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Low inventory levels in many parts of the US caused home sales to fall in July
Existing home sales in the United States lost momentum in July and decreased year on year for the first time since November 2015 with a fall of 3.2%, the latest index data shows. Total existing home sales fell to a seasonally adjusted annual rate of 5.39 million in July from 5.57 million in June and are now 1.6% below a year, only the second time in the last 21 months this has happened. The data from the National Association of Realtors (NAR) also shows that the median existing home price for all housing types increased by 5.3% in July to $244,100, the 53rd consecutive month of year on year gains. Lawrence Yun, NAR chief economist, said that existing sales fell off track in July after steadily climbing the last four months. ‘Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,’ he explained. He pointed out that real estate agents are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows. ‘Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single family home,’ he added. The report also shows that total housing inventory at the end of July inched 0.9% higher to 2.13 million existing homes available for sale, but is still 5.8% lower than a year ago and has now declined year on year for 14 months in a row. Unsold inventory is at a 4.7 month supply at the current sales pace, which is up from 4.5 months in June. ‘Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand,’ said Yun. ‘As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace,’ he added. The share of first time buyers was 32% in July which is below last month when it was 33% but up from 28% a year ago. First time buyers represented 30% of sales in all of 2015. All-cash sales were 21% of transactions in July, down from 22% in June, 23% a year ago and the lowest share since November 2009 when it was 19%. Individual investors, who account for many cash sales, purchased 11% of homes in July, unchanged from June and down from 13% a year ago while 70% of investors paid in cash in July. Coming in at the… Continue reading
New home building in UK up 6% year on year but below target
The number of newly built homes in the UK has increased 6% in the past year, according to the latest house building data from the government. Some 139,030 new homes were completed in the year to June and have continued to build gradually over the last two years, according to the figures from the Department of Local Government and Communities. The data also shows that more than 144,280 homes were started in the year to June 2016 but the figures are still below the current target of 220,000 that are needed to meet the housing crisis. Communities Secretary Sajid Javid admitted that more needs to be done. ‘We’ve got the country building again with more new homes started and built than this time last year. This is real progress but there is much more to do. That’s why we are going further and increasing our investment in house building to ensure many more people can benefit,’ he explained. A breakdown of the figures show strong regional growth in London, Swindon and Wakefield, which are all experiencing high levels of completions. Delivery in London saw 24% more homes being built in the year to June 2016 than the previous year with local authorities in Greenwich and Waltham Forest seeing completions increase by 126% and 103% respectively over the same period while in Swindon and Wakefield completions were up 104% and 41% respectively. Figures published last year show that the total number of new homes across the country rose by 25% in 2014 to 2015, when taking in to account all homes, including new builds, houses that have been converted into flats and buildings whose use has been changed to residential. Javid pointed out that the government is committed to building the homes the country needs and investing £8 billion to build 400,000 more affordable homes to rent and buy. He also pointed out that the new Housing and Planning Act will help deliver the ambition to build a million more homes by ensuring councils continue to play a key role in delivery, and through new measures that will allow them to deliver more homes more swiftly. On a quarterly basis, house building starts in England were estimated at 36,400 in the latest quarter, a 2% increase compared to the previous three months and 6% up on a year earlier while completions were estimated at 34,920, some 7% higher than the previous quarter but 2% lower than a year ago. Annual housing starts totalled 144,280 in the year to June 2016, up by 2% compared with the year to June 2015. During the same period, completions totalled 139,030, an increase of 6% compared with last year. Private enterprise housing starts were 4% higher in the June quarter 2016 than the previous quarter whereas completions were 3% higher. Starts by housing associations were 6% lower compared to the last quarter and completions 29% higher. All starts are now 112% above the trough in the March quarter of… Continue reading
UK rents up 2.4% in 12 months to July 2016, latest index shows
Rents in the UK’s private rental sector increased by 2.4% in the 12 months to July 2016, unchanged compared with the year to June 2016, according to the latest index data. The figures from the Office of National Statistics (ONS) shows that rental prices grew by 2.6% in England, 0.2% in Scotland and were unchanged in Wales. Rental prices increased in all the English regions over the year to July 2016, with rental prices increasing the most in the South East at 3.5%, up from 3.4% in June 2016, followed by the East of England at 3.1% and London at 3%, both unchanged from June 2016. Annual rental growth in the South East has surpassed that of London since May 2016. Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with July 2016 rental prices being 2.6% higher than July 2015 rental prices. Excluding London, England showed an increase of 2.3% for the same period. The lowest annual rental price increases were in the North East, up 0.9% and up from 0.8% in June 2016, the North West up 1.2% and Yorkshire and The Humber up 1.3%, both unchanged when compared with June 2016. But the lack of movement in Wales meant that rents continue to be well below that of England and the average for the country as a whole while rental growth in Scotland has gradually slowed to 0.2% in the year to July 2016, from a high of 2.1% in the year to June 2015. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation between January 2013 and June 2016 of 6%, compared with 2.1% for rental prices. Inflation in the rental market is likely to have been caused by demand in the market outpacing supply, says the ONS report which points out that the Royal Institute of Chartered Surveyors (RICS) Residential Market Survey reported an increase in demand in the three months to July, while tenant demand increased in June according to the Association of Residential Letting Agents (ARLA). On the supply side, RICS reported that new landlord instructions were flat in July and ARLA reported that the supply of rental stock bounced back in June 2016, following a sharp drop in May. It points out that rental prices have been growing at a slightly faster rate than real wages in recent months. Regular pay also grew by 2.3% in the three months to June 2016 compared with the same period last year, continuing a revival of real earnings growth. The annual jump in private rental prices is a stark reminder of the struggles that many people living in private rented homes are facing in saving a deposit to buy their first home, according to Richard Connolly,… Continue reading
