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Inventory boost lifts home sales

Michael J. Berens

Wednesday, November 28, 2018

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Inventory boost lifts home sales

More buyers looked favorably on the housing market in October, encouraged by a greater number of homes for sale, continued slowing in home prices, and a temporary decline in mortgage rates.

Existing home sales posted their first month-over-month positive growth in six months. New home sales, on the other hand, plummeted to their lowest point in over three-and-a-half years, even as inventories increased and prices dropped. Riding the same downward trajectory, construction of new homes also declined for the second month in a row.

Although the number of existing homes for sale decreased slightly from the end of September to the end of October, available inventory was up from the same period a year ago, according to the National Association of Realtors (NAR).

Real estate website Zillow reports that total available inventory in the metro areas it tracks rose 3 percent year-over-year in October, the first time in four years it has exceeded 1 percent growth. Availability was not widespread, however, with metro areas in California, for example, reporting big gains.

Home prices remain high, but the pace at which prices have been increasing has been slowing over the past six months due to weak sales. According to the latest S&P CoreLogic Case-Shiller home price index, prices in October were 5.1 percent higher than a year ago, down from 5.5 percent in September. The NAR stated the median price of an existing home was 3.8 percent higher than in October 2017, down from 4.2 percent year-over-year in September.

Along with increased inventory and easing prices, some buyers in late October would have been able to take advantage of a temporary dip in mortgage rates that occurred in response to turbulence in the stock and bond markets. That may have provided an added incentive to commit to a purchase while conditions were more favorable.

These trends helped push sales of existing homes up 1.4 percent for the month, compared with September’s drop of 3.4 percent, said the NAR. It was the first time since March that month-over-month sales enjoyed positive growth.

Activity was strongest in the Northeast, South and West. Most of the gains came from sales of condos and co-ops, which were up 5.3 percent over the previous month. Sales of single-family homes remained nearly flat, and are now 5.3 percent lower than the same time last year.

Higher than average prices (for existing homes) and rising interest rates are taking their toll on new home sales, which plunged 8.9 percent in October, following a 5.5 percent drop in September, to their lowest point since March 2016. The median price of a new home dipped to $309,700 (3.1 percent lower than the same time last year), but the average price was $395,000 – both far higher than the $255,400 median price (up 3.8 percent) for an existing home sold last month.

The softening market for new homes pushed inventories up to 7.4 months, the highest level of supply in seven and half years, reports MarketWatch. Not surprisingly, new single-family starts declined 1.8 percent from September, and permit requests were down 0.6 percent.

While October’s numbers were a welcome relief for real estate agents after a disappointing third quarter, market indicators suggest the growth in sales is not likely to continue for the remainder of the fourth quarter. Fannie Mae stated that its Home Purchase Sentiment Index (HPSI) fell for the second month in a row, by 2 points, in October.

Concerns about home prices, mortgage rates, and personal financial security combined to bring down the portion of participants saying “now is a good time to buy a home” by 5 points and those saying “now is a good time to sell a home” by 3 points.

Builders, too, are less optimistic about business activity in the coming months. In announcing that the Housing Market Index (HMI) for November had decreased by 8 points, to 60 (its lowest point in over three years), Randy Noe, chairman of the National Association of Home Builders, stated builders are reporting “that customers are taking a pause due to concerns over rising interest rates and home prices.” Current sales activity was down 7 points, customer traffic down 8 points, and expected future activity down 10 points.

Activity is expected to remain flat or worse going into next year. At the NAR’s annual conference earlier this month, chief economist Lawrence Yun told the audience his current forecast projects existing-home sales this year will finish at a pace of 5.345 million — a decrease from 2017 (5.51 million). In 2019, sales are forecasted to increase to 5.4 million, a 1 percent increase, provided the market begins to stabilize.

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About the Author

Michael J. Berens

Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at

Continue reading Inventory boost lifts home sales


US home price gains slowed in November

FILE- In this Oct 2, 2018, file photo, a for sale sign stands outside a home on the market in the north Denver suburb of Thornton, Colo. The Standard & Poor’s/Case-Shiller 20-city home price index for November is released. (David Zalubowski, File/Associated Press)

January 29

WASHINGTON — U.S. home prices rose at a slower pace in November, as sales have tumbled and affordability has deteriorated for many would-be buyers.

