Monthly Archives: June 2022

Pending home sales down 13.6% | Katonah Real Estate

Pending home sales increased 0.7% on a month-over-month basis to 99.9 in May, ending a six-month streak of declines, according to the National Association of Realtors (NAR). On a year-over-year basis, pending home transactions decreased 13.6%.

“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” says NAR chief economist Lawrence Yun. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”

According to the NAR, at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by approximately $800 since the beginning of the year as mortgage rates have increased 2.5 percentage points since the start of the 2022.

“Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” Yun says. “The better way to balance the market is through increased supply, which also helps the broader economy.”

Yun says variations in home prices and affordability contributed to regional differences in pending sales activity in May, with the largest decline in contract activity occurring in the West, where homes are the most expensive. The Pending Home Sales Index (PHSI) decreased 5% in the West in May and was down 19.8% on a year-over-year basis.

In the Northeast, pending sales increased 15.4% compared with April but decreased 11.9% compared with May 2021. The Midwest PHSI decreased 1.7% in May and 8.8% on a year-over-year basis.

The South PHSI increased 0.2% in May but decreased 13.8% compared with a year ago.

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builderonline.com/data-analysis/

Case Shiller prices up 21.2% | Bedford Hills Real Estate

Home price increases slowed ever so slightly in April, but it is the first potential sign of a cooling in prices.

Prices rose 20.4% nationally in April compared with the same month a year ago, according to the S&P CoreLogic Case-Shiller Index. In March, home prices grew 20.6%. The last slight deceleration was in November of last year.

The 10-city composite annual increase was 19.7%, up from 19.5% in March. The 20-city composite posted a 21.2% annual gain, up from 21.1% in the previous month.

In a change from the last five months, when most of the 20 cities saw month-to-month price gains, only nine cities saw prices rise faster in April than they had done in March. Cities in the South continued to see the strongest monthly gains, including Charlotte, North Carolina; Tampa, Florida; Atlanta, Dallas and Miami.

“April 2022 showed initial (although inconsistent) signs of a deceleration in the growth rate of U.S. home prices,” Craig Lazzara, managing director at S&P DJI, wrote in a release. “We continue to observe very broad strength in the housing market, as all 20 cities notched double-digit price increases for the 12 months ended in April. April’s price increase ranked in the top quintile of historical experience for every city, and in the top decile for 19 of them.”

Tampa, Miami and Phoenix continued to lead the pack with the strongest price gains. Tampa home prices were up, with a stunning 35.8% year-over-year price increase, followed by Miami, with a 33.3% increase, and Phoenix, with a 31.3% increase. Nine of the 20 cities reported higher price increases in the year ending April 2022 versus the year ending March 2022.

Cities with the smallest gains, although still in double digits, were Minneapolis, Washington and Chicago.

Not only are these price gains for April, but the index is a three-month moving average. The average rate on the 30-year fixed mortgage just crossed the 5% mark in April after rising from around 3% in January. By June it had crossed 6%.

“We noted last month that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that had only just begun when April data were gathered,” said Lazzara. “A more challenging macroeconomic environment may not support extraordinary home price growth for much longer.”

The housing market is already cooling, with slower sales and reports of price drops among some sellers. The supply of homes for sale has also increased steadily, as more listings come on the market and homes already on it sit longer. Active inventory last week was 21% higher than it was the same week one year ago, according to Realtor.com.

“For buyers and sellers, the road ahead will require more flexibility in pricing, brushing up on negotiation skills, and acknowledging that market conditions today are different than even six months ago,” said George Ratiu, senior economist at Realtor.com.

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cnbc.com/2022/6/28/

Existing home sales fall 8.6% | Bedford Real Estate

  • Existing-home sales declined for the fourth straight month to a seasonally adjusted annual rate of 5.41 million. Sales were down 3.4% from April and 8.6% from one year ago.
  • At $407,600, the median existing-home sales price exceeded $400,000 for the first time and represents a 14.8% increase from one year ago.
  • The inventory of unsold existing homes rose to 1.16 million by the end of May, or the equivalent of 2.6 months at the current monthly sales pace.

WASHINGTON (June 21, 2022) – Existing-home sales retreated for the fourth consecutive month in May, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while year-over-year sales slipped in all four regions.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

Total housing inventory2 registered at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun added. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”

The median existing-home price5 for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record.

