The National Association of Home Builders’ (NAHB) Multifamily Production Index (MPI) dropped three points to 50 in the second quarter of 2016 (Exhibit 1). This is the 18th consecutive reading of 50 or above, which means that more builders and developers report that current conditions in the apartment and condominium market are improving than report conditions are getting worse.
Exhibit 1: NAHB Multifamily Production Index (MPI) and Multifamily Starts (in thousands)
The MPI is comprised of three key sub-components: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. Low-rent units decreased two points to 52 in the second quarter, while market-rate rental units dropped five points to a level of 53, and for-sale units fell three points to 45.
The NAHB Multifamily Vacancy Index (MVI), which measures respondent perceptions of vacancies in the multifamily housing market, increased three points to 42, with higher numbers indicating more vacancies (Exhibit 2). However, the MVI is still below the breakeven point of 50, which means that more respondents perceived a reduction in vacancy rates than perceived an increase.
Exhibit 2: NAHB Multifamily Vacancy Index (MVI) and 5+ Rental Vacancy Rate
After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011. Historically, the MVI has shown to be a leading indicator of Census multifamily vacancy rates, which is displayed in Exhibit 2 as well.
30-year fixed-rate mortgage (FRM) averaged 3.54 percent with an average 0.5 point for the week ending June 16, 2016, down from last week when it averaged 3.60 percent. A year ago at this time, the 30-year FRM averaged 4.00 percent.
15-year FRM this week averaged 2.81 percent with an average 0.5 point, down from last week when it averaged 2.87 percent. A year ago at this time, the 15-year FRM averaged 3.23 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.
“The 10-year Treasury yield continued its free fall this week as global risks and expectations for the Fed’s June meeting drove investors to the safety of government bonds. The 30-year mortgage rate responded by falling 6 basis points for the second straight week to 3.54 percent — yet another low for 2016. Wednesday’s Fed decision to once again stand pat on rates, as well as growing anticipation of the U.K.’s upcoming European Union referendum will make it difficult for Treasury yields and — more importantly — mortgage rates to substantially rise in the upcoming weeks.”
The most recent release of Census’ Construction Spending report included significant revisions to the residential improvements spending category. Residential improvements spending is calculated as the amount of total private residential spending on owner-occupied units after accounting for single-family and multifamily expenditures. As discussed in an earlier post, with these changes, the total amount of spending on residential improvements more closely tracks NAHB’s remodelers’ sentiment.
According to Census, in the January 2016 release of the Construction Spending report, which provides construction spending data up to November 2015, monthly and annual estimates for private residential, total private, total residential and total construction spending for January 2005 through October 2015 were revised to correct a processing error in the tabulation of data on private residential improvement spending.
As illustrated in Figure 1, which shows residential improvements spending measured at a seasonally adjusted annual rate for each quarter, the revised series diverged noticeably from the first quarter of 2012 onward. Between 2012 and the third quarter of 2013, the revised series shows a muted increase while the previous series rose more significantly. In addition, the previous residential improvements series exhibited a steep decline over 2014 with a partial recovery in 2015. In contrast, the 2014 decline in the revised series is shallower, of a shorter duration, and is erased by the first quarter of 2015.
Figure 1 indicates that the revisions to residential improvements spending were sizable, especially in 2014 and the first three quarters of 2015. Between 2012 and the third quarter of 2013, the December 2015 release of residential improvements spending was revised down by an average of $12 billion in each quarter by the January 2016 release. On average, each quarter of spending over this period was revised down by 9%. The largest revision in this period took place in the first quarter of 2013 when the $131.3 billion in residential improvements spending was revised down by 12% to $115.6 billion.
Americans stepped up their home-buying for a third straight month in July, as sales accelerated to the strongest pace in eight years.
The National Association of Realtors said Thursday that sales of existing homes rose 2 percent last month to a seasonally adjusted annual rate of 5.59 million, the fastest rate since February 2007. Sales have jumped 9.6 percent over the past 12 months, while the number of listings has declined 4.7 percent.
Steady job growth and relatively low mortgage rates have convinced current homeowners to purchase homes, while first-time buyers remain scarce. The housing market contains a mere 4.8 months’ supply of homes, meaning that prices are rising for an increasingly narrow set of properties.