The S&P CoreLogic Case-Shiller 20-city home price index grew 4.7 percent from a year earlier, dropping off from a 5 percent annual increase in October, according to a Tuesday report.

Home sales drifted downward for much of 2018, causing homes to sit on the market longer and price growth to slip. Buyers have found it difficult to afford a home due to a shortage of properties at a median price of roughly $250,000, last year’s rising mortgage rates and roughly six years of home price growth exceeding wage gains.

“Home prices are still rising, but more slowly than in recent months,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “The pace of price increases are being dampened by declining sales of existing homes and weaker affordability.”

The Las Vegas metro area posted the largest price gains at 12 percent, followed by Phoenix at 8.1 percent and Seattle at 6.3 percent. All 20 of the metro areas tracked by the index reported price gains, with Washington, DC posting the slowest gain at 2.7 percent.

Still, 2019 has offered consumers some relief as the average 30-year mortgage rate has dipped to 4.45 percent from a recent peak of nearly 5 percent. This could help to boost demand after sales declined last year.

The National Association of Realtors said last week that sales of existing homes in 2018 fell 3.1 percent from the prior year to 5.34 million units, the lowest level since 2015.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Continue reading US home price gains slowed in November

The US housing market is slowly — but surely — returning to normal

Continue reading The US housing market is slowly — but surely — returning to normal

Homebuyer sentiment reverses course amid mixed signals

Michael J. Berens

Wednesday, October 12, 2016

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Homebuyer sentiment reverses course amid mixed signals

Homeowners looking to sell are enthusiastic about the continued rise in housing prices. Prospective homebuyers not so much.

Even with mortgage rates remaining near rock bottom, those who would like to purchase a home are feeling the pressure of having to strain too much financially to meet market demands. The past two months have seen a gradual decline in buyer interest that could linger throughout the remainder of the year.

Homebuyers were mostly optimistic just a few months ago. Nearly three-fourths of prospective buyers (71 percent) in the third quarter felt “now is a good time to buy a home,” according to the National Association of Realtors (NAR) September 2016 Housing Opportunities and Market Experience (HOME) study, up from fewer than half (42 percent) in the second quarter.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) hit a survey-high 86.5 (out of 100) in July. Sales of new homes were up strongly in July as well, as were pending home sales. The industry appeared to be well positioned to take advantage of the fall homebuying season. Then the winds shifted.

Fannie Mae’s HPSI dipped 1.5 points in August. Sales of newly built single-family homes — while still trending well above 2015 year-over-year — fell 7.6 percent, and new housing starts dropped 5.8 percent, according to the National Association of Home Builders (NAHB).

The NAR reports, “After bouncing back in July, pending home sales cooled in August for the third time in four months and to their lowest level since January,” declining 2.4 percent. Existing home sales toppled in July by more than 3.2 percent and softened again in August by nearly another point (0.9 percent), surprising economists who had expected a 1.1 percent increase over July, announced Reuters.

During this time, the economic news was mostly positive, and employment continued to trend upward. Clearly, other factors have brought about this sudden shift in consumer attitude.

A closer look at NAR’s third-quarter HOME study reveals a positive outlook was highest among prospective buyers who already own a home, were age 45 or older, had a household income of $50,000 a year or more, and lived in regions that have rebounded more quickly from the recession.

Prospective first-time buyers — especially millennials and those living in urban areas — were less optimistic. Moreover, participants in the HOME survey were more confident that home prices in their area would not rise substantially over the next six months and that mortgage rates would hold steady at current low levels.

As the summer progressed, those variables appeared less certain. Speculation that the Federal Reserve Board might raise interest rates in the light of strengthening employment numbers created concern that mortgage rates would soon follow. In the August HPSI, the net share of Americans who say it is a good time to buy a house fell by 5 percentage points. More than half of respondents (56 percent) indicated they believe mortgage rates would stay the same or go up during the next 12 months.

