Category Archives: South Salem

New-home sales crush estimates | South Salem Real Estate

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2015 tally for new-home sales is 15% higher than 2014

Sales of new homes rebounded handily in December, a signal of continued strength in the housing market.

Sales ran at an annual pace of 544,000, the highest since February, the Commerce Department said Wednesday. Economists surveyed by MarketWatch had forecast a 506,000 pace.

That represented a 10.8% increase over a slightly upwardly revised November pace of 491,000. New home sales are volatile and often revised, but the trend has been generally up. December’s number was 9.9% higher than the same period a year ago, and there were 501,000 new homes sold during 2015, a 14.5% increase over 2014.
Still, new-home sales are a fraction of what they used to be, even before the housing bubble began to swell. Some builders have found it difficult to attract workers, many of whom left the industry when the bubble burst. Many have remained tentative about building too many homes as the economic recovery remained tepid and wages stagnant.

Many builders have responded to those market conditions by targeting higher-end customers. Prices have risen steadily over the past few years. They averaged $294,575 throughout 2015, up 4% compared to 2014’s average.

Builders, and economists, want to see more first-time buyers entering the market, which would require more moderately-priced homes. That’s a strategy that has worked for the country’s largest builder, D.R. Horton DHI, -0.59% company executives said on a Monday earnings call.

Read: First-time buyers slowly return to housing market

Many builders have seen solid business growth over the past few years, even as their stocks have struggled. Lennar LEN, +0.12% shares have declined about 9% over the past 12 months, while Toll Brothers TOL, -1.12% is down 28%.

The sales data help confirm that the housing market is strengthening, Pantheon Macroeconomic Chief Economist Ian Shepherdson wrote in a note Wednesday. “The consensus always looked timid, given the very warm weather in December; new home sales are measured at the point contracts are signed, which often happens at sales offices at construction sites. Unseasonably warm winter weather makes these sites much more appealing places to visit.”

But other data, including builder sentiment and mortgage applications, signal stronger activity than the pace of new home sales suggest, Shepherdson wrote, “so we have to expect further gains over the next few months.”

 

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http://www.marketwatch.com/story/new-home-sales-soar-to-annual-rate-of-544000-2016-01-27

Will Sellers Step up the Plate in 2016? | South Salem Real Estate

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“It is important to recognize that 2016 is shaping up to be the best year in recent memory to sell. Supply remains very tight, so inventory is moving faster. Given the forecast that price appreciation will slow in 2016 to a more normal rate of growth, delaying will not produce substantially higher values, and will also see higher mortgage rates on any new purchase,” wrote Realtor.com Chief Economist Jonathan Smoke recently.

Should his sage advice to sellers fall on deaf ears, 2016 could produce one of the most miserable housing market in years.  After seven years of struggle, the issue no longer is demand, it’s supply. Anemic inventories are artificially driving up prices that keep first-time buyer trapped in rentals, which as expect to soar again this year.

Home sales prices have risen between 15 and 20 percent over the past three seasons, depending on which series you believe.  We’re less than 18 months away from reaching a national median sales price that’s higher than the very highest peak at the very top of the housing bubble in 2006.

Frozen stiff without enough equity to sell for nearly decade, owners at last have made it to the light at the end of the tunnel.  They can sell and cash out.  They can refi or take out a HELOC and stay put.  Moreover, with experts predicting that sale prices will moderate in 2016 to 4-5 percent appreciation from 6 percent as the market slow down to catch, this could be the perfect year to sell.

With the clock ticking on the opening of the 2016 season, now is the time potential sellers are making up their minds to sell or not.

Fannie Mae

In Fannie Mae’s December Home Purchase Sentiment Index, fewer than half of respondents said it’s a good time to sell (49 percent) and 41 percent said it’s a bad time to sell.  Not exactly a strong endorsement but at least movement in the right direction.  The best thing about the findings was that in November the sentiment to sell was even lower—48 percent said it was a good time and percent and 44 percent said it was a bad time.

