Pending home sales in November bounced back from last month’s decline, led by gains in the West.
The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI rose 1.2% from 107.2 in October to 108.5 in November. Sales were 7.4% higher than a year ago, the highest year-over-year gain since 2016.
The November PHSI were mixed regionally. The measure was 1.0% and 5.5% higher in the Midwest and the West, but fell 0.1% and 0.2% in the Northeast and the South. Year-over-year, the PHSI grew in all four regions, ranging from 2.6% in the Northeast to 14.0% in the West.
Though the gain in November suggests the housing market continuing benefit from lower mortgage rates and robust job market, housing supply has not kept up with demand. Housing inventory remains a challenge as it has been declined for six straight months.
As 2019 saw historically low vacancy rates among multifamily housing, it also led to a rising cost of rent, too.
According to realtor.com, a report from Abodo said rental prices went up in 38 states, including Washington, D.C., in 2019. In the other 12 states, the cost of rent actually fell, but only slightly.
Nationally, median rents for one-bedroom units went up 4.1%, making monthly rent $1,078 at the end of 2019.
Prices for two-bedroom units went up 5.5%, making monthly rent $1,343.
In 2019, multifamily occupancy rates reached as high as 96.3%. The demand of multifamily housing keeps rising, as home prices are also continuing to climb.
According to realtor.com, rental prices surged the most in Utah. There, rent went up 3.78% in 2019, reaching $965 for a one-bedroom unit.
“In states like Utah, people are relocating for jobs,” Abodo said in its report. “Many folks are coming from California and other high-priced hubs. People need to find places where they can live and afford to live a lifestyle that they want.”
Renting cost the most in Massachusetts, where the average one-bedroom unit cost $2,218 a month.
Renting surged the most in Detroit, where cost of renting a one-bedroom went up 7.48%, making rent $886 a month.
“They’re seeing a housing boom,” Abodo continued. “There are more people moving there, which increases the demand for housing as the city begins to come back. New construction has actually started there, which is obviously going to cost more.”
The highest rents in the nation were, at no surprise, San Francisco and New York City. On average, renting a one-bedroom unit was $3,877 and $3,082 a month, respectively.
Renters in Montana saw the biggest price cuts in 2019. Rents fell 1.6%, to an average $745 a month for a one-bedroom unit.
Average prices fell the most in Dayton, Ohio, in 2019, falling 4.11%. This made renting a one-bedroom unit $758 a month. Toldeo, Ohio also had the best deal, where rents were just $517 a month for a one-bedroom unit.
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.
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that the 30-year fixed-rate mortgage (FRM) averaged 3.72 percent.
“The combination of improved economic data and market sentiment has led to stability in mortgage rates, which have hovered around 3.7 percent for nearly the last two months,” said Sam Khater, Freddie Mac’s Chief Economist. “The stability is welcome news after the interest rate turbulence of the last year, which caused a slowdown in the housing market and other interest rate sensitive sectors. The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices.”
News Facts
30-year fixed-rate mortgage averaged 3.72 percent with an average 0.7 point for the week ending January 2, 2020, slightly down from last week when it averaged 3.74 percent. A year ago at this time, the 30-year FRM averaged 4.51 percent.
15-year fixed-rate mortgage averaged 3.16 percent with an average 0.7 point, down from last week when it averaged 3.19 percent. A year ago at this time, the 15-year FRM averaged 3.99 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.46 percent with an average 0.3 point, slightly up from last week when it averaged 3.45 percent. A year ago at this time, the 5-year ARM averaged 3.98 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.
