With just about two weeks remaining before the midterm election, early voting has begun in many states. And as is true every year, several states will see significantly better turnout than others — sometimes twice as high. And while there are numerous reasons why people don’t vote, a recent study found that one major factor is that some states make it much harder than others to cast a ballot.
New York, which does not allow people to vote early, saw 56.2 percent of voters turn out for the 2016 election, following 29 percent in the 2014 midterm election and 53.5 percent in the 2012 election, according to an analysis of election data by the nonprofit organization FairVote. FairVote is a nonprofit dedicated to reforming America’s electoral system to achieve full participation and obtain a “truly representative democracy.”
If history is any indicator, several states will see between just 25 percent and 35 percent of voters turn out. This includes Texas, which ranked dead last in the country for voter turnout in the 2014 election with a paltry 28.3 percent. Here were the worst states for voter turnout (Washington, D.C., included) in the 2014 midterm election:
Meanwhile, some states see more than double that turnout. Maine had the highest voter turnout in the 2014 election at 58.5 percent of eligible voters. Wisconsin, Colorado, Alaska and Oregon rounded out the top five with 56.8 percent, 54.5 percent, 54.4 percent and 53.5 percent of voters casting a ballot, respectively. All except Oregon allow residents to vote up to 15 days before Election Day.Subscribe
As noted earlier, there are a variety of reasons that some states see better turnout than others. FairVote noted some of the biggest involve how competitive the races are supposed to be, the demographics of the voting population — voters tend to be older, wealthier, more educated and white — and how restrictive voting laws are.
A new study lent a lot of credence to that last factor. Researchers at Northern Illinois University, Jacksonville University and Wuhan University in China found that states are influencing who votes by either making it easier or harder to cast a ballot. They created an index and ranked each state according to the time and effort it took to vote in each presidential election from 1996 through 2016. They scrutinized the effect of more than 30 factors involving registration and voting laws.
“The study does give us some very substantive findings that we can report about the effect on voter turnout,” wrote lead author Scot Schraufnagel. “But we created this index with the idea in mind that it’s going to have a lot of interest for reasons beyond voter turnout because it helps to define an electoral climate, which might influence whether people are willing to run for public office or who is willing to run for office. There also are implications for civil rights. We know, anecdotally, states with larger African-American populations have higher ‘cost of voting’ values.”Mississippi, Virginia, Tennessee, Indiana, Texas and Michigan were ranked as the states where it’s most difficult to vote. Maine, Oregon, California and Colorado all cracked the top 10 in places where it’s easiest.
In 37 states, including three that mail ballots to all voters, along with Washington, D.C., any eligible voter can cast a ballot in person before Election Day without an excuse, according to the National Conference of State Legislatures. Colorado, Washington and Oregon use all-mail voting.
Meanwhile, 13 states, including New York, Michigan and Pennsylvania, offer no early voting and require you to provide a reason to vote by absentee ballot.
Making it easier to vote nationwide could boost election turnout by about 10 percentage points, Schraufnagel noted. This includes same-day voter registration policy, mail-in voting and, yes, early voting.
Contracts for new single-family home sales declined in September, as eroding affordability conditions reduced sales volume. New single-family home sales declined to a significantly lower 553,000 seasonally adjusted annual rate, a 5.5% drop from a downwardly revised 585,000 annual rate recorded in August. The sales data are produced by HUD and the Census Bureau.
The weak September estimate was the lowest annual rate since December 2016. It marks a notable retreat from the recent, modest growth trend that had been in place due to solid economic conditions and unmet demographic demand but constrained by rising construction costs due to labor access issues, building material pricing and rising regulatory costs. The drop in monthly sales volume also pushed the months’ supply number to an elevated 7.1, the highest since the summer of 2011.
Despite the softer summer and early fall numbers, total sales for the first nine months of 2019 (485,000) are 3.5% higher than the comparable total for 2017 (469,000). Nonetheless, mirroring declining sales volume for the resale market, higher interest rates, storm disruption effects, and spring and summer hikes in lumber prices have taken a toll on the nation’s building markets, even as macroeconomic conditions remain positive.