 2016-01-07_13-11-01In December less than half of Fannie Mae’s survey sample said it’s a good time to sell.

The net percentage of respondents who say it is a good time to sell a house rose after falling for two months in a row – rising 4 percentage points to a net 8 percent positive at the end of the year.  Not much of an improvement over last year.

“Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time home buyers could face affordability constraints,” said Fannie Mae’s Doug Duncan.

 

2016-01-07_12-51-57

 Twenty percent 0f Trulia’s sample of consumers said 2016 will he a better year to sell than 2015, and 36 percent more than in 2014.

Trulia

Trulia’s housing predictions survey showed real positive change as consumers recognized 2016 is a significantly better climate to sell than 2015 was. Some 20 percent said it will be better than 2015 to sell and 14 percent said it 2015 would he better than 2014, for a net gain of 36 percent in two years, more than a third of consumers.

 

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http://www.realestateeconomywatch.com/2016/01/will-sellers-step-up-the-plate-in-2016/

Stronger Growth for Residential Construction Employment | South Salem Real Estate

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The count of unfilled jobs in the overall construction sector increased in November, as hiring in the home building sector accelerated.

According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs (on a seasonally adjusted basis) increased to 135,000 in November from 121,000 in October. The cycle high of 168,000 open positions was set during March.

On a three-month moving average basis, the open position rate (job openings as a percent of total employment) for the construction sector held steady at 1.9% for November. The overall trend for construction open jobs has been increasing, although the current open rate is down from the cycle high last reached in May (2.4%) as construction hiring picked up in recent months.

cosntr JOLTS

The construction sector hiring rate, as measured on a three-month moving average basis, increased to 5.1%, although it remains near rates set in the spring of 2015. The quits rate for construction jumped to 2% for November, the highest rate since December 2014.

Monthly employment data for December 2015 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that home builders and remodelers increased hiring significantly on a seasonally adjusted basis for the last two months. Total residential construction employment grew by 23,100 for December, after a pickup of 31,500 for November. The November gain was the largest single increase during the post-recession period.

The pace of hiring for the residential construction industry had been slowing over the course of 2015. With the jumps in November and December however, the six-month average of monthly employment growth is now a healthy 15,000.

Residential construction employment now stands at 2.534 million, broken down as 710,000 builders and 1.82 million residential specialty trade contractors.

res constr employ

Over the last 12 months home builders and remodelers have added 137,000 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 547,700 positions.

In December, the unemployment rate for construction workers increased slightly to 7% on a seasonally adjusted basis, up from the cycle low of 6.5% set during July. The unemployment rate for the construction occupation has been on a general decline since reaching a peak rate of 22% in February 2010.

Many builders continue to cite access to labor as a top business challenge as the market recovers (for example, see this NAHB survey on the issue, focusing on builder and subcontractor workers).

For the economy as a whole, the November JOLTS data indicate that the hiring rate held steady at 3.6% of total employment. The overall open job rate increased to 3.7%, near the 3.8% cycle high set during July.

 

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http://eyeonhousing.org/2016/01/stronger-growth-for-residential-construction-employment/

Will Sellers Step up the Plate in 2016? | South Salem Real Estate

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“It is important to recognize that 2016 is shaping up to be the best year in recent memory to sell. Supply remains very tight, so inventory is moving faster. Given the forecast that price appreciation will slow in 2016 to a more normal rate of growth, delaying will not produce substantially higher values, and will also see higher mortgage rates on any new purchase,” wrote Realtor.com Chief Economist Jonathan Smoke recently.

Should his sage advice to sellers fall on deaf ears, 2016 could produce one of the most miserable housing market in years.  After seven years of struggle, the issue no longer is demand, it’s supply. Anemic inventories are artificially driving up prices that keep first-time buyer trapped in rentals, which as expect to soar again this year.

