The S&P/Case-Shiller U.S. National Home Price Index is considered the leading measure of U.S. home prices. Released monthly, the index looks at home price movement on both a monthly and annual basis. According to the most recent release, home prices are up 5 percent over last year’s level. David Blitzer, managing director and chairman of the index committee at S&P Down Jones Indices, says prices continue to rise, though there is some uncertainty on the horizon. “The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5 percent or greater annual rate for six consecutive months,” Blitzer said. “The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook. One result is that an increasing number of cities have surpassed the high prices seen before the Great Recession … However, the outlook is not without a lot of uncertainty and some risk.” According to Blitzer, economic uncertainty caused by events in Europe and the U.S. election could have an effect in the coming months. In addition, the index found prices beginning to soften in some markets. For example, the latest release shows 16 of the 20 cities included in the index having experienced either a price decrease or smaller increases on a month-over-month basis. More here.
Author: Whit
Americans See Housing As Key To Security
A recent survey from the MacArthur Foundation found Americans overwhelmingly feel that affordable housing is an important part of achieving economic security. In fact, 85 percent of respondents said it was very important to achieving a secure, middle-class lifestyle. The only thing that ranked higher was a good job. Still, a majority of participants also said affordability was a problem in America and that it is more difficult to find an affordable place to live now than it was for previous generations. Julia Stasch, president of the MacArthur Foundation says too many Americans feel their dreams of owning a home are unattainable. “Too many Americans today believe the dream of a decent, stable home, and the prospects for social mobility, are receding,” Stasch said. “Having a decent, stable, affordable home is about more than shelter. It is at the core of strong, vibrant, and healthy families and communities. This survey demonstrates that the public wants action to address the nation’s real and pervasive housing affordability challenges.” The feeling that something should be done to address the issue is strong, with 86 percent of renters and 71 percent of homeowners agreeing that elected leaders should be making affordable housing a priority. More here.
Sales Of Newly Built Homes Fall In May
New home sales fell in May, according to new numbers released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. After soaring to an 8-year high the month before, sales dropped lower than economists expected, falling 6 percent from April. But despite the decline, sales remain 8.7 percent above last year’s level. Regionally speaking, the report showed significant differences between sales in some parts of the country compared to others. For example, new home sales tumbled 33 percent in the Northeast, while gaining 12.9 percent in the Midwest. The South, on the other hand, was nearly unchanged from the previous month and the West saw a double-digit decline. Also in the report, the median price of a new home rose to $290,400; the average price was $358,900. In recent years, both new home sales and construction have shown great improvement. Much of that improvement has taken place at the higher end of the market, however, raising the price of a typical new home. An increase in the number of new homes built at affordable prices would be good news for the overall market, as it would help relieve upward pressure on prices while providing home buyers with more choices. More here.
Existing Home Sales Hit 9-Year High
New estimates from the National Association of Realtors show home sales at their highest annual pace since February 2007. In fact, sales of previously owned homes increased 1.8 percent in May, marking the third consecutive monthly sales gain. Lawrence Yun, NAR’s chief economist, says most of the sales activity is from repeat buyers. “This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” Yun said. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.” Regional results show sales up in the South, West, and Northeast. The Midwest, on the other hand, saw a 6.5 percent decline – though sales remain 3.2 percent above last year’s level. Also in the report, the number of homes available for sale rose in May. At the current sales pace, unsold inventory represents a 4.7-month supply. Typically, a six month supply is considered a healthy market. More here.
Mortgage Rates At Lowest Level In 3 Years
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to their lowest level in three years last week. In fact, rates for 30-year fixed-rate mortgages with conforming loan balances dropped to levels last seen in May 2013. Rates for jumbo loan balances were also down, falling lower than they’ve been since January 2011. Lynn Fisher, MBA’s vice president of research, says mortgage rates declined due to concerns about events in Europe. “Rates fell on concerns that Britain may vote to leave the European Union later this week. Although beliefs about the likelihood of an exit have since moderated, the ‘Brexit’ vote promises to bring continued volatility to markets,” Fisher told CNBC. Because of the rate drop, refinance activity – which is more sensitive to rate fluctuations – rose 7 percent from the previous week. Purchase demand, on the other hand, slipped 2 percent from one week earlier. Still, overall demand for mortgage applications is now 35 percent higher than it was at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Rising Incomes Help Hopeful Home Buyers
The current housing market is a mixed bag. On the one hand, mortgage rates remain near record lows. At the same time, home price increases are causing affordability concerns. Additionally, home buyer demand is high but the number of homes available for sale is low. Because of this, recent results of Fannie Mae’s monthly Home Purchase Sentiment Index have been volatile. In March, sentiment hit an 18-month low. Then, according to the most recent release, it reached an all-time survey high in May. Partly, the increase in optimism was due to a 7 percent jump in the number of Americans who said their income was significantly higher than it was a year ago. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says rising incomes and low mortgage rates could help home buyers facing higher prices and fewer choices. “Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,” Duncan said. “The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer home buying season gains momentum, the effect may be muted by May’s discouraging jobs report.” More here.
New Homes Now 61% Bigger Than 40 Years Ago
In 2015, the median size of a completed single-family home was 2,467 square feet, according to new numbers from the U.S. Census Bureau’s annual Characteristics of New Housing. That’s 61 percent larger than it was 40 years ago and 11 percent bigger than a decade ago. And, in addition to the extra square footage, today’s new homes are also packed with more features than they used to have. For example, more than 90 percent of new homes built last year had air conditioning and at least two bathrooms. By comparison, a little less than half of the new homes built in 1975 had air conditioning and only 60 percent of them had two bathrooms. But along with becoming bigger, new homes have also climbed in price. In fact, the median sales price of new single-family homes sold last year was $296,400. That sets a new record and partly explains the reason why first-time home buyers have had difficulty finding affordable homes this spring. With the average new home selling for around $300,000, buyers looking for an affordable, starter home in many markets are limited to choosing from previously owned homes – as the majority of new homes are priced beyond their budget. Also in the report, among new homes built last year, 47 percent had four or more bedrooms, more than half were two stories, and a majority had two-car garages. More here.
Older Homeowners Hold Key To The Future
There are more than 67 million current homeowners over the age of 55 in America today. That represents two-thirds of the nation’s home equity and a significant slice of the country’s existing housing stock. Whether these homeowners decide to move sometime soon or plan to stay in their current home through their retirement will have a big impact on the housing market, affordability, mortgage demand, and the homes that are available to younger, aspiring home buyers in the coming years. Because of this, Freddie Mac has launched a new survey aimed at uncovering baby boomers’ thoughts about homeownership and their plans for the future. According to the results, 63 percent of these homeowners say they’d prefer to age in place and large majorities say they are very satisfied with their homes, communities, and quality of life. But though the number who say they’d like to stay where they are is big, so is the number that say they’d like to move again. In fact, nearly 40 percent of respondents said they plan to move at some point in the future – that’s roughly 27 million Americans. Whether or not these homeowners do or don’t move, however, the only thing for sure is that their decision will have a lasting impact on the residential real-estate market for years to come. More here.