Monthly Archives: June 2016

Existing-Home Sales Reach Highest Pace in Over Nine Years

Source: RISMedia

Existing-home sales sprang ahead in May to their highest pace in almost a decade, while the uptick in demand this spring amidst lagging supply levels pushed the median sales price to an all-time high, according to the National Association of REALTORS®. All major regions except for the Midwest saw strong sales increases last month.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 1.8 percent to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. With last month’s gain, sales are now up 4.5 percent from May 2015 (5.29 million) and are at their highest annual pace since February 2007 (5.79 million).

“The May gain over April signals that the real estate market has maintained strong momentum all spring,” says realtor.com chief economist Jonathan Smoke. “We are now in this year’s peak home buying months, and this pace of sales should produce the gains we have been forecasting that will make 2016 the best year of home sales in a decade. The biggest challenge to prospective buyers right now is tight supply, which we have seen for 45 consecutive months. In these conditions, home values have strong support, but potential buyers will continue to face challenges finding a home for sale that meets their needs. That is why we’re seeing the age of inventory drop dramatically while prices have gone up 5 percent over the last year and are now at record nominal levels.”

Lawrence Yun, NAR chief economist, says existing sales continue to hum along, rising in May for the third consecutive month. “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,” he says. “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.”

Adds Yun, “Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer.”

Surpassing the peak median sales price set last June ($236,300), the median existing-home price for all housing types in May was $239,700, up 4.7 percent from May 2015 ($228,900). May’s price increase marks the 51st consecutive month of year-over-year gains.

Total housing inventory at the end of May rose 1.4 percent to 2.15 million existing homes available for sale, but is still 5.7 percent lower than a year ago (2.28 million). Unsold inventory is at a 4.7-month supply at the current sales pace, which is unchanged from April.

“Existing inventory remains subdued throughout much of the country and continues to lag even last year’s deficient amount,” adds Yun. “While new home construction has thankfully crept higher so far this year, there’s still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers.”

The share of first-time buyers was 30 percent in May, down from 32 percent both in April and a year ago. First-time buyers in all of 2015 also represented an average of 30 percent.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched backward from 3.61 percent in April to 3.60 percent in May, which is the lowest since May 2013 (3.54 percent). The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 32 days in May (39 days in April), which is below a year ago (40 days) and the shortest time since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 103 days in May, while foreclosures sold in 51 days and non-distressed homes took 30 days. Forty-nine percent of homes sold in May were on the market for less than a month – the highest percentage since NAR began tracking.

May inventory data from Realtor.com® shows that the top five metropolitan statistical areas where listings stayed on the market the shortest amount of time were San Francisco-Oakland-Hayward, Calif., and Seattle-Tacoma-Bellevue, Wash., both at a median of 25 days; San Jose-Sunnyvale-Santa Clara, Calif., 26 days; and Denver-Aurora-Lakewood, Colo., and Vallejo-Fairfield, Calif., both at 30 days.

Earlier this month, NAR released a new survey looking at the home buying opportunities of student debt borrowers who are current in their repayment. The findings affirmed the notion that repaying student debt is a contributing factor to the low homeownership rate among young adults and the underperforming share of first-time buyers. Nearly three-quarters of non-homeowners in the survey believed that their student debt is delaying them from buying a home, with most of them citing not being able to save for a down payment as the primary reason.

“At a time of historically low interest rates, responsible student loan borrowers should have the opportunity to refinance their loans from their current rates, which can oftentimes run over double-digit percentage points,” says NAR President Tom Salomone. “In addition to policy proposals that streamline income-based repayment programs and allow student loan borrowers the ability to refinance into lower rates, NAR supports those that promote student loan simplification, clarity and education. Furthermore, it’s important that mortgage underwriting guidelines related to student loan debt are standardized and do not impair homeownership opportunities.”

All-cash sales were 22 percent of transactions in May, down from both 24 percent in April and a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in May, unchanged from April and down from 14 percent a year ago. Sixty-three percent of investors paid cash in May.

Distressed sales– foreclosures and short sales – declined to 6 percent of sales in May, down from 7 percent in April and 10 percent a year ago. Five percent of May sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 12 percent below market value in May (17 percent in April), while short sales were discounted 11 percent (10 percent in April).

Single-family and Condo/Co-op Sales

Single-family home sales increased 1.9 percent to a seasonally adjusted annual rate of 4.90 million in May from 4.81 million in April, and are now 4.7 percent higher than the 4.68 million pace a year ago. The median existing single-family home price was $241,000 in May, up 4.6 percent from May 2015.

Existing condominium and co-op sales rose 1.6 percent to a seasonally adjusted annual rate of 630,000 units in May from 620,000 in April, and are now 3.3 percent above May 2015 (610,000 units). The median existing condo price was $229,600 in May, which is 6.0 percent above a year ago.