Inventory increased in September to 327,000 single-family homes for sale. September saw a notable uptick in homes not-started construction but otherwise listed for sale, rising from 57,000 in August to 64,000 in September (compared to 47,000 in September of 2017). Additionally, sales of homes not started construction were lower on a year-over-year basis (168,000 annual rate in September compared to 185,000 in September of 2017), suggesting the current soft patch is demand-side focused rather than supply-side constrained.
Median new home sales pricing has decreased over the last year as the mix of supply has adjusted. Median new home price was $320,000 in September, compared to $331,500 a year ago. Managing rising construction costs in the months ahead will be a key challenge for housing affordability as input costs increase, although recent declines in lumber prices should help.
For the first nine months of 2018 (and relative to the first nine months of 2017), new home sales were up 9.7% in the Midwest, 4.4% in the South, 3.9% in the West, and down 16.5% in the Northeast, due to tax reform-related effects and affordability concerns.
While investors are no doubt wringing their hands over what’s going on in the stock market this week, here’s another thing to fret over: rising mortgage rates.
“What many in 2016 thought would never happen again is now reality,” writes Wolf Richter of the Wolf Street blog. “A line in the sand has been breached.”
He explained that the average interest rate for 30-year fixed mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment just passed 5% — the highest since 2010, according to the Mortgage Bankers Association.See Also
This, however, is not quite the “pain threshold” for the housing market, Richter wrote. No, that number is 6%, but that rate is moving ever closer.
“This is still historically low. It would take rates back to December 2008, when the Fed was kicking off its first round of QE to repress long-term rates and inflate asset prices,” he said. “Beyond that are the now unimaginably high rates of 7% and 8%.” Here’s a chart for some perspective:
Mortgage rates loosely follow the path of the 10-year U.S. Treasury noteTMUBMUSD10Y, -0.86% . The spread between the average 30-year fixed mortgage rate and the 10-year comes in around 1.5 to 2.0 percentage points over time. The yield on the benchmark government bond has soared this month to roughly seven-year highs amid worries that increasing inflation will erode the value of fixed-income assets.
“The 10-year yield has moved in two surges so far in this rate-hike cycle, each of them over 1 percentage point, with some back-tracking in between,” Richter wrote. “It appears to have launched ‘Surge 3.’ If it plays out, this surge would push the 10-year beyond 4%. And this would bring the 30-year fixed rate into the neighborhood of 6%.”
“This new mortgage rate environment is meeting home prices across the U.S. that have surged over the past years,” Richter wrote. “Affordability issues, already tough to deal with at 4% and 4.5% and even tougher to deal with at 5%, are going to be much tougher at 6%.”
Consequently, and unsurprisingly, he said the red-hot housing markets, like Seattle, San Francisco and Denver, are most at risk.
“These price increases came on top of the crazy peaks of Housing Bubble 1,” Richter wrote. “So a 6% average 30-year fixed rate in these inflated markets will likely change the equation a lot more than in some of the less inflated markets.”
House prices rose in 25 out of the 39 world’s housing markets which have so far published housing statistics, using inflation-adjusted figures.
The more upbeat nominal figures, more familiar to the public, showed house price rises in 32 countries. House prices fell in only 6 countries and remained stable in 1 country.
Most of Europe continues to experience strong price rises, especially Ireland and the Netherlands. In Asia Hong Kong and Macau have risen strongly over the past year. There have also been notable turnarounds in Thailand, Egypt, and Puerto Rico. But China, Ukraine, and most of the Middle East are experiencing either house price falls – or a sharp deceleration of house price rises
The strongest housing markets in our global house price survey during the year to Q2 2018 included: Hong Kong (+13.15%), Ireland (+11.57%), Netherlands (+7.24%), Macau (+6.31%), and Mexico (+5.12%) using inflation-adjusted figures.
The biggest y-o-y house-price declines were in Qatar (-16.91%), Kiev, Ukraine (-7.81%), Dubai, UAE (-7.63%), Turkey (-4.21%), and Shanghai, China (-3.51%), again using inflation-adjusted figures.
Momentum. Only 16 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q2 2018, while 23 housing markets showed weaker momentum, according to Global Property Guide’s research. Momentum is a measure of the “change in the change”; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less).
Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.
