,390,000 in July, up 10.3% from a year ago. The median price in the Midwest was $244,500, an 8.0% increase from July 2019.
Existing-home sales in the South shot up 19.4% to an annual rate of 2.59 million in July, up 12.6% from the same time one year ago. The median price in the South was $268,500, a 9.9% increase from a year ago.
Existing-home sales in the West ascended 30.5% to an annual rate of 1,240,000 in July, a 7.8% increase from a year ago. The median price in the West was $453,800, up 11.3% from July 2019.
Prices paid for goods used in residential construction increased 1.9% in June (not seasonally adjusted) according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. It is the second consecutive monthly increase since the index declined three months straight by a total 5.4%.
The index has decreased 3.0% year-to-date (YTD), five times the magnitude of the prior record for a June YTD decrease (-0.6% in 2009). Prices paid for goods used in residential construction have only fallen four times between January and June since 2000.Well when buying real estate it also includes important parts like garage door.Price of garage door may vary,So you might get confused which garage door to buy! Don’t worry check over here and you will able to clear all your doubts here.
The increase in prices paid for goods used in residential construction was led by a 12.9% increase in softwood lumber prices. Since decreasing 10.8% in April, softwood lumber prices have risen 16.5% and are now at the highest level since July 2018—the peak of the early- to mid-2018 runup. Although the YTD percentage increase in prices paid for softwood lumber is roughly two-thirds of the increase seen over the same period in 2018, timing of PPI data collection suggests that a recent, sharp advance in prices will be captured in the July PPI report.
Prices paid for gypsum products climbed 0.6% in June after increasing 1.5% in May (seasonally adjusted). The price index for gypsum products has risen 0.8% over the past 12 months and is 7.7% lower than the most recent peak reached in March 2018.
Even after the monthly increase, gypsum product prices have declined 2.5% YTD. Prices fell by 3.9% over the same period in 2019 and are just 4.4% higher than they were to start 2017.
Nationally, prices paid for ready-mix concrete (RMC) advanced 0.1% in June (seasonally adjusted) after no change in May.
Prices rose in the Northeast and West regions by 0.6% and 4.5%, respectively, while prices paid in the Midwest (-0.4%) and South (-2.3%) decreased month-over-month.
Other changes in indexes relevant to home building and infrastructure are shown below.
Faced with mounting pressure from tenant advocates, Gov. Andrew Cuomo has extended New York’s eviction moratorium another two months until August.
The measure builds on a March 20 order that prohibits residential and commercial evictions statewide through June. Now, that moratorium is in place through August 20 along with a ban on fees for late or missed rent payments during that same period.
“I hope it gives families a deep breath,” Cuomo said at a press conference announcing the extension. “Nothing can happen until August 20 and then we’ll figure out between now and August 20 what the situation is.”
Under the new executive order, a landlord cannot legally evict a tenant until the measure expires, preventing renters who are suffering a sudden financial hardship from being forced into the streets during a pandemic. The moratorium does not cancel rent payments, and tenants are still on the hook to pay back their landlords for any missed payments.
Renters who are struggling to make ends meet as a result of the COVID-19 pandemic also now have the option to put their security deposit toward paying rent—a measure New Jersey and Connecticut already allow and one that Mayor Bill de Blasio and other New York elected officials have advocated for since early April.
But there’s a catch: Those deposits must be repaid within 90 days of their usage. And if the amount of the deposit is less than a full month of rent, tenants still owe the remaining rent due that month, according to the executive order.
Cea Weaver, the campaign coordinator with Housing Justice For All, which is spearheading the push to cancel rent statewide, called the governor’s eviction moratorium extension and security deposit payments “half measures” that fail to truly protect tenants.
“It’s continuing to not face the problem,” says Weaver. “He’s ignoring the real issue—that tenants can’t pay—and just postponing the date of when there will be mass evictions.”
When asked about relief for landlords who may have difficulty making mortgage payments without rent revenue, Cuomo noted that the state is working on “relief from the banks for landlords also.” Landlord groups are not thrilled with Cuomo’s lack of details on support.
James Whelan, president of the Real Estate Board of New York, acknowledged that tenants and small retailers impacted by the pandemic “will need more time to pay their bills and more help from the federal government to do so” but those who have the ability to pay “should not get away with not paying rent.”
But paying—or not paying—rent may not be much of a choice for those who aren’t earning an income. The eviction moratorium keeps New Yorkers in their homes during a public health crisis, but crucially, it does not address the months of back rent tenants must eventually repay. Lawmakers and housing attorneys argue that there will be a “tidal wave” of eviction cases filed in the courts—potentiallyleading to mass homelessness—once that moratorium is lifted. And with COVID-19 hobbling New York’s economy, renters have few options to make up what’s owed.
Many in the state are still struggling to access unemployment benefits. And while federal stimulus checks of $1,200 have offered some relief, the one-time payment is woefully inadequate for the long-term financial burdens New York renters, homeowners, and small property owners face. (Others still, such as undocumented immigrants, don’t qualify for this aid.)