The slow six-year recovery from the Great Recession has finally revitalized the housing market. Home sales have soared in recent months, as more current homeowners have returned to the real estate market for an upgrade or to downsize as they approach retirement. Yet the upswing also reflects increasing problems with affordability that have left first-time buyer on the sidelines.
“When first-time homebuyers compete with people who are more qualified borrowers that have additional cash, they tend to lose,” said Budge Huskey, chief executive of the real estate brokerage Coldwell Banker.
The median home price climbed 5.6 percent over the past 12 months to $234,000. Just 28 percent of the purchases last month went to first-time homebuyers, a group that historically accounted for 40 percent of sales. A more balanced market would contain six months’ of supply-instead of less than five-and provide potential homebuyers with a greater selection of homes.
Current homeowners with equity have been able to absorb some of that price appreciation as they’ve shopped for another home. But the recent sales explosion also reflects two critical factors: the economy adding a solid 2.9 million jobs over the past 12 months and the average, 30-year fixed mortgage rate staying around 4 percent. At roughly two percentage points below the historical level, mortgage rates have reduced monthly borrowing costs for buyers.
Still, the trajectory of mortgage rates- and sales- going forward is unclear.
It’s possible that a weakening global economy will cause more investors to buy U.S. Treasury bonds, a move that has historically held down mortgage rates. The average mortgage rate has slipped slightly as China has endured stock market volatility and reduced the value of its currency.
Yet the Federal Reserve is preparing to raise a key interest rate for the first time in nearly a decade. Economists say the Fed could lift its fed funds rate from near-zero as soon as September, an increase that would potentially cause mortgage rates to rise. When Fed officials previously announced plans in 2013 to pull back on other forms of economic stimulus, mortgage rates suddenly spiked and derailed home sales for several months.
Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving higher amid positive housing data and pushing fixed mortgage rates to their highest level of the year.
30-year fixed-rate mortgage (FRM) averaged 3.87 percent with an average 0.6 point for the week ending May 28, 2015, up from last week when it averaged 3.84 percent. A year ago at this time, the 30-year FRM averaged 4.12 percent.
15-year FRM this week averaged 3.11 percent with an average 0.5 point, up from last week when it averaged 3.05 percent. A year ago at this time, the 15-year FRM averaged 3.21 percent.
1-year Treasury-indexed ARM averaged 2.50 percent this week with an average 0.3 point, down from last week when it averaged 2.51 percent. At this time last year, the 1-year ARM averaged 2.41 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 links for theRegional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.
Quotes Attributed to Len Kiefer, deputy chief economist, Freddie Mac.
“Mortgage rates rose to the highest level in 2015 following positive housing market data. New home sales surged 6.8 percent to an annual pace of 517,000 units in April. Althoughexisting home sales slipped 3.3 percent to a seasonally-adjusted pace of 5.04 million units, sales are up 6.1 percent on a year-over-year basis. The S&P/Case-Shiller 20-city home price index also posted a solid gain of 5 percent over the 12-months ending in March 2015.”
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
The legendary architect and his companion, the curator David Whitney, spent their weekends in the world’s most famous transparent box. Or did they?
WHEN PHILIP JOHNSON’S Glass House in New Canaan, Conn., was featured in Life magazine soon after its completion in 1949, architects and designers downed martinis at the Oyster Bar, pondering the future of the International Style. But that probably wasn’t what most people were thinking about as they looked at the pictures. They likely leaned back in their Barcaloungers and wondered: How could he actually live in a clear box, without walls, without privacy, without any stuff?
The answer was that despite our indelible impression of Johnson, the owlish man in the dapper suit and those spectacles, spending his incredibly long life (he died at age 98 in 2005) in the 1,800-square-foot transparent rectangle, silhouetted against a backdrop of greenery that he called “expensive wallpaper,” he never really did live in the Glass House. At least not in the self-contained sense in which the rest of us occupy our homes.
T’s design editor Tom Delavan tours the 49-acre estate with Henry Urbach, the house’s director.
Instead, the Glass House was merely the focal point of what eventually grew to be a veritable architectural theme park on 49 meticulously tended acres, comprising 14 structures, in which Johnson and David Whitney, the collector and curator who met him in 1960 and became his life partner, and who died just months after Johnson, enjoyed their impossibly glamorous weekend existence.