The strongest performing markets:
Hong Kong is now the strongest housing market in our global survey, up from fourth place in the previous quarter. Residential property prices surged 13.15% during the year to Q2 2018, after y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017 and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.
The boom continues despite stamp duties being raised for all non-first time homebuyers (November 2016) and allowable loans on residential and commercial properties being cut in May 2017. In addition, Chief Executive Carrie Lam revealed in June 2018 another series of cooling measures, including a tax against vacant flats.
Ireland‘seconomy grew by 7.8% last year. It is not surprising that the housing market is growing at breakneck speed. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are being driven by strong demand and supply shortages..
The Netherlands‘ housing market continues to perform very well, mainly due to robust demand, coupled with inadequate housing supply. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter.
During 2017, home sales surged 13% from a year ago. However in the first seven months of 2018, home sales dropped more than 7% from a year earlier due to supply shortages.
Macau’s housing market remains strong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased by 5.21% q-o-q during the latest quarter. Macau’s housing market is buoyed by massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong.
Mexico‘s housing market is strengthening, amidst improving economic conditions. The nationwide house price index rising by 5.12% during the year to Q2 2018, up from a y-o-y growth of just 0.73% in Q2 2017. On a quarterly basis, house prices increased 4.89% during the latest quarter.
Most Europe remains vibrant
European house price rises continue unabated. House prices have risen over the past year in no less than 13 of the 20 European housing markets for which figures were available.
Ireland remains the best performer in Europe, buoyed by its very strong economy. Residential property prices were up by 11.57% during the year to Q2 2018, after y-o-y rises of 12.4% in Q1 2018, 11.7% in Q4 2017, 11.75% in Q3 2017, and 11.8% in Q2 2017. During the latest quarter, Irish house prices increased 2.22%. Ireland’s surging house prices are mainly driven by strong demand as well as supply shortages. The Irish economy grew by around 7.8% last year and is projected to expand by another 5.6% this year, according to the European Commission.
The Netherlands‘ housing market remains strong, mainly due to robust demand, coupled with lack of adequate housing supply in the market. The average purchase price of all dwellings rose by 7.24% during the year to Q2 2018, slightly up from the previous year’s 6.39% growth. On a quarterly basis, house prices were up 0.85% during the latest quarter. During 2017, home sales surged 13% from a year ago, fuelled by low interest rates and robust economic growth. In the first seven months of 2018, home sales dropped more than 7% from a year earlier to 124,615 units, according to Statistics Netherlands. The Dutch economy grew by 3.1% in 2017, the highest growth since 2007. GDP is expected to grow by another 3.2% this year and by 2.4% in 2019, according to the IMF.
Portugal’s housing prices continue to rise strongly, fuelled by surging demand as well as improved economic conditions. Nationwide property prices rose by 4.53% during the year to Q2 2018, from y-o-y rises of 4.7% in Q1 2018, 3.03% in Q4 2017, 4.04% in Q3 2017 and 3.47% in Q2 2017. During the latest quarter, house prices were almost stable.
After more than three years of depression, house prices in Portugal started to recover in 2014. The Portuguese economy is expected to expand by 2.4% this year, after GDP growth of 2.7% in 2017, 1.6% in 2016, 1.8% in 2015, and 0.9% in 2014.
Other strong European housing markets included Iceland, with house prices rising by 4.18% during the year to Q2 2018, Spain (4.01%), and Riga, Latvia (2.68%). All, expect Latvia, recorded positive quarterly growth during the latest quarter. In terms of momentum, only Spain had stronger performance in Q2 2018 compared to a year earlier.
Minimal annual house price rises during the year to Q2 2018 were registered in Jersey (1.93%), Germany (1.74%), Slovak Republic (1.68%), Romania (1.66%), Athens, Greece (0.66%), Lithuania (0.48%) and Finland (0.43%). Only Germany, Slovak Republic, Finland and Lithuania saw quarterly growth during the latest quarter. On the other hand, only Jersey, Greece and Finland performed better in Q2 2018 compared to the previous year.
