Tag Archives: united-states
US pending home sales reach highest level since June 2013
Pending home sales in the United States in February increased to their highest level since June 2013, according to the latest figures from the National Association of Realtors. Sizeable gains in the Midwest and West offset smaller declines in the Northeast and South and overall demand is increasing as the residential real estate market moves into the spring buying seasons. The NAR pending homes sales index, which is a forward looking indicator based on contract signings, rose 3.1% to 106.9 in February from a slight downward revision of 103.7 in January and is now 12% above February 2014. Indeed, the index is at its highest level since June 2013 when it was 109.4, and has increased year on year for six consecutive months and. It is also above 100, considered an average level of activity, for the tenth consecutive month. ‘Pending sales showed solid gains last month, driven by a steadily improving labour market, mortgage rates hovering around 4% and the likelihood of more renters looking to hedge against increasing rents,’ said NAR chief economist Lawrence Yun. ‘These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle, especially for first time buyers, continues to be the depressed level of homes available for sale,’ he added. According to NAR’s monthly confidence index the percent share of first time buyers increased slightly for the first time in February since November 2014, up to 29% from 28% in January. ‘Several markets remain highly-competitive due to supply pressures, and real estate agents are reporting severe shortages of move-in ready and available properties in lower price ranges. The return of first time buyers this year will depend on how quickly inventory shows up in the market,’ Yun explained. The PHSI in the Northeast fell 2.3% in February, but is 4.1% above a year ago. In the Midwest the index leaped 11.6% and is now 13.8% above February 2014. Pending home sales in the South decreased 1.4% but is still 10.8% above last February. The index in the West climbed 6.6%, the highest since June 2013, and is now 18.3% above a year ago. Total existing homes sales in 2015 are forecast to be around 5.25 million, an increase of 6.4% from 2014. The national median existing home price for all of this year is expected to increase around 5.6%. In 2014 existing home sales declined 2.9% and prices rose 5.7%. Continue reading
US home prices growing at fastest rate for a year
Existing home sales increased modestly in the United States last month but prices are growing at their fastest pace for a year, the latest index data shows. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 1.25% in February and are 4.7% higher than a year ago and above year on year totals for the fifth consecutive month. The data from the National Association of Realtors also shows that the median existing home price for all housing types in February was $202,600, some 7.5% above February 2014. This marks the 36th consecutive month of year on year price gains and the largest since last February when it was 8.8%. According to Lawrence Yun, NAR chief economist, although February sales showed modest improvement, there’s been some stagnation in the market in recent months. ‘Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,’ he said. ‘Stronger price growth is a boon for home owners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise. Severe below freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country,’ Yun explained. The data shows that total housing inventory at the end of February increased 1.6% but remains 0.5% below a year ago. For the second month in a row unsold inventory is at a 4.6 month supply at the current sales pace. The share of first time buyers was 29% in February, up slightly from 28% in January and the first increase since November 2014. First time buyers represented 28% of all buyers in February 2014. All cash sales were 26% of transactions in February, down from 27% in January and down considerably from a year ago when it was 35%. Individual investors, who account for many cash sales, purchased 14% of homes in February, down from 17% in January and 21% in February 2014. Some 67% of investors paid cash in February. Distressed sales, that is foreclosures and short sales, amounted to 11% of sales in February, unchanged for the third consecutive month and down from 16% a year ago. Some 8% of February sales were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 17% below market value in February compared to 15% in January, while short sales were discounted 15% compared to 12% the previous month. ‘Investor sales are trending downward due to the continued rise in prices and fewer bargains available from distressed properties coming onto the market,’ said Chris Polychron, NAR president. He added that real estate agents in areas popular with foreign buyers, such as South Florida and the West Coast, are reporting tempered demand from international clients who typically pay in cash and this… Continue reading
Gap between residential rents and income widens in the US
The gap between rental costs and household income is widening to unsustainable levels in many parts of the United States and the situation could worsen unless new home construction meaningfully rises, it is claimed. According to new research by the National Association of Realtors which reviewed data on income growth, housing costs and changes in the share of renter and owner occupied households over the past five years, renters are being squeezed in many metro areas. This is due to the disproportionate growth in rental costs to incomes and New York, Seattle and San Jose, California, are among the cities where combined rent growth is far exceeding wages. Lawrence Yun, NAR chief economist, said that the disparity between rent and income growth has widened to unhealthy levels and is making it harder for renters to become home owners. ‘In the past five years, a typical rent rose 15% while the income of renters grew by only 11%. The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay,’ he explained. He also pointed out that the share of renter households has been increasing and home ownership is falling. Those financially able to buy a home in recent years were insulated from rising housing costs since most take out 30 year fixed rate mortgages with established monthly payments. Furthermore, a typical home owners’ net worth climbs because of upticks in home values and declining mortgage balances. The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing housing costs every year. ‘Meanwhile, current renters seeking relief and looking to buy are facing the same dilemma: home prices3 are rising much faster than their incomes. With rents taking up a larger chunk of household incomes, it’s difficult for first time buyers, especially in high cost areas, to save for an adequate down payment,’ added Yun. NAR’s research analysed changes in the share of renters and home owners, mortgage payments, median home prices, median household income for renters and the rental costs in 70 metro areas. The top markets where renters have seen the highest increase in rents since 2009 are New York with growth of 50.7%, Seattle up 32.38%, San Jose up 25.6%, Denver up 24.14% and St. Louis up 22.26%. Looking ahead, Yun says a way to relieve housing costs is to increase the supply of new home construction, particularly to entry level buyers. Builders have been hesitant since the recession to add supply because of rising construction costs, limited access to credit from local lenders and concerns about the re-emergence of younger buyers. Yun estimates housing starts need to rise to 1.5 million, which is the historical average, yet housing starts have averaged about 766,000 per year over the past seven years. ‘Many of the metro areas that have experienced the highest rent increases are popular to millennials because… Continue reading