Releasing the results, Fannie Mae senior vice president and chief economist Doug Duncan said the decline in the HPSI over the past two months “adds a note of caution to our moderately positive housing outlook.” Commenting on the drop in pending home sales, NAR Chief Economic Lawrence Yun remarked that in most areas of the country “an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the minuscule number of affordable listings.”

In areas throughout the country, the mismatch between housing costs and income, as well as the hurdle of qualifying for a mortgage, is making prospective buyers think twice about taking on the burden of a home purchase. Whether the current reversal will evolve into a trend will become clearer when September figures are released later this month.

Meanwhile, industry experts remain confident, if cautious, that the market will continue to experience modest growth in the months ahead.

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About the Author

Michael J. Berens

Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at

Continue reading Homebuyer sentiment reverses course amid mixed signals

Rising mortgage rates to shape housing activity in 2017

Continue reading Rising mortgage rates to shape housing activity in 2017

Reasons to Suspect the US Housing Market is Starting to Coo

Low unemployment doesn’t ensure more Americans can afford a home, and rising home prices say more about target markets than the supply of motivated buyers

AUGUST 8, 2018
2018Housing Slowdown Inventory
Months of supply for existing homes ticked up year-over-year in June for only the second time in three years. Given the number of existing homes for sale has been falling, the uptick in months of supply is likely attributable to a slower pace of sales.

With housing inventory shortages rampant across the nation, the summer of 2018 was supposed to be “the most competitive housing market in recorded history.”

But as July turns to August, reports suggest the rush of buyers missed many markets. Existing homes sales have fallen, compared to the same months last year, in four of the last five months. New U.S. home sales fell 5.3% in June to an eight-month low. It was the second drop in new-home sales in three months. June housing starts plunged 12.3%. Residential building permits issued in June dropped for the third consecutive month.

2018Housing Slowdown Existing SalesExisting homes sales have fallen year-over-year in four of the last five months. New U.S. home sales fell 5.3% in June to an eight-month low. It was the second drop in new-home sales in three months.“It’s alarming that single-family construction permit growth is decelerating, at a time when homeownership is rising and Millennials are reaching their peak age to really enter the market and buy their first home,” said Sam Khater, chief economist for Freddie Mac, in a statement about the Commerce Department’s June housing estimates. “The growing imbalance between demand and supply is the reason home prices continue to escalate.”

Home price growth has yet to be affected but the apparent weakening of demand suggests that the housing market may finally be cooling.

Housing inventory shortages have been a primary factor in rising home prices over the last three years. At the same time, skyrocketing building costs and the demographics of those who have money to spend in a period of declining wages has ensured a steady flow of expensive premium housing. Home prices have been rising at least twice as fast as incomes for the past four years.

“Home sales, new home construction and outlays for renovations and repairs were collectively a net drag on overall growth during the first half of the year, even as real GDP growth ramped up to a 4.1% pace during the second quarter,” according to special commentary on housing by the Wells Fargo Economics Group.

After nine years of U.S. economic growth, the housing industry is starting about 30% fewer single-family homes than the 1.3 million units that the National Association of Homebuilders calls a normal level of housing starts. The pace of multifamily starts has trended down since January.

“Higher lumber prices in light of tariffs on Canadian softwoodAtlanta Fed Wage Growth TrackerU.S. wage growth has slowed since November 2016 more steeply than it rose between November 2013 and 2016. Despite strong employment, wage growth has lagged economists’ expectations. After accounting for inflation, today’s average wage has about the same purchasing power it did 40 years ago.FEDERAL RESERVE BANK OF ATLANTAlumber and higher building material prices in general may be causing some builders to hold off on some projects, particularly starts of lower priced homes, which simply do not have enough profit margin in them to absorb these higher costs,” according to analysis by Wells Fargo Economics of the U.S. Commerce Department’s June monthly housing construction estimates. “Those higher costs are likely weighing even more heavily on apartment projects, which have seen permits tumble at an astounding 58.2% annual rate over the past three months.”