Other strong European housing markets included Jersey, with house prices rising by 8.91% during the year to Q1 2018, Macedonia (6.1%), Riga, Latvia (5.72%), Romania (4.71%), Portugal (4.7%), Germany (4.19%), and Estonia (3.72%). All recorded positive quarterly growth during the latest quarter. In terms of momentum, only Macedonia, Latvia, Portugal and Jersey had stronger performances in Q1 2018 compared to a year earlier.
Modest to very minimal annual house price rises during the year to Q1 2018 were registered in Sweden (2.97%), Slovak Republic (2.41%), Spain (2.37%), Vienna, Austria (1.68%), Finland (0.29%), and Lithuania (0.1%). Only Slovak Republic, Spain, and Austria saw quarterly growth during the latest quarter. On the other hand, only Spain, Austria and Finland performed better in Q1 2018 compared to the previous year.
The U.K.’s house prices were unchanged during the year to Q1 2018. London was the worst-performing region, with house prices falling by 3.4% y-o-y in Q1 2018. Some high-end London districts have experienced significant price-falls.
Europe’s weakest housing markets
Ukraine‘s housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 7.81% (inflation-adjusted) during the year to Q2 2018, to an average price of US$ 1,071 per square metre (sq. m.) – worse than the previous year’s 5.13% decline. House prices fell 1.94% quarter-on-quarter in Q2 2018.
House prices in Ukraine have been falling over the past five years, particularly in 2014 (with prices plunging 37.38%) because ofhryvnia devaluation due to the Russian war. Ukraine’s economy is expected to expand by 3.2% this year, after expansions of 2.5% in 2017 and 2.4% in 2016, and contractions of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013.
Turkey’s housing market continues to weaken, amidst its plummeting currency (the lira), record-high inflation, and the country’s political conflict with the US. Nationwide residential property prices fell by 4.21% during the year to Q2 2018, in contrast with a 1.62 y-o-y rise in a year earlier – the fourth consecutive quarter of y-o-y price declines. On a quarterly basis, house prices dropped 1.99% during the latest quarter.
In June 2018, inflation rose to 15.39%, the highest level since 2004. The Turkish lira plunged to record lows, having shed more than 40% of its value against the US dollar in the past year. The government recently cut its 2018 GDP growth forecast to 3% – 4% from its earlier estimate of 5%.
Switzerland’s house prices fell 3.49% y-o-y in Q2 2018, the fourth consecutive quarter of annual price declines and the biggest fall in almost two decades. During the latest quarter, prices fell by 1.28% q-o-q.
After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool the country’s overheated property market have finally succeeded. The Swiss economy is expected to expand by 2.3% this year and by another 2% in 2019, following annual growth of 1.1% in 2017, 1.4% in 2016, 1.2% in 2015 and 2.5% in 2014, according to the IMF.
Other weak European housing markets included Sweden, with house prices falling by 1.86% during the year to Q2 2018, Russia(-0.81%), Norway (-0.73%), and the UK (-0.09%). Only Norway and the UK saw quarterly growth during the latest quarter. All, except Russia, performed better in Q2 2018 compared to the previous year.
The Asia-Pacific region remains strong, but China slowing rapidly
Two of the five strongest housing markets in our global survey are in Asia-Pacific, with house prices rising in 6 of the 9 housing markets for which figures were available during the year to Q2 2018.
Hong Kong‘s housing market continues to boom, with residential property prices surging 13.15% during the year to Q2 2018, from y-o-y rises of 12.28% in Q1 2018, 12.78% in Q4 2017, 13.41% in Q3 2017, and 19.27% in Q2 2017. Quarter-on-quarter, house prices increased 5.05% in Q2 2018.
The latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016 and cutting allowable loans on residential and commercial properties in May 2017. In June 2018, Chief Executive Carrie Lam revealed another series of cooling measures, including a tax against vacant flats. In the first half of 2018, the total number of property transactions in Hong Kong increased 5.6% from a year earlier while sales values rose by 8.4%, according to the Ratings and Valuation Department (RVD). The economy expanded by 3.8% last year, the highest growth since 2011. The IMF recently raised its 2018 growth forecast for Hong Kong to 3.6%, up from its earlier estimate of 2.6%.