Properties typically remained on the market for 16 days in May, down from 17 days in April and 17 days in May 2021. Eighty-eight percent of homes sold in May 2022 were on the market for less than a month.

First-time buyers were responsible for 27% of sales in May, down from 28% in April and down from 31% in May 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 25% of transactions in May, down from 26% in April and up from 23% recorded in May 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, down from 17% in April and 17% in May 2021.

Distressed sales5 – foreclosures and short sales – represented less than 1% of sales in May, essentially unchanged from April 2022 and May 2021.

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate across all of 2021 was 2.96%.

Realtor.com®’s Market Trends Report(link is external) in May shows that the largest year-over-year median list price growth occurred in Miami (+45.9%), Nashville (+32.5%), and Orlando (+32.4%). Austin reported the highest growth in the share of homes that had their prices reduced compared to last year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points).

Single-family and Condo/Co-op Sales

Single-family home sales declined to a seasonally adjusted annual rate of 4.80 million in May, down 3.6% from 4.98 million in April and down 7.7% from one year ago. The median existing single-family home price was $414,200 in May, up 14.6% from May 2021.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 610,000 units in May, down 1.6% from April and down 15.3% from one year ago. The median existing condo price was $355,700 in May, an annual increase of 14.8%.

“Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties – placing additional financial strain on prospective first-time homebuyers,” said NAR President Leslie Rouda Smith, a Realtor® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “To counter this trend, policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers.”

Regional Breakdown

Existing-home sales in the Northeast climbed 1.5% in May to an annual rate of 680,000, falling 9.3% from May 2021. The median price in the Northeast was $409,700, a 6.7% rise from one year ago.

Existing-home sales in the Midwest dropped 5.3% from the previous month to an annual rate of 1,240,000 in May, slumping 7.5% from May 2021. The median price in the Midwest was $294,500, up 9.5% from one year before.

Existing-home sales in the South declined 2.8% in May to an annual rate of 2,410,000, down 8.4% from the previous year. The median price in the South was $375,000, a 20.6% jump from one year ago. For the ninth consecutive month, the South recorded the highest pace of price appreciation in comparison to the other three regions.

Existing-home sales in the West slid 5.3% compared to the month before to an annual rate of 1,080,000 in May, down 10.0% from this time last year. The median price in the West was $633,800, an increase of 13.3% from May 2021.

The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.

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For local information, please contact the local association of Realtors® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

NOTE: NAR’s Pending Home Sales Index for May is scheduled for release on June 27, and Existing-Home Sales for June will be released on July 20. Release times are 10 a.m. Eastern.


1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR benchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).

3 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at nar.realtor.

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nar.realtor/newsroom/

Single family housing starts fall 9.2% | Pound Ridge Real Estate

Single-family starts declined further in May, as higher interest rates weighed on housing affordability. This follows a sixth straight monthly decline for the NAHB/Wells Fargo HMI. Additionally, the cost and availability of materials, lumber, labor and lots remain key supply-side headwinds. Single-family permits decreased 5.5% to a 1.05 million unit rate in May. Despite declines for housing affordability, a lack of resale inventory continues to partially support demand for home construction.

Overall housing starts declined to 1.55 million units on an annual basis in May, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The decline was due to weakening for single-family and multifamily construction. The May reading of 1.55 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months.

Within this overall number, single-family starts decreased 9.2% to a 1.05 million seasonally adjusted annual rate. The multifamily sector also fell back off extremely strong April numbers, declining 23.7% in May to a more sustainable 498,000 annualized rate of starts.

With inflation running at a 40-year high, economic policy needs to focus on improving the supply side of the economy by bringing down material, energy and transportation costs. Due to supply-chain effects, there are 152,000 single-family units authorized but not started construction—up 3.4% from a year ago. However, this total number has leveled off recently with slowing for single-family permits.

In June single-family builder confidence decreased 2 points to a level of 67, according to the NAHB/Wells Fargo Housing Market Index (HMI). After peaking at a level of 90 in November 2020, builders have reported ongoing concerns over elevated lumber, OSB and other construction costs, as well as delays in obtaining building materials. The sharp rise in mortgage interest rates for the first half of 2022 has also had an impact on the volume of home construction.