From the bunkerlike Brick House where Johnson often slept and the tiny, turreted, postmodern Library where he worked surrounded by architecture books, to Calluna Farms, the 1905 shingled farmhouse and the subterranean art gallery, the collection of buildings formed Johnson’s idea of the perfect deconstructed home. When the Glass House compound, a National Trust for Historic Preservation site, reopens for tours in May after its usual winter break, the public will for the first time be able to visit two additional structures of the 14 — Calluna Farms and Grainger, the cozy 18th-century timber-frame house the couple used as a TV room — at last offering a more nuanced picture of what life really was like behind glass.
Philip Johnson’s “Glass House” refers ambiguously both to his iconic residence in New Canaan, Conn., and to the 49-acre property which comprised eight other buildings, including this house, called Grainger, which was used as a sitting room.Dean Kaufman
The world-famous Glass House, completed in 1949, was not the couple’s sole residence on the property. Dean Kaufman
The Sculpture Gallery, built in 1970, holds works from the likes of Frank Stella and Robert Morris. Dean Kaufman
The postmodern one-room Library, built in 1980, where Johnson often worked. Dean Kaufman
The Gehryesque Da Monsta gatehouse, completed in 1995. Dean Kaufman
The interior of Grainger, the 18th-century farmhouse used mostly for watching TV. Dean Kaufman
The entrance to the subterranean Painting Gallery. Dean Kaufman
Calluna Farms, the shingle-style farmhouse purchased by Johnson in 1981 to serve as Whitney’s residence. Dean Kaufman
The interior of Calluna Farms with its lace curtains and chairs designed by Prouvé, Le Corbusier and Thonet. Dean Kaufman
The bedroom in the Brick House, designed by Johnson in 1953, features vaulted ceilings, Fortuny-covered walls and a hand-woven carpet. Dean Kaufman
The Lincoln Kirstein Tower, a 30-foot folly on the property that Johnson used to climb. Dean Kaufman
A window by the artist Michael Heizer at the back of Grainger, facing the peony and iris garden. Dean Kaufman
IN THE BEGINNING, there were two: the Glass House and the Brick House, both about 50 feet long and finished within months of each other in 1949 on a five-acre plot, with a 90-foot-wide grassy court separating them. History has downplayed the Brick House — from the outside it’s plain and it doesn’t fit well with the people-in-glass-houses narrative — but Johnson always knew it would be impossible to live entirely in the open, so he built a place to get some privacy.
The rest of the buildings came naturally, if gradually. The idea of having a slew of small houses for different activities, moods and seasons, complemented by decorative “follies,” was Johnson’s conception for the site from early on. He called it a “diary of an eccentric architect,” but it was also a sketchbook, an homage to architects past and present, and to friends like the dance impresario Lincoln Kirstein, after whom Johnson named one of the follies he built on the property, a 30-foot-high tower made of painted concrete blocks.
In contrast to their whirlwind weekday world in Manhattan, Johnson and Whitney saw life in New Canaan as perpetual camping, albeit of a luxurious, minimalist sort. Neither Grainger nor the 380-square-foot Library has a bathroom, though both are air-conditioned, unlike the Glass House, which relies on cross ventilation. It originally had heating pipes in the ceiling and the floor, but the ceiling pipes reportedly froze early on and were never adequately repaired. To compensate, on particularly cold winter days the temperature of the water flowing through the radiant heated floors was turned up to nearly 200 degrees. “You couldn’t go in there with bare feet,” Port Draper, the contractor who maintained the house for many years, recalled in The Times in 2007. Johnson was unbothered by the house’s leaks, a problem endemic to a flat roof. Frank Lloyd Wright once referred to one of his houses as a “two-bucket house,” according to Robert A. M. Stern, to which Johnson gaily replied, “Oh, that’s nothing, Frank. Mine’s a four-bucket house. One in each corner.”
While the Glass House was designed with areas for dining, living and sleeping, loosely divided by low cabinetry and a brick cylinder holding the chimney and bathroom, it functioned more as a living space, an occasional office for Johnson and a place to throw parties (lots of them, attended in the early years by a coterie of young Yale architecture students, and later by the likes of Richard Meier, Frank Gehry, Fran Lebowitz and Agnes Gund). The house was astonishingly tchotchke-free. “I don’t think clutter was allowed,” the painter Jasper Johns, a friend of both men, once said. “One was always aware of their ruthless elegance.”
