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Home sales could take a big hit this year as housing affordability falters [new data]

(HOUSING NEWS) Housing affordability falls and sales could take a hit, but perhaps there’s one silver lining that will keep some chins up…

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Affordability conditions vary

As 2016 drew to a close, housing affordability fell, ending a four month streak of progress. According to research from the National Association of Realtors, mortgage rates rose slightly to 3.82 percent with further increases possible, and the overall housing affordability metric fell by 1.8 percent from October, signifying a decrease from the prior year as well.

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With median sales prices rising by nearly 7 percent for single family homes sold in November, with an average price of $236,500, homeowners saw a boost in their equity, but homebuyers faced a market that was still hot at the end of 2016.

The silver lining: rising equity

“In just the last four years, equity for homeowners with a mortgage has nearly doubled to $6.9 trillion,” said Frank Nothaft, chief economist at CoreLogic, speaking to CNBC.

“The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment,” added Nothaft. “These are all positive factors that will provide support to both household balance sheets and the overall economy.”

The Midwest remains the most affordable

Looking at the issue regionally, the Northeast US was the only region that was actually more affordable in November 2016 than it had been the prior year. The South saw a nearly double-digit gain in home prices, while home prices in the West and Midwest rose by 8.5 and 6.6 percent, respectively.

Those monthly snapshots, however, did nothing to change the fact that the Midwest region remains the most affordable housing market in the United States, while the West is the least affordable.

Interest vs. availability

Even with decreases in the housing affordability index, and increases in interest rates, mortgage applications continue to rise and housing shortages make the market tight for the homebuyer.

This indicates that there is still a great deal of interest in any property that comes to the market, but with fewer and fewer properties of interest that are both available and affordable, the challenge is on to find one that blends those two elements.

#HousingAffordability

Roger is a Staff Writer at The Real Daily and holds two Master’s degrees, one in Education Leadership and another in Leadership Studies. In his spare time away from researching leadership retention and communication styles, he loves to watch baseball, especially the Red Sox!

NAR Reports

Existing home sales surged in October, what’s next?

(REAL ESTATE NEWS) Existing home sales rose in October despite continually tight inventory levels and rising home values.

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Despite the challenges of ongoing political uncertainty, extremely tight inventory conditions, and home values that continue to rise, existing home sales rose 2.0 percent in October, according to the National Association of Realtors (NAR).

This marks the strongest home sales pace since June, yet are 0.9 percent below October 2016. October’s average days on market was 34, down from 41 days on this month last year.

The median price has risen 5.5 percent in the last year to $247,000 with October marking the 68th consecutive month of annual increases. Nearly half of all homes on the market in October sold in under 30 days.

Dr. Lawrence Yun, NAR Chief Economist said, “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”

Added Yun, “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida. However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”

Regional performances varied with sales rising in the Northeast by 4.2 percent, in the West by 2.4 percent, the South by 1.9 percent, and 0.8 percent in the Midwest.

Prices also varied depending on region, with the median price in the West rising 7.8 percent above October 2016 (to $375,100), 6.6 percent in the Northeast (to $272,800), 7.1 percent in the Midwest (to $194,700), and 4.6 percent in the South (to $214,900).

Dr. Yun expects conditions to remain competitive through the winter, but housing is experiencing a tremendous hanging chad right now – what will politicians do to the tax deductions that incentivize homeownership in the first place?

NAR President Elizabeth Mendenhall, says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the U.S.

“Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.”

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NAR Reports

Sustained lull in signed contracts means pullback in home sales

(REAL ESTATE NEWS) Existing home sales aren’t looking super hot this month, but it’s not the bad news that you’re thinking – let’s discuss!

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Existing home sales slide in June

Low supply has kept home sales muted, with existing home sales dipping 1.8 percent in the month of June, albeit 0.7 percent above June of 2016, according to the National Association of Realtors. The Midwest region is the current bright spot as the only area sales actually rose during this period.

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Dr. Lawrence Yun, NAR Chief Economist, says the previous three-month lull in contract activity translated to a pullback in existing sales in June.

“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” said Yun.

He added, “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

There’s a silver lining

“The good news is,” observes Yun, “that sales are still running slightly above last year’s pace despite these persistent market challenges.”

The median price for an existing home rose 6.5 percent over the last year to $263,800, surpassing May as the new peak, and the 64th consecutive month of year-over-year gains.

Housing inventory declined 0.5 percent from the previous month, and 7.1 percent over the last year. Average days on market rose one day from May to 28 in June, which is down from 34 days in June 2016.

Supply and demand challenges

First time buyers were 32 percent of sales in June, down one percent from both in May and a year ago. Yun says “It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun.

“Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year,” noted Yun.

Spicy sales in the Midwest

In the Midwest, sales rose 3.1 percent from May but remain unchanged from this time last year. The median price rose 7.7 percent in the last year to $213,000.

In the Northeast, existing home sales actually fell 2.6 percent, but are 1.3 percent above a year ago (the median price was $296,300, up 4.1 percent for the year).

The South saw a 4.7 percent dip in sales ((unchanged from a year ago) and the median price in the South was $231,300, up 6.2 percent from a year ago.

Sales in the West declined 0.8 percent but are 2.5 percent above June 2016. The median price in the West was $378,100, up 7.4 percent from June 2016.

#HomeSales

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NAR Reports

Home prices up for third consecutive quarter, median price hits $232,100

(REAL ESTATE NEWS) Home prices continue to rise, and while homeowners may be feeling good about it, NAR notes some unhealthiness about these numbers, especially in areas where new home construction isn’t keeping up.

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Strong performance in housing

For the third consecutive quarter, home prices in America have risen on the tailwinds of the strongest quarterly sales pace in a decade which has put downward pressure on perpetually tight inventory levels, according to the latest quarterly report by the National Association of Realtors (NAR).

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Rising 6.9 percent from the first quarter of 2016, the national median existing single-family home hit $232,100, the fastest growth experienced since the second quarter of 2015. The median price during the fourth quarter of 2016 increased 5.9 percent from the fourth quarter of 2015. In the first quarter, home prices rose in 85 percent of measured markets.

NAR chief economist, Dr. Lawrence Yun says continual supply shortages ignited faster price appreciation across the country in the first quarter.

“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” said Dr. Yun.

“Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years,” Dr. Yun added.

He also noted that many metros have increased demands as employment levels rebound, but new home construction isn’t up, particularly in the South and West, leading to “unhealthy price appreciation that far exceeds incomes.”

Regional performances varied

NAR reports that total existing-home sales in the Northeast declined 2.2 percent in the first quarter but are 4.2 percent above the first quarter of 2016. The median existing single-family home price in the Northeast was $255,000 in the first quarter, up 2.2 percent from a year ago.

In the Midwest, existing-home sales dipped 4.3 percent in the first quarter but are 1.6 percent above a year ago. The median existing single-family home price in the Midwest increased 5.7 percent to $176,600 in the first quarter from the same quarter a year ago.

Existing-home sales in the South jumped 5.8 percent in the first quarter and are 5.8 percent higher than the first quarter of 2016. The median existing single-family home price in the South was $209,000 in the first quarter, 8.8 percent above a year earlier.

In the West, existing-home sales rose 1.6 percent in the first quarter and are 7.4 percent above a year ago. The median existing single-family home price in the West increased 8.4 percent to $342,500 in the first quarter from the first quarter of 2016.

#HomeSales

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