Consequently, the market has now passed an inflection point whereby single-family home building is weakening. We expect further declines in the months ahead, which itself is a recession warning for the quarters ahead. For instance, single-family permits decreased 5.5% to a 1.05 million unit rate. This is the lowest pace for single-family permits since July 2020.

On a regional and year-to-date basis, combined single-family and multifamily starts are 2.1% higher in the Northeast, 1.2% higher in the Midwest, 12.9% higher in the South and 4.3% higher in the West.

Overall permits decreased 7.0% to a 1.70 million unit annualized rate in May. Multifamily permits decreased 9.4% to an annualized 647,000 pace.

Looking at regional permit data on a year-to-date basis, permits are 8.3% lower in the Northeast, 5.2% higher in the Midwest, 4.6% higher in the South and 1.6% higher in the West.

As an indicator of the economic impact of housing and as a result of accelerating permits and starts in recent quarters, there are now 822,000 single-family homes under construction. This is 24% higher than a year ago. There are currently 843,000 apartments under construction, up 25% from a year ago. Total housing units now under construction (single-family and multifamily combined) is 24% higher than a year ago. The number of units under construction is rising on both the total volume of construction, as well as longer construction times. However, it appears the number of single-family units in the construction pipeline is now peaking for this business  cycle.

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eyeonhousing.org

Builder confidence falls to two year low | Chappaqua Real Estate

Rising inflation and higher mortgage rates are slowing traffic of prospective home buyers and putting a damper on builder sentiment. In a troubling sign for the housing market, builder confidence in the market for newly built single-family homes posted its sixth straight monthly decline in June, falling two points to 67, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This marks the lowest HMI reading since June 2020.

“Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment,” said NAHB Chairman Jerry Konter, a builder and developer from Savannah, Ga. “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates. Government officials need to enact policies that will support the supply-side of the housing market as costs continue to climb.”

“The housing market faces both demand-side and supply-side challenges,” said NAHB Chief Economist Robert Dietz. “Residential construction material costs are up 19% year-over-year with cost increases for a variety of building inputs, except for lumber, which has experienced recent declines due to a housing slowdown. On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out a significant number of prospective home buyers, as reflected by the decline for the traffic measure of the HMI.”

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI 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 indices posted declines in June. The component charting traffic of prospective buyers fell five points to 48, marking the first time this gauge has fallen below the breakeven level of 50 since June 2020. The HMI index gauging current sales conditions fell one point to 77 and the gauge measuring sales expectations in the next six months fell two points to 61.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 71, the Midwest dropped six points to 56, the South fell two points to 78 and the West posted a nine-point decline to 74.

HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS (formerly housingeconomics.com).

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nahb.org/news/

Mortgage rates average 5.78% | Bedford Corners Real Estate

 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 5.78 percent.

“Mortgage rates surged as the 30-year fixed-rate mortgage moved up more than half a percentage point, marking the largest one-week increase in our survey since 1987,” said Sam Khater, Freddie Mac’s Chief Economist. “These higher rates are the result of a shift in expectations about inflation and the course of monetary policy. Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”

News Facts

  • 30-year fixed-rate mortgage averaged 5.78 percent with an average 0.9 point as of June 16, 2022, up from last week when it averaged 5.23 percent. A year ago at this time, the 30-year FRM averaged 2.93 percent.
  • 15-year fixed-rate mortgage averaged 4.81 percent with an average 0.9 point, up from last week when it averaged 4.38 percent. A year ago at this time, the 15-year FRM averaged 2.24 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.33 percent with an average 0.3 point, up from last week when it averaged 4.12 percent. A year ago at this time, the 5-year ARM averaged 2.52 percent.

The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. 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.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

The current real estate market | Armonk Real Estate

Compass and Redfin make cuts amid volatile market

On Tuesday, the other shoe dropped. With mortgage rates now north of 6% and the stock market officially in bear territory, two of America’s most prominent real estate brokerages instituted large-scale layoffs and halted expansion efforts.

Redfin CEO Glenn Kelman said the brokerage/listings platform made the tough decision to lay off 470 workers across several divisions, including its engineering department.