Cuomo has maintained that the eviction moratorium “solves” New York renters’ woes, and this week he doubled down on that assessment, saying that the extension and new security deposit mechanism “takes this issue off the table until August 20.” While the moratorium is a piece of the rent relief jigsaw puzzle, housing attorneys note that is it not a fullsolution.
“The governor must go farther,” says Ellen Davidson, a staff attorney with the Legal Aid Society. “We welcome the extension of the eviction moratorium, but make no mistake, it doesn’t stop tenants from being at risk.”
In March, New York Chief Administrative Judge Lawrence Marks announced a suspension on eviction proceedings in the courts, but a loophole of sorts briefly allowed landlords to file new eviction cases. Cuomo ultimately blocked those new cases by pausing the statue of limitations until May 7. That block has now been extended to June 6, according to Office of Court Administration spokesperson Lucian Chalfen.
In his latest executive order, Cuomo has banned the “initiation of a proceeding or enforcement” of evictions or a foreclosure, but only for those who are “eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20.” Davidson fears the language of that provision leaves undocumented immigrants, and others who don’t qualify for unemployment aid, in a vulnerable position.
“Are they supposed to out themselves as undocumented to their landlords to be protected under this provision?” Davidson questioned, who has dealt with instances of landlords calling U.S. Immigration and Customs Enforcement on undocumented tenants. “It would seem this is putting undocumented New Yorkers in danger. It’s not clear to me how I would advise a client about what to do about this provision.”
The governor’s office did not immediately clarify the provision.
In the meantime, Jay Martin, the executive director of the Community Housing Improvement Program (CHIP), says greater federal support, such as additional stimulus aid and emergency housing vouchers, are sorely needed to help renters and landlords alike.
“New York State leaders are doing what they can and must to avoid a housing crisis in New York,” said Martin. “But it is past time for the federal government to step up and provide renters and building owners with the relief they need. If they do not millions of New Yorkers will suffer.”
New residential construction slowed sharply in March as the coronavirus pandemic swept across the United States. Privately-owned housing starts declined last month to an annualized rate of 1.2 million, the US Census Bureau said Thursday. That represents a 22% decline from the pace in February.All four geographical segments in the United States were down, led by a 43% plunge in the Northeast, which is getting hit hardest by the health crisis.
22 million Americans have filed for unemployment benefits in the last four weeksThe worse-than-expected declines in housing starts reflects the economic impact caused bythe pandemic.”Unprecedented economic uncertainty and mandatory distancing guidelines squashed homebuyer demand and builders’ ability to confidently invest in new housing projects,” Zillow economist Matthew Speakman wrote in an email Thursday.Despite the sharp month-over-month drop, housing starts were still up from a year ago.Many construction projects have been classified as essential work, meaning they could continue despite stay-at-home orders across the country. Yet social distancing requirements can slow that work and mounting job losses gave homebuilders pause.Building permits, a more forward-looking indicator, also slowed. Privately-owned housing units authorized by permits in March dropped to an annual rate of 1.4 million, Census said. That’s 7% below the February pace. The drop was led by single-family authorizations. However, authorizations of multi-unit buildings rose by 5% from the February pace.
Record plunge in homebuilder confidence
It’s the latest sign that the pandemic will have hurt America’s once-booming housing market.Industry executives have become significantly more pessimistic about the outlook for the housing market.US homebuilder confidence for single-family homes plunged in April by a record 42 points, according to a National Association of Homebuilders index released Wednesday.”The unfolding nightmare in the labor market has removed large numbers of potential homebuyers from the pool,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a report Wednesday.New numbers released Thursday show that another 5.2 million Americans filed for unemployment benefits in the week ended April 11. All told, 22 million people have filed for first-time claims since mid-March.
The stock market is acting like a rapid recovery is a slam dunk. It’s notThe government is attempting to avoid a wave of foreclosures caused by the mass layoffs by allowing homeowners hurt by the coronavirus pandemic to postpone payments.Yet many Americans may be less willing to buy homes when they read the dreary economic headlines and look at sharp declines in their investment portfolios.”Everything will get revalued. If the stock market is lower, that has massive wealth effects,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.Yet others argue that historically-low borrowing costs and a limited amount of supply of homes will insulate the real estate market.”I don’t expect a collapse in prices,” said David Kelly, chief global strategist at JPMorgan Asset Management. “There’s no reasons to sell your home at a loss this year if you can get a better price next year.”
The mass exodus of New Yorkers leaving the Empire State has reached a new fevered pitch, with nearly 80,000 choosing to move out to cheaper pastures, according to a new study.
But where are they going?
Whether it’s the high costs of living, a lack of well-paying jobs, or poor Northeastern weather, the population in New York State dropped by 76,790 between 2018 and 2019, according to the latest data from the U.S. Census Bureau.
The number represents a 0.4 percent drop in the state’s population year-to-year, which has dropped by nearly 1.5 million in the past decade.