Regional Breakdown

May existing-home sales in the Northeast increased 4.1 percent to an annual rate of 770,000, and are now 11.6 percent above a year ago. The median price in the Northeast was $268,600, which is 0.1 percent below May 2015.

In the Midwest, existing-home sales dropped 6.5 percent to an annual rate of 1.30 million in May, but are still 3.2 percent above May 2015. The median price in the Midwest was $190,000, up 4.8 percent from a year ago.

Existing-home sales in the South expanded 4.6 percent to an annual rate of 2.28 million in May, and are now 6.5 percent above May 2015. The median price in the South was $211,500, up 5.9 percent from a year ago.

Existing-home sales in the West jumped 5.4 percent to an annual rate of 1.18 million in May, but are still 1.7 percent lower than a year ago. The median price in the West was $346,900, which is 7.7 percent above May 2015.

For more information, visit www.realtor.org

Mortgage Applications Rise over 9 Percent

Source: RISMedia

Mortgage applications increased 9.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 3, 2016. Results include an adjustment to account for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 12 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 6 percent lower than the same week one year ago.

The refinance share of mortgage activity decreased to 53.8 percent of total applications from 54.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.0 percent of total applications.

The FHA share of total applications increased to 13.0 percent from 12.5 percent the week prior. The VA share of total applications decreased to 11.5 percent from 12.0 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.83 percent from 3.85 percent, with points decreasing to 0.33 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from the last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) remained unchanged at 3.81 percent, with points decreasing to 0.25 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.71 percent from 3.65 percent, with points decreasing to 0.23 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from the last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.11 percent from 3.12 percent, with points decreasing to 0.35 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the week prior.

The average contract interest rate for 5/1 ARMs decreased to 2.96 percent from 3.00 percent, with points decreasing to 0.29 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from the last week.

For more information, visit www.mba.org/WeeklyApps.

How Single Women Are Changing the Home Buying Market

 

Source: Megan Wild/RISMedia

While women in business schools and C-level suites may still hover on the low end when compared to their male counterparts, single women are currently proving to be one of the most important demographics in the home buying market.

The National Association of Realtors® (NAR) reported this year that — of the recent buyers who are single — single women accounted for 60 percent more home purchases than single men, across all age groups. They are actually the biggest home buying demographic after married couples.

This trend of single female home ownership is projected to increase in the coming years, thanks to a variety of factors. The gender-pay gap is decreasing, giving women increased financial independence. In some areas, their incomes are even increasing faster than their male counterparts’ are.

Generational Gap: Baby Boomers (Still) Own the Housing Market

Even though millennials show great promise in the real estate market, baby boomers are still the largest group of homebuyers. NAR found that single female baby boomers buy twice as many homes as single men do and account for one out of every five houses sold in their own age cohort.

Additionally, baby boomers are wealthier than any other generation. They are set to inherit $13 trillion of wealth in the next 20 years, and 70 percent of them believe that their current home will not be the best one that they live in. Contrary to cat lady stereotypes, a 2015 survey of over 1,000 single boomer females found that the overwhelming majority — 74 percent — are as confident and happy as they were at 35. These women are going to keep buying houses. Better, bigger houses, at that.

This trend affects the housing market as well as the interior design business. A company that targets single female baby boomers would be wise to consider their preferences. Boomers overwhelmingly live in the suburbs and have more space than other generations who camp out in smaller city apartments. Custom hardwood cabinetry, granite or marble countertops, and the ability to customize are all attractive options for single female baby boomers. This slice of consumer will not shy away from affordable luxury, like a glass-gated walk-in shower or custom bathtub.

Per Richard Endres, the owner of E.B. Endres, a residential home remodeling company, “Statistics show the number of single women homeowners is on the rise.  We have a number of single women homeowner clients so we are experiencing the statistic first-hand within our residential remodeling division.  There are subtle and pronounced differences in how women approach a remodeling project as opposed to men.”

According to Endres, when his company meets with a female client to start a remodeling project:

  • She knows her budget and she’s determined to stay within that budget.
  • She wants to reflect her personality and her own personal style through the project. Fortunately there are many design styles and options today to choose from.
  • She takes time to do her research and make final decisions.
  • She wants the best quality products and workmanship she can afford within her budget.
  • She is concerned for others. She focuses on comfort for herself as well as family and friends who will benefit from the remodeling project.

It’s clear from this industry insight that single women, regardless of age, are coming into their own in the housing market.

Millennial Focus: Young Adults Will Enter the Market                              

Millennials tend to live in smaller spaces located within major cities, close to their workplaces and social centers. Also, millennial women tend to get married later (if they plan to marry at all) and are well-educated. Their demand for housing will likely increase along with their salaries. It’s no secret that the U.S. marriage rate has hit record lows in recent years, which makes singles an even more important player in markets like housing, traditionally dominated by married couples.