“We raised hundreds of millions of dollars so we wouldn’t have to shed people after just a few months of uncertainty,” he wrote in a filing to the Securities and Exchanges Commission. “But mortgage rates increased faster than at any point in history. We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive. If falling from $97 per share to $8 doesn’t put a company through heck, I don’t know what does.”

Meanwhile, venture-backed Compass laid off 450 workers, halted expansion plans and even briefly paused trading of its stock, which had fallen from a debut price of $20.15 in April 2021, to $4.51 a share. Compass on Tuesday said that it has shut down Modus Technologies, a Seattle-based company that Compass bought in October 2020, heralding its entry point into the title and escrow space. It also plans to reduce costs by not backfilling roles and by getting out of real estate office leases.

Both Redfin and Compass are considered disruptors in the real estate industry, but neither has managed profitability. Redfin is rare in that it has salaried real estate agents as opposed to independent contractors. Its foray into iBuying has hurt its bottom line, and its business model is vulnerable to sudden shifts in the market. Compass, which lured top-performing agents with high commission splits and large signing bonuses, has struggled to contain costs.

The uptick in mortgage rates from the 3% range in January to over 6% in June and resulting drop in home sales volume has put immense pressure on virtually all real estate brokerages and mortgage lenders over the past two quarters.

HousingWire recently spoke with Jon Irvine, Chief Production Officer at Change Lending, about how brokers can gain a new competitive advantage in the current tight market.

It reached a tipping point this week following a worse-than-expected report on inflation on Friday and corresponding speculation about what the Federal Reserve would do this week to combat inflation. Many Fed observers expect the central bank to raise rates by 75 basis points on Wednesday. It is likely to trigger more layoffs across the real estate and mortgage industries.

Such market volatility has led to sleepless nights for real estate agents and LOs as well as buyers and sellers in recent few days.

“Interest rates are obviously rising and they are probably going to go up quite a bit again this week, so I’ve got buyers that are under contract now, but not closed and they are all texting me going, ‘Oh no, look at this,’” Anne-Marie Wurzel, who leads a top real estate team for Mainframe Real Estate in Orlando, Florida, told RealTrends. “But I tell them that this is why the lender and I wanted them to lock in on a rate and close a couple of days early so they could keep their rate. So buyers are getting concerned.”

Melissa Cohn, a veteran mortgage banker at William Raveis Mortgage, described Friday and Monday as “a bloodbath.” Industry pros are going to have to grit and bear it until stability in the market is achieved, but a return to normal will happen, she said. It’s just not exactly clear when.

“It’s nonsensical – rates don’t go up 50 basis points in three days,” she said. “This is just an overreaching concern about the Fed not being proactive enough and looking for real guidance.”

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housingwire.com/articles/

Residential construction costs rise 19.4% | North Salem Real Estate

The prices of goods used in residential construction climbed 1.8% in May (not seasonally adjusted) and have increased 19.4%, year-over-year, according to the latest Producer Price Index (PPI) report. Prices have surged 40.4% since January 2020.  Building materials (i.e., goods inputs to residential construction, less energy) prices have increased 5.4%, year-to-date, and are 36.3% higher than they were in May 2021.

The price index of services inputs to residential construction was driven 0.4% lower in May by decreases in the building materials retail and wholesale trade indices. The services PPI is 8.3% higher than it was 12 months prior and 42.9% higher than its pre-pandemic level.

Gypsum Products

The PPI for gypsum products jumped 7.1% in May and has soared 22.6% over the past year. After a quiet 2020, the price of gypsum products climbed 23.0% in 2021 and is up 7.5% through the first five months of 2022.

Paint

The PPIs for exterior and interior architectural coatings (i.e., paint) increased 1.7% and 0.2%, respectively, in May and have not declined since January 2021.  The price of exterior paint has risen nearly 50% in the months since, including 14.5% through the first five months in 2022.

Ready-Mix Concrete

The PPI for ready-mix concrete (RMC) gained 0.9% in May and has climbed 3.2%, year-to-date.  The index for RMC has increased 9.5% over the past 12 months and 12.0% since January 2021.

Price changes were broad based geographically with increases in the South (+1.3%), Midwest (+1.5%), Northeast (+2.6%), and West (+3.0%). Although prices are higher than pre-pandemic levels in all regions, the variance of increases across regions is quite large, ranging from 4.6% in the Midwest to 23.7% in the West.