Home sales prices have risen between 15 and 20 percent over the past three seasons, depending on which series you believe.  We’re less than 18 months away from reaching a national median sales price that’s higher than the very highest peak at the very top of the housing bubble in 2006.

Frozen stiff without enough equity to sell for nearly decade, owners at last have made it to the light at the end of the tunnel.  They can sell and cash out.  They can refi or take out a HELOC and stay put.  Moreover, with experts predicting that sale prices will moderate in 2016 to 4-5 percent appreciation from 6 percent as the market slow down to catch, this could be the perfect year to sell.

With the clock ticking on the opening of the 2016 season, now is the time potential sellers are making up their minds to sell or not.

Fannie Mae

In Fannie Mae’s December Home Purchase Sentiment Index, Fewer than half of respondents in Fannie Mae’s survey of consumers said it’s a good time to sell (49 percent) and 41 percent said it’s a bad time to sell.  Not exactly a strong endorsement but at least movement in the right direction.  The best thing about the findings was that in November the sentiment to sell was even lower—48 percent said it was a good time and percent and 44 percent said it was a bad time.

 

read more…

 

http://www.realestateeconomywatch.com/2016/01/will-sellers-step-up-the-plate-in-2016/

Residential Construction Employment Grew | South Salem Real Estate

The count of unfilled jobs in the overall construction sector remained elevated in October, as residential construction employment continued to grow.

According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs (on a seasonally adjusted basis) came in at 205,000 in October, after reaching 221,000 in September. The cycle high was 225,000 set in July.

The open position rate (job openings as a percent of total employment) for October was 3%. On a smoothed twelve-month moving average basis, the open position rate for the construction sector increased to 2.7%, setting a cycle high and surpassing the top twelve-month moving average rate established prior to the recession.

The overall trend for open construction jobs has been increasing since the end of the Great Recession. This is consistent with survey data indicating that access to labor remains a top business challenge for builders.

jolts-dec-pub

The construction sector hiring rate, as measured on a twelve-month moving average basis, remained steady at 4.9% in October. The twelve-month moving average for layoffs was also steady (2.7%), remaining in a range set last Fall.

Monthly employment data for November 2016 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that home builder and remodeler net hiring jumped significantly, as sector employment increased by 19,600. The November gains continue the improvement in the Fall after a period of hiring weakness early in 2016. The 6-month moving average of jobs gains for residential construction has now increased to a healthier 10,400 per month.

Residential construction employment now stands at 2.644 million, broken down as 743,000 builders and 1.901 million residential specialty trade contractors.

res-constr-employ

Over the last 12 months home builders and remodelers have added 120,000 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 658,000 positions.

 

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http://eyeonhousing.org/2016/12/residential-construction-employment-grew-in-november/

Northeast, Midwest Markets Warm up as Year Winds Down | South Salem Real Estate

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Outside it may be cold and snowy with early storms, but housing prices are warning up in some of the most stunningly negative Midwestern and Northeastern markets, according to Clear Capital’s November market report.

Regionally the West still leads the appreciation parade, with quarterly increases of 1.2 percent and annualized price growth at 7.5 percent.  But the Northeast and Midwest both gained ground compared to earlier in the year.  The Northeast saw an increase in quarterly growth in November, a 0.1% uptick. This is an unexpected shift for a region that, just a few months prior, lagged behind the rest of the country in quarterly growth.

“As the year draws to a close, housing continues to recalibrate and the Midwest maintains its impressive trend. November’s data shows Detroit up 135% from the trough, with other regional MSAs demonstrating strong growth. In January we predicted that the Midwest would be a frontrunner this year for both homeowners and investors, and the region’s small percentage point gains, subsiding losses, and decreased volatility indicate steady improvement that is reflective of the greater recovery,” wrote Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.