According to the website Zippia , which used data from the Census to determine where New Yorkers are landing, the most popular destinations are New Jersey, Pennsylvania, Florida, California, Connecticut, and North Carolina.
“New York, New York, what a wonderful place, except for the people who left the Big Apple last year that is. New York may be a cultural and economic hub in the United States,” Zippia stated. “However, it comes at a steep price. No doubt those high prices are partially to blame for New York being the most quickly shrinking state in the United States.”
According to reports, the population drop may cause New York to lose up to two congressional seats by 2022, dropping it from 27 to 25 members in office.
Last year, President Donald Trump was questioned about comments he made in 2017 stating that upstate New York residents should consider moving out of the state. The commander-in-chief doubled down on those statements.
“If New York isn’t gonna treat them better, I would recommend they go to another state where they can get a great job,” Trump said on Wednesday. “I love those people. Those people are my voters. They’ve been treated very badly.”
According to New York Gov. Andrew Cuomo’s Office, the combined state/local tax rate for high-income New Yorkers is the second-highest in the country. The top one percent of taxpayer accounts for nearly half (46 percent) of State Income Tax liability. More than 95 percent of the tax increase from SALT falls on the top 20 percent of taxpayers – these taxpayers pay 87 percent of New York income taxes.
The governor said that the tax reforms encourage New York’s wealthiest to move to other states, “and even if a small number of high-income taxpayers leave the state, it would harm state revenues” and impact funding for education, healthcare, infrastructure, and a planned middle-class tax cut.
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 58 in the fourth quarter of 2019, up three points from the previous quarter (Figure 1). The RMI has been consistently above 50—indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower—since the second quarter of 2013. The overall RMI averages current remodeling activity and future indicators.
Current market conditions increased two points to 56 in the fourth quarter of 2019 (Figure 2). Among its three major components, major additions and alterations gained four points to 56, minor additions and alterations increased by one point to 54 and the home maintenance and repair component rose one point to 58.
The future market indicators gained three points to 60 in the fourth quarter (Figure 3). Calls for bids increased by three to 58, amount of work committed for the next three months gained three points to 57, the backlog of remodeling jobs jumped five points 64 and appointments for proposals increased by two points to 62.
The fourth quarter RMI reading reflects solid demand for remodeling, supported by a strong overall economy and low interest rates. Remodelers still face challenges in the market, including skilled labor shortages, making it harder to work off a backlog quickly.
A report from Douglas Elliman and Miller Samuel says that the average sales price for Manhattan real estate fell 7.5% in the fourth quarter of 2019.
The average sales price fell to $1.8 million, while the median sales price fell below $1 million.
Sales of apartments priced at $5 million or more fell 38% in Q4, leaving behind a two-year supply of luxury apartments on the market.
Now, CNBC says there is an eight-month supply of unsold apartments. Out of the previous nine quarters, eight have seen a drop in real estate sales in Manhattan, a considerably pricey market.
Tax pressures and rising inventory are what brokers say may keep buyers at bay.
“I think we’ll see more of the same,” Jonathan Miller, CEO of Miller Samuel, said to CNBC. “The problem with saying that 2020 will mark the bottom is that it suggests it will go up after that. And I think we still have another couple of years of moving sideways.”
Last summer, a new mansion tax hit the multimillion-dollar apartment market in New York.
Buyers were rushing to close before the new state taxes kicked in on July 1.
The new taxes boost the previous 1% fee on sales of $1 million and above – known as a “mansion tax,” though it applies to all types of homes, not just townhouses – to 1.25% for sales priced above $2 million and 3.9% for a sale of $25 million or more. The transfer tax increases from 0.4% to 0.65%.
This means that the mansion tax makes already high-tax states, like New York, more expensive.
CNBC said there is an expected 2,000 new condos to come onto the market this year, but buyers are steering to the rental market, even in luxury.
The National Association of Home Builders and Wells Fargo, which publish the monthly report, revealed sentiment increased by 5 points to 75, markingthe highest reading since June of 1999.
“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates, and a strong labor market,” said NAHB Chairman Greg Ugalde.
In December, the index measuring current sales conditions rose to 84 points, while buyer traffic grew to 58 points and sales expectations over the next six months inched forward to 79 points.
The three-month moving averages for regional HMI scores show the South grew to 76 points, the West increased to 84 points and the Midwest climbed to 63 points. However, the report indicates the Northeast declined to 61 points.
Although sentiment improved in a majority of the nation’s regions, NAHB Chief Economist Robert Dietz warns homebuilders across the country continue to grapple with affordability concerns.
“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability,” Dietz said. “Higher development costs are hurting affordability and dampening more robust construction growth.”
NOTE: The NAHB/Wells Fargo Housing Market Index gauges builder opinions of single-family home sales and expectations, asking for a rating of good, fair or poor. Builders are also asked to rate prospective buyer traffic from very low to very high. The scores are used to calculate a seasonally adjusted index with a rating of 50 or over indicating positive sentiment.