Category Archives: South Salem

Housing Starts Readjust | South Salem Real Estate

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May housing starts fell 11.1% from an elevated April to a seasonally-adjusted annual rate of 1.036 million units. The drop was broad based, falling 5.4% in single-family to an annual rate of 680,000 and multifamily falling 20.2% to 356,000. When viewed from a quarterly average, however, the first two months of the second quarter were better than the first quarter for both single- and multifamily starts: single-family up 9% and multifamily up 20%.
Furthering the upswing signals, building permits were up 11.8% to a seasonally-adjusted annual rate of 1.275 million, the highest since August 2007. The surge is concentrated in the Northeast where multifamily permits doubled from 130,000 per year to 264,000 per year and ahead of the 2014 rate of 64,000. Multifamily permit were also up in the Midwest (34%) but down in the South (-12.4%) and West (-8.1%).
Individual metropolitan permit data is available one month later than national figures and those data through April show substantial increases in multifamily permits over the same four month period in 2014 for New York metropolitan area (50%), Boston (56%), Pittsburgh (142%) and Albany (215%).
Single-family starts were up in every region when viewed from a two-month average and compared to the first quarter average. The Northeast was up 35.4% to a recent two-month average of 55,500 homes. The Midwest was up 26.1% to a recent average of 113,500 homes while the South made the smallest advance at 1.5% to 365,500 homes. The West was up 8.6% to a recent average of 165,000 homes.
Confirming an underlying advance, the NAHB/Wells Fargo Housing Market Index rose 5 points to 59 as builders increased their expectations for future sales.

Single-family Starts and Permits

 

 

 

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http://eyeonhousing.org/2015/06/

US construction spending up 2.2 percent in April | South Salem Real Estate

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U.S. construction spending climbed in April to the highest level in more than six years, fueled by healthy gains in housing, government spending and non-residential construction.

The Commerce Department says construction spending advanced 2.2 percent in April to a seasonally adjusted annual rate of $1 trillion, the highest level since November 2008. Spending had risen a more modest 0.5 percent in March.

The gain included a 0.6 percent rise in residential construction and a 3.1 percent jump in non-residential activity such as office buildings, hotels and shopping centers. Government projects increased 3.3 percent, reflecting the biggest jump in spending on state and local projects in three years.

Economists are looking for construction to provide solid support to the economy this year.

 

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http://finance.yahoo.com/news/us-construction-spending-2-2-140059199.html

S&P Case Shiller: House prices beat expectations, gain 1% in March | South Salem Real Estate

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S&P Case Shiller’s adjusted 20-city house price index rose a very solid and slightly higher-than-expected 1.0% in March with gains across all cities and well balanced gains across all regions.

These gains, however, were not confirmed by the Federal Housing Finance Agencyhouse price index, which rose a lower-than-expected 0.3% in March. The most optimistic reading for March came from Black Knight Financial Services (BKFS), a Fidelity National Financial (FNF) company.

Black Knight’s index says that home prices were up 1.2% in the month of March and up 4.8% on a year-over-year basis. Those totals represent the largest monthly gain in national home prices since June 2013.

“As we move deeper into the traditional home buying season, the low level of homes for sale in many markets is continuing to push prices higher,” said Quicken Loans Vice President Bill Banfield. “Once more owners realize the opportunity to sell their home, price gains will slow and prices may even dip in response to the greater choice for buyers.”

Year-on-year readings in both the S&P and FHFA reports show an improving trend, at a moderate 5% for Case-Shiller and plus 5.2% for FHFA.

“Home prices have enjoyed year-over-year gains for 35 consecutive months,” says David Blitzer, Managing Director & Chairman of the Index Committee for S&P Dow Jones Indices. “The pattern of consistent gains is national and seen across all 20 cities covered by the S&P/Case-Shiller Home Price Indices. The longest run of gains is in Detroit at 45 months, the shortest is New York with 27 months. However, the pace has moderated in the last year; from August 2013 to February 2014, the national index gained more than 10% year-over-year, compared to 4.1% in this release.

 

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http://www.housingwire.com/articles/33987

Housing Affordability Posts Solid Gain in First Quarter | South Salem Real Estate

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Lower interest rates and home prices contributed to a solid boost in nationwide affordability in the first quarter of 2015, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

“Consumers benefitted from continued low mortgage rates and some fall in the price of homes sold in the first quarter, as these conditions offer a great time to buy,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

“The past two quarters have seen an improvement in affordability as mortgage rates remain low,” said NAHB Chief Economist David Crowe. “Eighty-five percent of the metropolitan areas measured experienced an increase in affordability. Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace.”

In all, 66.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,800. This is up from the 62.8 percent of homes sold that were affordable to median-income earners in the fourth quarter.