Macau’s housing market remains vibrant, amidst massive infrastructure investments, which will transform Macau’s connections to China and Hong Kong. The average transaction price of residential units rose by 6.31% during the year to Q2 2018, following y-o-y rises of 4.22% in Q1 2018, 4.93% in Q4 2017, 9.59% in Q3 2017 and 11.79% in Q2 2017. House prices increased strongly by 5.21% q-o-q during the latest quarter.
Macau’s economy grew by a spectacular 9.3% in 2017, a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014. Macau’s economy is expected to grow by 7% this year and by another 6.1% in 2019, according to the IMF.
Thailand’s housing market is rising strongly again, with nationwide house prices rising by 5.01% during the year to Q2 2018, in contrast to a y-o-y decline of 3.02% in the previous year. House prices fell slightly by 0.58% q-o-q in Q2 2018. During the first five months of 2018, nationwide land and building transactions rose by 3.2% y-o-y to THB 425.74 billion (US$ 13.1 billion). The Bank of Thailand recently raised its 2018 economic growth forecast for the fifth time to 4.4% from its earlier projection of 4.1% due to rising exports and strong private consumption.
Other Asia-Pacific housing markets with modest house price rises include New Zealand, with house prices rising by 4.3% during the year to Q2 2018, Tokyo, Japan (3.89%), and Indonesia (0.01%). All, except Japan, recorded positive quarterly growth during the latest quarter. In addition, all showed stronger upward momentum in Q2 2018 as compared to the previous year.
Sharp housing slowdown China
China’s housing market is now slowing, with new regulatory and monetary policies impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 3.51% during the year to Q2 2018, in sharp contrast with a y-o-y rise of 6.76 in Q2 2017. During the latest quarter, house prices in Shanghai fell by 0.81%.
Despite this, the Chinese economy grew by 6.7% y-o-y in Q2 2018, only slightly lower than the 6.8% growth recorded the previous quarter. The economy is projected to expand by 6.6% this year, after expanding 6.9% in 2017 and 6.7% in 2016. China has achieved 27 straight years of above 6% growth.
Taiwan‘s housing market is still weak. Nationwide house prices fell by 0.27% during the year to Q2 2018, compared to a decline of 0.07% y-o-y in Q2 2017. Quarter-on-quarter, house prices fell by 0.15% in during the latest quarter.
South Korea‘s housing market is also fragile, with the nationwide housing purchase price index falling by 0.08% during the year to Q2 2018, from a y-o-y decline of 0.73% a year earlier. House prices dropped 0.04% q-o-q during the latest quarter.
Middle Eastern housing markets continue to struggle, but Egypt is an exception
TheMiddle East is now in the doldrums, with two of the three weakest housing markets in our global house price survey: Qatar and UAE. This is not surprising given the region’s ailing economy due to low oil prices and the ongoing political and diplomatic crisis. The Middle East’s economy grew by just 1.1% in 2017, the lowest level in eight years.
Qatar remains the weakest housing market in our global survey, amidst a sharp economic slowdown and the adverse impact of the blockade it is suffering from other Golf countries.
Qatar’s real estate price index dropped 16.91% during the year to Q2 2018, after y-o-y declines of 9.65% in Q1 2018, 10.42% in Q4 2017, 3.47% in Q3 2017, and 4.52% in Q2 2017. Property prices fell by 6.62% q-o-q during the latest quarter. The Qatari economy is expected to grow by a modest 2.6% this year, after annual average growth of 2.1% in 2016-17, 4.2% during 2012-15, and 15.7% in 2008-11.
Other Middle Eastern housing markets are also depressed.
In Dubai, residential property prices fell 7.63% during the year to Q2 2018, worse than the prior year’s 2.51% decline, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai dropped 1.33% q-o-q.
Likewise, Israel‘s decade-long house price boom is now over, with government cooling measures intensifying. The nationwide average price of owner-occupied dwellings fell by 1.21% during the year to Q2 2018, in sharp contrast with the previous year’s 4.06% growth. Israeli house prices fell 1.14% q-o-q in Q2 2018.
Egypt is an exception
Egypt’s housing market has risen over the past year, with the nationwide real estate index rising by 4.51% during the year to Q2 2018, in contrast with the y-o-y decline of 5.32% during the previous year. However house prices fell 9.91% quarter-on-quarter during the latest quarter.