Transportation of Freight

The price of truck transportation of freight increased 2.9% in May and has climbed 25.8%, year-over-year. Long-distance and local motor carrying prices are up 28.2% and 18.4%, respectively, over that period.

Water transportation costs have jumped 21.5% over just the past two months and have increased 35.7% over the past 12 months. Deep sea (i.e., ocean) transportation of freight prices have accounted for the majority of those increases as the category accounts for over half of the water transportation PPI. The price of ocean freight transport has climbed 31.2% since March and 63.2% since the start of 2021.

Prices of rail transportation services for freight gained 2.7% in May and have increased 11.7% and 15.4% since May and January of 2021, respectively.

Steel Products

Steel mill products prices rose 10.7% in May, the second straight monthly increase following three consecutive decreases to start 2022. Although prices are 4.9% below their all-time high (reached in December 2021), they remain 105.6% higher than the January 2021 level.

Softwood Lumber

The PPI for softwood lumber (seasonally adjusted) increased 0.4% in May after declining 15.6% in April. According to Random Lengths data, the “mill price” of framing lumber has fallen more than 35% since mid-May.

The PPI of most durable goods for a given month is largely based on prices paid for goods shipped, not ordered, in the survey month. Combined with survey timing issues, this can result in lags relative to cash market prices, suggesting a large decrease in the softwood lumber producer price index may be reflected in next month’s release.

Other Building Materials

The chart below shows the 12-month and year-to-date price changes of other price indices relevant to the residential construction industry.

Building Materials Wholesaling and Retailing

The producer price indices for building materials wholesaling and retailing decreased 0.6% and 2.1%, respectively, the second consecutive monthly decline for each. The wholesale and retail services indices measure changes in the nominal gross margins for goods sold by retailers and wholesalers. Gross profit margins of wholesalers, in dollar terms, have increased 26.3% over the past year while those of building materials retailers rose 3.9%. Compared to pre-pandemic levels, however, retailers’ margins are 64.2% higher and margins of wholesalers are up 36.1%.

Building materials wholesale and retail indexes account for roughly two-thirds of the PPI for “inputs to residential construction, services.”

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eyeonhousing.org

Mortgage applications fall to 22 year low | Mt Kisco Real Estate

Mortgage applications decreased 6.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 3, 2022. This week’s results include an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The Refinance Index decreased 6 percent from the previous week and was 75 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 18 percent compared with the previous week and was 21 percent lower than the same week one year ago.

“Weakness in both purchase and refinance applications pushed the market index down to its lowest level in 22 years. The 30-year fixed rate increased to 5.4 percent after three consecutive declines. While rates were still lower than they were four weeks ago, they remain high enough to still suppress refinance activity. Only government refinances saw a slight increase last week,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past months. These worsening affordability challenges have been particularly hard on prospective first-time buyers.”

The refinance share of mortgage activity increased to 32.2 percent of total applications from 31.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.2 percent of total applications.

The FHA share of total applications increased to 11.3 percent from 10.8 percent the week prior. The VA share of total applications increased to 11.4 percent from 10.2 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40 percent from 5.33 percent, with points increasing to 0.60 from 0.51 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 4.99 percent from 4.93 percent, with points increasing to 0.44 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 5.30 percent from 5.20 percent, with points increasing to 0.79 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.62 percent from 4.59 percent, with points increasing to 0.65 from 0.63 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 4.51 percent from 4.46 percent, with points remaining at 0.68 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. 

If you would like to purchase a subscription of MBA’s Weekly Applications Survey, please visit www.mba.org/WeeklyApps, contact mbaresearch@mba.org or click here.The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.

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Buy a House in a Hot Real Estate Market | South Salem Real Estate

Real estate prices are rising, but it’s still possible to find deals even in a red-hot housing market.

Buying a home has become incredibly difficult because most of the country has become a seller’s market. 

Sale prices have escalated, pricing some people out of the market and pushing others to spending more than they wanted to.

It’s a bleak situation for anyone buying a home and it’s a market that has trapped people who might be willing to sell because they don’t see anyplace they might be able to move to.

There are, however, some ways to find a (relative) bargain even in a time of higher prices and very limited inventory. 