The national median home price declined from $215,000 in the fourth quarter to $210,000 in the first quarter. Meanwhile, average mortgage interest fell from 4.29 percent to 4.03 percent in the same period.

For the second straight quarter, Syracuse, N.Y. remained the nation’s most affordable major housing market, as 95.6 percent of all new and existing homes sold in the first quarter of 2015 were affordable to families earning the area’s median income of $68,500.

Also ranking among the most affordable major housing markets in respective order were Toledo, Ohio; St. Louis; Akron, Ohio; and Harrisburg-Carlisle, Pa.

Meanwhile, Sandusky, Ohio topped the affordability chart among smaller markets in the first quarter of 2015. There, 96.3 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $69,600. Other smaller housing markets at the top of the index included Cumberland, Md.-W.Va.; Elmira, N.Y.; Davenport-Moline-Rock Island, Iowa-Ill.; and Kokomo, Ind.

 

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http://www.nahb.org/en/news-and-publications/Press-Releases/2015/may/housing-affordability-posts-solid-gain-in-first-quarter.aspx

Homeownership rate drops | South Salem Real Estate

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In the latest sign of a changing housing market, homeownership rates are at a quarter-century low, while the rental-vacancy rate is close to the slimmest proportion in more than two decades, according to government data released Tuesday.

The seasonally adjusted homeownership rate, which shows the share of occupied homes in which an owner lives, fell to 63.8% in the first quarter — the lowest proportion since the end of 1989, the U.S. Census Bureau said.

Families with income both above and below the median have seen drops in homeownership rates over the past year.

Weak income growth and difficult-to-get mortgages are likely behind homeownership drops, experts say. Home prices that are running higher aren’t helping, either. Nor are the millions of properties that are underwater — these homes are worth less than owners owe for their mortgage — with borrowers struggling to make monthly payments,

However, long-term trends show that the drop in homeownership is actually pushing the U.S. back to “normal” levels, said Sam Khater, deputy chief economist at CoreLogic, an Irvine, Calif.–based analysis firm. The market may even see further drops, he added.

“In the mid-1990s pro-homeownership policies led to an expansion in mortgage credit and the homeownership rate peaked in 2004 at 69%,” Khater said. “Homeownership rates are back to roughly their long-term trend between the 1960s and 1990s.”

Meanwhile, the rental-vacancy rate ticked up to 7.1% in the first quarter, clinging close to 7% reached at the end of 2014, which was the slimmest share in 21 years. High demand has enabled landlords to crank up rents well past broader inflation growth.

 

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http://www.marketwatch.com/story/homeownership-rate-drops-to-quarter-century-low-2015-04-28?siteid=bnbh

Mortgage Loan Rates Drop for Third Consecutive Week | South Salem Real Estate

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The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning. The report noted a week­over­week increase of 0.4% in the group’s seasonally adjusted composite index for the week ending April 3, following an increase of 4.6% for the week ending March 20.

Mortgage loan rates decreased on all types of loans last week. On an unadjusted basis, the composite index increased by 1% week­over­week.

The seasonally adjusted purchase index increased 7% compared to the week ended April 3. The unadjusted purchase index also rose by 7% for the week and is now 12% higher year­over­year.

The MBA’s refinance index decreased 3% week­over­week, and the percentage of all new applications that were seeking refinancing slipped from 60% to 57%, its lowest level since last October.

The MBA’s chief economist noted: Purchase mortgage application volume last week increased to its highest level since July 2013, spurred on by still low mortgage rates and strengthening housing markets.

Purchase volume has increased for three straight weeks now on a seasonally adjusted basis. Adjustable rate mortgage loans accounted for 5.5% of all applications, down from 5.6% in the prior week.

The FHA share of all applications rose from 12.8% a week ago to 13.2%, and the VA share increased from 10.5% to 10.7%.

 

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http://247wallst.com/housing/2015/04/08/mortgage-loan-rates-drop-for-third-consecutive-week/

U.S. home prices steady in January, Case-Shiller data show | South Salem Real Estate

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U.S. house prices were steady in January, according to the S&P/Case-Shiller 20-city composite released Tuesday, with Charlotte, Miami and San Diego all seeing gains of 0.7% while San Francisco prices fell 0.9%. On a seasonally adjusted basis, prices grew 0.9%. Compared to Jan. 2014, prices were up 4.6%. “The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices,” said David M. Blitzer, chairman of the index committee for S&P Dow Jones Indicies, in a statement.

 

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http://www.marketwatch.com/story/us-home-prices-steady-in-january-case-shiller-data-show-2015-03-31

New and Existing Home Sales Increase in February | South Salem Real Estate

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Builders signed contracts on more homes last month than any time since early 2008, according to figures released by the Census Bureau and HUD. February seasonally adjusted annual new home sales topped out at a 539,000 annual pace, up 7.8% from a healthy 500,000 rate in January. In percentage terms, sales increased the most in the Northeast (153% over the January rate) due to prior weather-related declines. Inventories dropped slightly to 210,000, which with the increased sales rate, lowered the months’ supply measure to 4.7 months. Lower inventories suggests optimism about construction growth for the year ahead.