Rapid house price rises should be expected in Egypt due to the dramatic inflation unleashed by more-than-halving of the currency’s value in November 2016. That house prices have not risen more is surprising.
President Abdel Fattah el-Sisi recently removed the last restrictions on foreign ownership of land and property in Egypt. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. The economy is expected to grow strongly by 5.2% this year, the fastest pace in a decade, according to the IMF.
The Americas are mixed
The U.S. remains strong but Canada is slowing sharply.
In Latin America, Mexico is strengthening while Chile has rebounded strongly. House prices are still falling in Brazil, despite some improvement.
After five years of strong house price growth, the U.S. housing market remains surprisingly vibrant. The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index increased 3.67% y-o-y in Q2 2018 (inflation-adjusted), after annual rises of 4.93% in Q1 2018, 4.64% in Q4 2017, 4.68% in Q3 2017 and 4.77% in Q2 2017. The FHFA index rose by 0.07% q-o-q during the latest quarter.
U.S. housing demand and construction activity are mixed. In July 2018, sales of new single-family houses rose by 12.8% y-o-y while existing home sales were down by 1.5%. Building permits authorized for new housing units rose by 4.2% in July 2018 from a year earlier. On the other hand, new housing starts fell by 1.4% y-o-y in July 2018, while completions were slightly down by 0.8%.
The world’s biggest economy grew by 4.1% y-o-y in Q2 2018, nearly double the 2.2% growth the previous quarter and the fastest pace since Q3 2014. Growth was mainly driven by consumers spending their tax cuts and exporters rushing to get their goods delivered ahead of retaliatory tariffs. Recently, the IMF raised its 2018 US growth forecast from 2.3% to 2.7% and finally to 2.9%, an acceleration from the expansions of 2.3% in 2017 and 1.5% in 2016.
In December 2017, President Donald Trump signed a landmark tax law (known as the Tax Cuts and Jobs Act or TCJA) considered to be the largest overhaul of the U.S. tax code in over 30 years.
Canada‘s housing market is slowing sharply, amidst the introduction of more market-cooling measures and rising mortgage interest rates. House prices in the country’s eleven major cities rose by a meagre 0.41% during the year to Q2 2018, a sharp deceleration from last year’s 13.02% growth. Quarter-on-quarter, house prices increased 1.68% q-o-q in Q2 2018.
The Canadian Real Estate Association (CREA) expects home sales to fall by 11% this year, mainly due to higher home prices and interest rates, supply shortages, and heightened uncertainty. Demand is weak. In July 2018, actual sales activity dropped 1.3% from a year earlier. The Canadian economy grew by a healthy 3% in 2017, the highest growth since 2011. The economy is expected to expand by 2.1% this year and by another 2% in 2019.
The Latin Americas are improving
Mexico‘s nationwide house price index rose by 5.12% during the year to Q2 2018, up from just 0.73% y-o-y house price rises in Q2 2017. House prices increased 4.89% q-o-q during the latest quarter.
Chile‘s housing market continues to grow stronger, despite the introduction of a property sales tax in 2016. The average price of new apartments in Greater Santiago rose by 3.39% during the year to Q2 2018, up from the previous year’s 2.11% y-o-y growth. House prices fell by 1.07% q-o-q in Q2 2018.
Brazil’s house prices are still falling, but the outlook is now positive, amidst increasing construction and home sales, as well as a positive economic outlook. In Sao Paulo, house prices fell by 2.38% during the year to Q2 2018, after a y-o-y decline of 2.15% a year earlier. Quarter-on-quarter, house prices in Sao Paulo fell by 1.22% in Q2 2018.
Builder confidence in the market for newly-built single-family homes fell two points to 68 in June on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline was due in large part to sharply elevated lumber prices, although sentiment remains on solid footing.
Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead. However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.
Builders are optimistic about housing market conditions as consumer demand continues to grow. However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.
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 indexes inched down a single point in June. The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57 while the West and Midwest remained unchanged at 76 and 65, respectively. The South fell one point to 71.