Millennials also want to differentiate themselves from their parents — McMansion-style designs will not sell well within this age group. They tend to favor unique, stylish, but practical designs. This could mean an in-kitchen cocktail/bar space for entertaining complete with mason-jar cocktail mugs, or a shower with a top-mounted rainfall showerhead that adds a bit of comfort and class to a small space.

Location will be particularly important for this cohort. On the upper end of this market, a preference for apartments or condos in dense communities with vibrant street life is expected. Dense cities like San Francisco or Pittsburgh are currently enjoying downtown booms, with ever-increasing numbers of high-earning women moving in every year.

Future Plans: Housing Options Marketed Across Age Groups

As the housing market continues to change, it’ll be more important to market towards women across all age groups, not just millennials. No generation is homogeneous, and marketing that way is a recipe for failure. A variety of choices and designs targeted towards all women, and features like easy parking, safety and overall affordability, will have obvious appeal for all single females.

Single women are getting a lot of attention in the real estate industry — and for good reason. This group is clearly on the upswing both financially and demographically. The current U.S. economy favors the growth of home buying, despite rising prices in certain areas. Lenders are making it easier and easier to get a mortgage after tightening the screws during the financial crisis. Many are saying that the time to buy a home is now, since property prices in the U.S. overall are expected to increase in value following the housing bust.

All in all, in an increasingly fragmented market, single women are the most important demographic to watch out for. They are increasing in power, wealth and market share, and are a force to be reckoned with.

New Home Sales Soar Higher

Source: RISMedia

New home sales data released this week showed that sales were 16.6 percent higher than March when comparing the seasonally adjusted annualized rates, and 23.8 percent higher than last year.

This news comes from estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.

The median sales price of new houses sold in April 2016 was $321,100; the average sales price was $379,800. The seasonally adjusted estimate of new houses for sale at the end of April was 243,000. This represents a supply of 4.7 months at the current sales rate.

“At last we have a clear, statistically significant view that the new home market is having its best spring buying season in a decade,” says realtor.com® chief economist Jonathan Smoke. “April’s non-seasonally adjusted volume of new home contracts was estimated to be 61,000, which was the highest April volume since 2007. However, a key difference between now and 2007 is that 38 percent of the new homes sold then were completed speculative inventory.  In April, less than 30 percent of new homes sold were completed. Likewise, the supply of new homes for sale in 2007 was 7.4 months.  This April’s new home supply was 4.7 months – solidly below normal. It appears that the growth in sales is coming from higher price points, indicating that builders are finding success with move-up, luxury, and active adult home buyers rather than entry level buyers. Hopefully this will free up existing home owners to sell their lower priced homes as they move up.”

Quicken Loans Vice President Bill Banfield stated, “The spring home buying season is in full swing as builders have been picking up steam through the first quarter. While the large jump in new home sales is encouraging, I would look for a normalization in the coming months that shows a slow but steady increase in the health of the housing market.”

For more information, visit www.census.gov.

Homes Selling Fast As Prices Hit Record Highs, Says Realtor.com

Source: RISMedia

The 2016 homebuying season is in full swing, with homes in May moving as fast as we’ve seen since the housing recovery began – even as asking prices continue to hit new record highs.

Based on preliminary May data released by realtor.com, the median age of properties on realtor.com in May was 65 days, which was the same median age as a year ago and three days faster than last month. The median home was listed at $250,000 – 9 percent higher than one year ago and 2 percent higher than April. For-sale housing inventory also continues to increase on a monthly basis, but is still lower than one year ago.  More than 550,000 new listings have been added to the market so far this month.

“Based on our early read of demand and supply data in May, this spring’s real estate market is coming in strong, just as we expected,” says Jonathan Smoke, chief economist of realtor.com. “Pent-up demand and low mortgage rates are driving consumers into the market with urgency. However, the recurring issue of limited supply is leading to record-high prices.

“Thankfully, we are finally seeing gains in new single-family construction and new home sales to provide a pressure release. Potential buyers are finding they can avoid a competitive bid situation if they elect to sign a contract on a home to be built. As the share of new homes sold goes up, we should eventually see signs of more balance in the existing home market, like lower price appreciation. However, we clearly aren’t there yet.”

Key Statistics:

  • Median age of inventory is estimated to end at 65 days, the same as May 2015 and down 4 percent from April.
  • Median listing price for May should reach a record high of $250,000, a 9 percent increase year over year and a 2 percent increase month over month.
  • Listing inventory in May is showing a 4 percent increase over April. However, inventory decreased 4 percent year over year.
  • com’s Hottest Markets receive two to three times the number of views per listing compared to the national average. In terms of supply, these markets are seeing inventory move 19-25 days more quickly than the rest of the U.S. They have also seen days on market drop by an average of three days from April.

For more information, visit www.realtor.com.