Other market showing new life in the second half of the year are:

  • Providence, R.I. – a mainstay on the list of lowest performing markets until October – has seen a huge increase in growth, jumping from -0.8% quarterly growth in October to 3.1% in November. Gains of this magnitude are more expected during the early spring season, when markets typically gain momentum leading into the peak summer season.
  • Cleveland and Detroit have also seen a similar upward pattern during this typically slower season. Quarterly growth in Cleveland has bumped up 0.2% to 2.2% quarterly growth, while Detroit’s quarterly growth has upticked 0.1% from October to 2.5% quarterly growth in November.
  • While these increases are notable, bringing Cleveland 52.3% and Detroit a whopping 135.1% above trough, don’t be blindsided by the numbers. Cleveland is still -37.1% below peak while Detroit is -39.3%, demonstrating that both MSAs still have a long road to recovery ahead.

 

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http://www.realestateeconomywatch.com/2015/12/northeast-midwest-markets-warm-up-as-year-winds-down/

Year-on-year, new home sales grew 4.9 percent | South Salem Real Estate

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Sales of new single-family houses in October 2015 were at a seasonally adjusted annual rate of 495,000, up 10.7 percent from last month but below market expectations.

The inventory of properties for sale reached the highest since early 2010 while both median and average prices decreased.

New Home Sales in the United States averaged 654.25 Thousand from 1963 until 2015, reaching an all time high of 1389 Thousand in July of 2005 and a record low of 270 Thousand in February of 2011.

New Home Sales in the United States is reported by the U.S. Census Bureau.

United States New Home Sales

 

Mortgage Rates average 3.97% this week | South Salem Real Estate

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Freddie today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates largely unchanged as analyst expectation turned from world events to the Federal Open Market Committee’s (FOMC) October minutes.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.97 percent with an average 0.6 point for the week ending November 19, 2015, down from last week when it averaged 3.98 percent. A year ago at this time, the 30-year FRM averaged 3.99 percent.
  • 15-year FRM this week averaged 3.18 percent with an average 0.5 point, down from last week when it averaged 3.20 percent. A year ago at this time, the 15-year FRM averaged 3.17 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98 percent this week with an average 0.5 point, down from last week when it averaged 3.03 percent. A year ago, the 5-year ARM averaged 3.01 percent.
  • 1-year Treasury-indexed ARM averaged 2.64 percent this week with an average 0.3 point, down from 2.65 percent last week. At this time last year, the 1-year ARM averaged 2.44 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.

As of January 1, 2016, the PMMS will no longer provide results for the 1-year ARM or the regional breakouts for the 30-year and 15-year fixed rate mortgages, or the 5/1 Hybrid ARM

Why are new home sales slumping? | South Salem Real Estate

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The rising cost of residential real estate and a slowdown in the U.S. economy is making it harder to sell a house.

10445Sales of new homes plunged in September to the slowest pace in 10 months, the U.S. Commerce Department said Monday, a sign that higher prices and sliding economic growth weigh on the housing market. New-home sales slumped 11.5 percent last month to a seasonally adjusted annual rate of 468,000, the lowest level since November of 2014.

September’s drop ended a two-month streak of accelerating sales.

Monthly sales of new home often fluctuate sharply, and some forecasters cautioned against reading too much into the latest figures. Pointing to other indicators that show the sector continuing to rebound, such as the National Association of Home Builders’ housing activity index, economist Stephen Brown of Capital Economics said in a note that ” we are confident that new home sales will rebound strongly in the coming months”. If you are a homeowner take some time before placing your house on the market and introspect: is now the time to sell your house? As doing so will not just help you gain more money but will also help you decide better tenants suited for your home.

Americans’ zeal for newly built homes took off this year, yet now appears close to having topped out. Solid hiring over the past three years has improved many family balance sheets, while rising home prices has returned equity to current homeowners now seeking to upgrade to new residential developments. Sales of new homes have soared 17.6 percent during the first nine months of 2015.