Although reporting smaller gains, existing home sales shook off winter-related declines in February as well. As reported by the National Association of Realtors, sales increased 1.2% in February (up 4.7% from a year earlier), and the share of sales for first-time buyers registered its first gain since last November. Supplies of existing homes for sale are also diminished, with the current inventory representing only a 4.6-month supply.

However, the lingering regional effects of the tough winter for the Eastern part of the U.S. were seen in disappointing construction data for February. The pace of housing starts fell 17% to its lowest level since January 2014.

The decline was across the board in building types and regions. Single-family starts were down 14.9% and multifamily starts fell 20.8%. Single-family starts decreased the most in the weather sensitive Northeast (-60.7%) and Midwest (-32.4%) but were also down in the less weather affected South (-5.9%) and West (-9.1%).

The declines mirror the NAHB/Wells Housing Market Index (HMI), which fell two points to 53 in March. The drop marked the third consecutive decrease in this measure of single-family builder confidence. However, the HMI has been above 50 since July of last year, suggesting that the outlook for construction growth is good, not great. Similarly, fourth-quarter market data from the Census Bureau and HUD Survey of Market Absorption of Apartments suggest ongoing strong rental demand and positive prospects for maintaining current levels of multifamily development.

 

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http://eyeonhousing.org/2015/03/

Housing Production Stumbles | South Salem Real Estate

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Housing starts fell 17% to their lowest level since January 2014. The decline was across the board in building types and regions. Single-family starts were down 14.9% and multifamily starts were down 20.8%. Single-family starts were down the most in the weather sensitive Northeast (-60.7%) and Midwest (-32.4%) but were also down in the less unseasonable weather patterns of the South (-5.9%) and West (-9.1%).

While total building permits were up 3%, single-family permits were down 6.2% with only the West recording a rise in single-family permits (+5.6%). Multifamily permits were up 18.3% to the highest level since April 2014 and only the third time above 470 since 2006.

Aside from a small weather impact in the Northeast and Midwest, the decline is in line with a hesitation in builder sentiment as measured by the NAHB/Wells Fargo March Housing Market Index that fell 2 points to 53. Builders express concern that buyers are unable to attain a mortgage because of tight underwriting standards and that buyers continue to expect price concessions and discounts.

Coincident with buyers discount expectations, builders are facing higher costs and reduced availability of lots on which to build the homes and workers to construct them. The squeeze is causing builders to slow construction until new home prices rise, consumers regain confidence and the supply chain for lots, labor and to a lesser extent building materials rebuilds.

The underlying conditions for a good, not great, housing rebound remain in place. The economy is adding jobs at a much faster pace than earlier in the recovery, overall growth is more dependably positive, mortgage rates are historically low and there is considerable pent-up demand waiting to be released. Consumers need to regain their confidence in those trends and to readjust their expectations for home prices. The softness in the fourth quarter GDP estimates and the very slow rise in worker pay and household incomes contributed to the current hesitation.

Actual Housing Starts and Trends

 

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http://eyeonhousing.org/2015/03/housing-production-stumbles/

U.S. Household Balance Sheet Improves Again | South Salem Real Estate

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The balance sheet of U.S. households with real estate continues to improve – despite tight lending conditions – as increases in home prices continue. The real estate equity position of U.S. households (the difference between assets and liabilities) increased nearly 2.4% for the quarter according to NAHB tabulations of the fourth quarter Federal Reserve Flow of Funds.

The value household-owned real estate, including owner-occupied and second homes, totaled $20.6 trillion for the quarter. Total home mortgage debt outstanding stands at $9.4 trillion. The market value of real estate held by U.S. households increased $265 billion dollars during the quarter, while liabilities (home mortgages) remained virtually unchanged.

AssetLiability

Because the figures are not adjusted for inflation, it is useful to also examine the owners’ equity in real estate as a percentage of household real estate. The ratio is calculated by taking the aggregate equity position divided by the market value of owner-occupied real estate held by U.S. households. The higher the ratio the more favorable is the financial position of U.S. households with real estate. The current reading of 54.5% represents a significant improvement over the 39.1% registered as recently as the second quarter of 2011.

EquityPosition

The improvement in the balance sheet of U.S. households means fewer underwater homeowners, thereby unlocking housing supply and demand. This type of improvement in the balance sheet of U.S. households with real estate along with further improvements to job market could release pent-up housing demand.

 

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http://eyeonhousing.org/2015/03/u-s-household-balance-sheet-improves-again/