With prices already at all-time highs in most markets, rising interest rates exacerbate affordability problems. Rates were hovering below 4% going into 2018 but have since shot to as high as 4.6%.

Although it can vary market to market, these factors all point to housing affordability being pushed beyond what many people can pay. The clearest evidence is that months of supply for existing homes ticked up year-over-year in June for only the second time in three years. Given the total number of existing homes for sale has been falling, the uptick in months of supply is likely attributable to a slower pace of home sales.

In some markets, the increase in inventory is more pronounced. According to, active listings in July were up 44% year-over-year in San Jose, 29% in Seattle, 19% in Portland, 18% in San Diego, and 15% in Dallas.2018Housing Slowdown RatesInterest rates were below 4% going into 2018 but have since shot to as high as 4.6%. Prospects of rising rates pushes premium buyers to buy sooner, but can put off first-time buyers indefinitely.

Moody’s just released a positive outlook for the U.S. homebuilding sector, reflecting enthusiasm for fundamental business conditions overcoming housing headwinds over the next 12 to 18 months:

Momentum – key underlying drivers of housing demand, with homebuilding growth, now in year seven, and the overall economic expansion, now in year nine, show few signs of slowing.

Millennials – the biggest population cohort in the U.S. workforce is entering the housing market – both for purchases and for rentals – in powerful and increasing numbers.

Consolidation – homebuilders are finding it cheaper and quicker to enter new markets, and easier to go much deeper in existing markets, by buying competitors rather than “green fielding.”

Credit metrics – for much of the homebuilding industry, debt leverage is gradually being reduced, interest coverage is strengthening and recent declines in gross margins are slowing and even stopping.

It does appear U.S. economic fundamentals are little changed over the past few years. Those fundamentals have produced two-thirds of normal housing construction volume since the economy turned solidly up five years ago. Those aren’t laurels to rest on.

It’s possible the larger economy’s momentum and the direction of home buying might diverge, as this spring and summer have already seen a few months’ declines in home sales, home construction and permits issued. Home prices and mortgage rates continue to rise, and mortgage-interest deductions have been curtailed. These conditions are unfolding in an environment where U.S. wage growth has slowed since November 2016 more steeply than it rose between November 2013 and 2016.

Millennials should be doing a significant portion of home buying, given 20-somethings’ high potential for forming new households. Instead, they earn 20% less than the Baby Boomer generation did when they were in their 20s. And Millennials also have exponentially more student loan debt to repay than any other generation before. Inflated home prices and limited starter inventory are not in their favor.

I’m not an economist, so even if I wanted to make predictions, they wouldn’t be worth much. But here’s an early warning from somebody who knows: “Housing market activity – sales and construction – likely has peaked for this cycle,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told clients after the Commerce Department’s release of June housing construction data this month.

Continue reading Reasons to Suspect the US Housing Market is Starting to Coo

New-home sales fall to a nearly 3-year low; inventory surges as housing-market outlook darkens

Published: Nov 28, 2018 10:27 a.m. ET

So far this year, sales are just 2.8% higher than a year ago

Bloomberg News/Landov
A contractor works on a town house under construction at a PulteGroup development in California.

The numbers: New-home sales ran at a seasonally adjusted annual 544,000 rate in October, the Commerce Department said Wednesday.



What happened: October’s selling pace for new single-family homes was 8.9% lower than September’s, although that report was revised upward. It badly missed the MarketWatch consensus forecast of a 589,000 pace, and was 12% lower than year-ago levels.

The median sales price in October was $309,700, 3.1% lower than a year earlier. At the current pace of sales, it would take 7.4 months to exhaust available supply. That’s not only above the 6 months that’s long been considered a marker of a balanced market, but also the highest level of supply in seven and a half years.

Read: A tax break to hasten gentrification? Housing market’s Opportunity Zones may miss their target

Big picture: The government’s data on new residential construction is based on small samples, and can be erratic and prone to sizable revisions. Still, it’s clear that the housing market has hit a rough patch. Sales of existing homes rose in October for the first time in six months, the National Association of Realtors said. National annual price growth decelerated for the sixth-straight month in September, according to the S&P/Case-Shiller 20-city index.