To do that, you need to be prepared flexible, and perhaps a little daring.

These steps won’t guarantee that you find the house of your dreams — or even the house for right now — but they give you a much better chance.

1. Have a Great Realtor

Early in the pandemic, my wife and I sold our downtown West Palm Beach condo, bought a Disney-area resort property with some of the proceeds, and moved into a larger rental a few miles from downtown. 

We needed to stay in roughly the same area so my son could finish high school, which he did this May.

Renting was not a long-term plan for us and with six months on our lease, slightly ahead of graduation we contacted our long-time Realtor. 

Having worked with the same person on multiple transaction, we had a high level of trust and she generally knows what we would do without us having to convey it.

You can’t build that trust quickly — we had bought and sold two properties and purchased our resort property with this Realtor — but you should find a buyer’s agent you feel comfortable with overall. 

Ideally, look for someone willing to communicate, who responds quickly, and is willing to listen to what you want.

2. Have Your Finances in Order

We lined up a real mortgage pre-approval before we started looking. 

I talked to potential lenders as I had only been in a full-time job for under a year after a decade of freelancing. 

That’s a complicated mortgage approval to get, so we made sure to clear most of the hurdles and find out exactly what we could afford before we began looking.

In addition, we took some small steps to make us more attractive to the lender. 

That included paying off a small car loan, making sure to keep our credit card balances paid off, and making sure we had no large expenditures. 

We also gathered paperwork to show where funds from some non-payroll income we had came from and we sold a small property.

3. Look at a Lot of Houses and Be Flexible 

We wanted a single-family home after years of living in condos and townhouses. 

It became obvious pretty much immediately that we could not afford anything suitable anywhere in Palm Beach County, so we began looking at condos/townhouses. 

Most properties we saw checked most of our boxes, but lacked the amenities I wanted — resort-style pool and a gym — and were in areas that were less desirable.

With no kid in school, we had a lot of flexibility, so I opened up our search to see if we could afford a single-family home that met our needs anywhere in South or even Central Florida. 

We found that the Orlando-area had a lot of choices, but since we owned a property there anyway, moving there would require selling that condo, and buying a small place in South Florida.

That was more moves than I wanted to make.

That led us to Port St. Lucie, or more specifically, the Tradition section of Port St. Lucie, which is sort of a town within a city. 

Tradition had a very small amount of three-bedroom homes in our price range in developments that offered the amenities we —really I — wanted.

Moving to Port St. Lucie meant sacrificing location. 

We’ll be about 40 minutes farther from family and less convenient to airports, but we could in theory afford a single-family home on a nice plot of land in a development with a pool, gym, walking trails, and a clubhouse.

Buying a House Lead JS
Image source: Daniel Kline/TheStreet

4. Take on a Problem House

When we opened up our search to looking in Tradition/Port St. Lucie exactly three houses were available in our price range, all in the same complex. 

One only had two bedrooms and we need three, but the other two seemed like prospects so we went to look at them.

The second house we saw was a mess and it needed a total redo. 

The owner had also recently lowered the asking price, so we immediately decided to put in an offer. 

Our agent called their agent and we made an offer slightly under asking. 

As communication continued over the next few days, we upped our offer a few times until finally, after we had thought we had a deal, they told us they had accepted a cash offer from someone else.

As that was happening — literally while I was on the phone with my Realtor — another house in that complex became available at a lower asking price. 

There were very few pictures and a tenant was living there who had the right to stay for 90 days after being given notice of a pending sale.

My agent hardly needed to ask if we were going to make a sight-unseen offer. 

We did exactly that knowing that it could not be in worse shape than the previous home we had bid on. 

Our bid was over-asking and we priced it relative to the previous house. 

It was accepted and we were able to meet the sellers’ demand of a 30-day closing because we had already prepped our mortgage.

When we started the home-buying process purchasing a fixer-upper 40 minutes away from our chosen area was not even a vague consideration. 

But once we saw the reality of the market, we made the choice to sacrifice location and being move-in ready over sacrificing buying a single-family home. 

To buy a house or a condo in the market, most people will have to make sacrifices, but ultimately we got a house, that with a lot of work, we will be happy living in. 

In addition, we stayed at the low-end of our budget and maintained the flexibility needed to be able to make the house the home we want.

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