Sales of previously owned houses in the United States went up 1.1 percent month-over-month to a seasonally adjusted annual rate of 5.62 million in May of 2017, following a downwardly revised 5.56 million in the previous month and beating market expectations of a 0.5 percent drop. Sales of single family houses went up 1 percent to 4.98 million after falling by 2.8 percent in the previous month and those of condos increased 1.6 percent to 0.64 million, following a flat reading in April. The median house price increased to an all-time high of $252,800 and the months’ worth of supply went up to 4.2 percent from 4.1 percent. In addition, the number of houses available in the market increased to 1.96 million from 1.92 million in April. Existing Home Sales in the United States averaged 3902.01 Thousand from 1968 until 2017, reaching an all time high of 7250 Thousand in September of 2005 and a record low of 1370 Thousand in March of 1970.
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed mortgage rate inching lower for the third consecutive week and setting a new low for the year.
30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.5 point for the week ending June 1, 2017, down from last week when it averaged 3.95 percent. A year ago at this time, the 30-year FRM averaged 3.66 percent.
15-year FRM this week averaged 3.19 percent with an average 0.5 point, the same as last week. A year ago at this time, the 15-year FRM averaged 2.92 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.
“In a short week following Memorial Day, the 10-year Treasury yield fell 4 basis points. The 30-year mortgage rate remained relatively flat, falling 1 basis point to 3.94 percent and once again hitting a new 2017 low.”
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%).
“This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability,” said NAHB Chairman Ed Brady, a home builder and developer. “This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29% in the past five years.”
Perhaps this is just the increase the industry needs to boost new home development for first-time buyers, something that First American Chief Economist Mark Fleming said will be a key player in 2017’s housing market.
“Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing,” NAHB Chief Economist Robert Dietz said.
“The rise in the HMI is consistent with recent gains for the stock market and consumer confidence,” Dietz said. “At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”
Derived from a monthly survey that NAHB has been conducting for 30 years, the 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.
Nationally, the contract interest rate on conventional mortgages for home purchase held steady in October 2016. Over the month, the rate on conventional mortgages for home purchase was unchanged at 3.60%, according to data released by the Federal Housing Finance Agency (FHFA). Rates on the purchase of previously occupied homes ticked up 1 basis point to 3.62% while rates on new homes fell 2 basis points to 3.54%.
The lack of change in mortgage rates overall reported by the FHFA does contrast with the increase in mortgage rates over the month of October in the Mortgage Bankers’ Association’s Mortgage Applications Survey (MAS). This Survey indicates that the contract rate on conventional mortgages rose 5 basis points to 3.72% over the month*. However, the FHFA release more closely parallels results from Freddie Mac’s Primary Mortgage Market Survey (PMMS). The commitment rate on conventional mortgages ticked up 1 basis point to 3.47% over the month of October*.
Despite some divergence, over the longer term, these 3 series track each other fairly closely. Between 1990 and 2000, the trend in the 3 series matched, although the rates reported by MBA’s MAS and Freddie Mac’s PMMS were more similar while FHFA’s MIRS was often a bit lower. Since 2000, the three series have been in near unison both in its point estimate and the overall trend.
The monthly data covers the month of October, but the weekly mortgage rate data for November indicates that rates have clearly begun to rise. As shown by the figure below, between October 28th and November 25th, the contract mortgage rate calculated by the PMMS rose from 3.47% to 4.03%. Over the same period, the MAS increased from 3.75% to 4.23%. Further, mortgage rates are expected to continue climbing in the near term. In its most recent forecast, dated October 28th, NAHB expects the rate on a 30 year fixed rate mortgage to climb in each of 2017 and 2018.
The increase in mortgage rates follows the increase in the 10-year Treasury note. A rising rate on the 10-year partly reflects the desire to make progress on monetary policy normalization, which has been impeded by a series of unrelated surprises over the course of the year. However, momentum has been building and expectations of an impending increase in the federal funds rate has pushed interest rates modestly higher in the second half of the year.
A more seismic impact from a different set of rate expectations has been set in motion by the surprise outcome of the November election. Proposals for fiscal stimulus via tax cuts, government spending and regulatory reform have led to expectations of stronger economic growth, higher inflation and higher interest rates. The yield on 10-year Treasury securities has moved up over 50 basis points since November 8.