The median sales price of a new home rose 2.7 percent last month to $296,900, the highest price level this year, according to Oxford Economics.

But global pressures began to exert a downward pull on economic growth in recent months. Those pressures could be spread to the housing market if the drop in sales of new homes leads to a decline in construction.

“A stronger pace of sales will need to be seen for the recent stronger pace of single-family housing starts to be sustained,” said Ted Wieseman, an economist at Morgan Stanley.

Job gains slowed in September, while profit margins for many of the largest U.S. businesses with a global footprint stopped growing. The stronger dollar has punished exports abroad and cheaper oil prices have forced energy firms to cut workers and slash orders for pipeline and equipment.

The slowdown has yet to hit sales of existing homes as drastically, but the September pullback in newly built properties was severe.

Purchases of new homes slid in the Midwest, South and West, but plummeted a stiff 61.8 percent in the Northeast.

Prices have climbed sharply as well, making new construction less affordable for would-be buyers. The median new-home sales price has jumped 13.5 percent from a year ago to $296,900.

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http://www.cbsnews.com/news/why-are-new-home-sales-slumping/

Housing: A Near-term Pullback in Home Sales Is Likely | South Salem Real Estate

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This week’s housing news revealed the latest data on two leading indicators of home sales, both of which point to additional retrenchment in existing home sales in the near-term.

Pending home sales dropped in August, marking the second decline over the past three months. Combined with the second consecutive drop in average monthly purchase applications in August, existing home sales will likely soften further after posting a 4.8 percent drop in August from an expansion-high pace in July.

Our forecast that 2015 total home sales will be the strongest since 2007 remains on target, however. While purchase applications dropped during the final week of September, average applications for the entire month rose for the first time in three months and are about 23 percent and 8 percent higher than during the same period in 2014 and 2013, respectively. Low mortgage rates will remain supportive for the housing market.

The Freddie Mac survey’s average yield on 30-year fixed-rate mortgages ticked down to 3.85 percent, staying below 4.0 percent for the tenth consecutive week. Home price trends continue to be strong.

The S&P/Case-Shiller house price index showed solid year-over-year appreciation in July, albeit at a more moderate pace than other main measures of home prices reported earlier. Strong housing demand during the summer season, lean inventories, and fewer distressed sales helped boost home prices.

The August construction spending report suggests that real residential investment will likely post solid growth this quarter, though not as strong as the 9.4 percent annualized pace recorded for the second quarter.

 The National Association of REALTORS® Pending Home Sales Index, which records contract signings of existing homes and typically leads closings by one to two months, dropped 1.4 percent to 109.4 in August, the lowest level since March. Pending sales are 6.1 percent above the level a year ago, the smallest year-over-year gain since November 2014. Pending sales dropped in the Northeast, Midwest and South, with the largest decline occurring in the Northeast. The West was the only region that saw a rise in pending sales.

 Private residential construction spending advanced 1.3 percent in August from the prior month, according to the Census Bureau. Spending on new single-family homes rose 0.7 percent, compared with a 4.8 percent jump for multifamily spending. Data for the prior two months were revised lower. Spending for home improvement increased 0.7 percent. From a year ago, new single-family and multifamily construction spending increased 14.0 percent and 24.7 percent, respectively.

 The S&P/Case-Shiller 20-city Composite Home Price Index (not seasonally adjusted) rose 0.6 percent in July. From a year ago, the index increased 5.0 percent, a slight pickup from 4.9 percent pace of the prior month. Of the 20 cities, San Francisco, Denver, and Dallas posted the largest year-over-year increases, while New York City, Chicago, and Washington, D.C. saw the smallest gains. The pace of increase for the national index also firmed slightly in July, posting a 4.7 percent year-over-year gain, compared with a 4.5 percent gain in June. Other measures of home prices, including the FHFA purchase-only index and the CoreLogic index, also showed a pickup in year-over-year increases in July.

 

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