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In the year to date, new-home sales are just 2.8% higher than in the same period last year.

The question now is whether the housing cycle comes to an end, or stages a rebound. Some regional markets that have overheated over the past few years, like San Francisco, have bounced back after a cooling-off period. And there was a national rebound some time after the Federal Reserve quashed a nascent recovery in 2013 by reminding investors that interest rates would have to go up at some point.

What they’re saying: “It’s clear we are well into a correction period for the new home market,” said TIAA Bank’s John Pataky. “High prices and rising rates are continuing to take their toll on this segment, which is particularly sensitive to changes in these metrics. Additionally, declining homebuilder confidence is only exacerbating the troubles for the new home market on the supply side. Next year, we will likely see a tussle between price moderation creating additional demand and rising rates having the opposite effect.”

Read: Home builder confidence tumbles the most since 2014 as housing headwinds catch up

“If the economy manages to right itself with real wage growth expanding and housing affordability holding relatively steady (prices and mortgage rates), there is a sufficient backlog of demand to reboot housing for this cycle,” Steve Blitz, chief U.S. economist for TS Lombard, after the release of October housing starts data earlier in the month.

“Pay your money and take your chances, this is the bet to be made if your view on housing leans towards ‘soft patch’. Our outlook is that because the buildup in housing was never big enough for a ‘collapse’, the coming downswing in residential construction, and the housing sector more broadly, will drag down GDP growth but not enough to flip total growth negative.”

Market reaction: Home builder stocks slid after the report. Shares of PulteGroup Inc. PHM, +1.13% were down more than 2% in midmorning trading, and KB Home shares KBH, +0.28% lost more than 3%. The Dow Jones Industrial Average DJIA, +1.13% was little changed, however.

Continue reading New-home sales fall to a nearly 3-year low; inventory surges as housing-market outlook darkens

U.S. Pending Home Sales Unexpectedly Decline on Lean Listings

Contract signings to purchase previously owned U.S. homes unexpectedly declined in April, underscoring the housing market’s challenge centered around a persistent inventory shortage, according to data released Thursday from the National Association of Realtors in Washington.



  • Index fell 1.3% m/m (est. 0.4% gain) after an upwardly revised 0.6% increase (prev. 0.4%)
  • Gauge rose 0.4% y/y on an unadjusted basis after a 4.3% decllne

Key Takeaways

The latest results show home sales may struggle to gain much traction in coming months. A limited number of for-sale properties is keeping prices elevated at a time when mortgage rates have climbed to an almost seven-year high. Such headwinds make home ownership more difficult for some prospective buyers. Nonetheless, a healthy job market and lower taxes are expected to underpin housing demand. Data released last week showed existing-home sales fell in April to a three-month low.

 Official’s Views

“The unfortunate reality for many home shoppers is that reaching the market will remain challenging if supply stays at these dire levels,” Lawrence Yun, NAR’s chief economist, said in a statement.


At the same time, “demand for buying a home is very robust,” Yun said. “Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher.”


Other Details

  • Signings dropped in three of four regions, led by a 3.2 percent decline in the Midwest; fell 1 percent in the South and 0.4 percent in the West, while sales agreements were unchanged in the Northeast
  • Pending home sales index for West was lowest since June 2014
  • Economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later

— With assistance by Chris Middleton

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Home Prices Continued to Rise in February

Home-price gains accelerated in February for the 70th consecutive month, creating increasingly challenging conditions for buyers as interest rates also rise and inventory remains tight.

The S&P CoreLogic Case-Shiller National Home Price Index, which covers the entire nation, rose 6.3% in February, up from a 6.1% year-over-year increase reported in January.

Continue reading Home Prices Continued to Rise in February

Demand for major remodels remains strong

As more long-term homeowners make the decision to stick with the home they have, they are undertaking larger-scale remodeling projects, such as complete room renovations or additions.

Due to the complexity of these changes, more homeowners are hiring professionals to assist with or do the entire project for them. While that’s great for business, it is pushing out wait times as project backlogs begin to pile up.

Continue reading Demand for major remodels remains strong

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