Residents of newly built homes are more likely to bike or walk, according to 2013 American Housing Survey (AHS) data recently released by HUD and the Census Bureau. The data show that nearly 44 percent of households in new construction either bike or walk, compared to about 40 percent of households overall (see the graph immediately below).
In general, walking is more common than biking. A little under a quarter of households walk but don’t bike, while fewer than 4 percent bike but don’t walk. The new-overall difference shows up most strongly in the households that both bike and walk: over 16 percent of households in new construction both bike and walk, compared to just under 12 percent of households overall. This occurs even though, as the next graph shows, many trip destinations are less often accessible by biking/walking to households in new homes.
For example, a grocery store (the most commonly accessible destination in the chart) is accessible by biking or walking to about one-fifth of households in new construction, compared to more than one-fourth of households overall. A similar new-overall difference is apparent for every destination down in the graph─down to the least often accessible school or work, accessible to 11.4 percent of households in new construction, and 13.4 percent of households overall. It’s possible that, in some cases, homes may go up in a new subdivision before stores, banks, etc. in the surrounding area are completely built out.
On the other hand, new homes are more likely to be built in neighborhoods with amenities designed to facilitate walking and biking. Over 61 percent of households in new homes report that their neighborhoods have sidewalks, compared to 55.7 percent of households overall. New homes are also more likely to be located in neighborhoods that have well-lit sidewalks and bike lanes (see chart below).
The implication is that, for the sheer number of households walking & biking, neighborhood features like sidewalks and bike lanes are more important than nearness of particular destinations, and these features are somewhat more common in new subdivisions.
Privately-owned housing starts plunged 14.4% in August, according to the U.S. Census Bureau.
Starts were expected to drop after a strong July but not by this much.
Housing starts for July jumped to an annualized pace of 1.093 million units-up from 0.945 million units the prior month. July was up a sharp 15.7%.
Housing starts printed at a seasonally adjusted annual rate of 956,000, well below analyst expectations, but 8% above the August 2013 rate of 885,000.
Single-family units remained largely flat as they have for the past 20 months, multifamily starts fell from 396,000 to 343,000, or 13.4% for permits, and an incredible 31.5% for starts.
Single-family housing starts in August were at a rate of 643,000; this is 2.4% below the revised July figure of 659,000. The August rate for units in buildings with five units or more was 304,000.
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 998,000. This is 5.6% below the revised July rate of 1,057,000, but is 5.3% above the August 2013 estimate of 948,000.
Single-family authorizations in August were at a rate of 626,000; this is 0.8% below the revised July figure of 631,000. Authorizations of units in buildings with five units or more were at a rate of 343,000 in August.
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 892,000. This is 3.2% above the revised July estimate of 864,000 and is 16.9% above the August 2013 rate of 763,000.
Single-family housing completions in August were at a rate of 591,000; this is 8.2% below the revised July rate of 644,000. The August rate for units in buildings with five units or more was 292,000.
The sharp drop in China’s housing prices has led to an outburst of anger among property owners, leading to violent clashes in some cases, according to local media reports Tuesday.
In one case, scores of property owners surrounded a Shanghai sales office of Greentown China Holdings Ltd. 3900, +8.58%GTWCF, -33.19% to protest the developer’s 25% cut to prices within a five-day period, according to a report on the NetEase NTES, +1.62% news portal site 163.com.
Protesters held banners with slogans such as “You cheated us!” and “300,000 yuan [$48,750] worth of assets evaporate within five days — years of work in vain!” according to photographs of the demonstration posted on the site.
The report quoted a sales manager from Greentown as saying that the price-cut was aimed to boost sales and “cope with competition” from rival China Vanke Co. 2202, +1.48% the nation’s largest residential property developer.
In other Chinese cities, such confrontations between buyers and developers have turned violent.
In the eastern city of Jinan, banner-carrying owners blocked a street to protest another 25% price cut for a local housing development, this one conducted over the space of two weeks, according to the local-government-run Life Daily newspaper.
The protesters clashed with a group of counter-protestors suspected to have been hired by local developers, injuring some of the demonstrators and forcing the police to break up the fight, 163.com said in a separate report.