NAHB Housing Market Index Shows Builder Confidence Slip In March

March 20, 2013 by

Home Builder Confidence Index March 2013The National Association of Home Builders (NAHB) released its NAHB/Wells Fargo Housing Market Index for March on Monday.

The HMI measures builder confidence in the market for newly constructed single family homes.

A reading of 50 for the NAHB Housing Market Index (HMI) indicates that more builders are confident of housing market conditions for new single family homes than those who are not confident.

Home builder confidence fell for the third consecutive month with a two-point drop to a reading of 44 in March.

Several Factors Create New Home Bottleneck

An NAHB leader noted that several situations are causing a “bottleneck” in the supply of new homes as compared to those wanting to buy them:

  • Low supply of developed lots available for new construction
  • Rising costs for labor and materials
  • Stricter mortgage credit requirements for homebuyers and lowball home appraisals. (These circumstances are typically caused by some mortgage lenders taking a conservative attitude toward risk management by tightening credit requirements and appraisers erring on the side of caution when valuing single family homes.)

Would-be buyers may find themselves stuck between a lack of buildable lots and ready building supply chains and lenders reluctant to risk mortgage defaults caused by lenient loan approvals.

Keep in mind that this only one perspective; if you’re looking for a new home, don’t give up.

Future Sales Confidence Creates Bright Spot

The HMI also measures builder confidence in three categories including current sales conditions, sales conditions within the next six months and the amount of foot traffic in new housing developments.

Confidence in current sales conditions dropped from 51 points in February to 47 points in March, but the news is not all bad.

Confidence in sale conditions for the next six months rose by one point from 50 to 51, and builder confidence in buyer foot traffic rose by three points to 35.

Foot traffic will likely increase as warmer weather arrives and the peak home buying season gains momentum.

Housing Market Conditions Vary By Region And Community

The three-month rolling average of builder confidence in four geographic regions of the U.S. showed mixed results for March.

The index reading for the Northeast had no change and remained at 39.

Index readings for the Midwest and Southeast declined by one point each to 47 and 46 respectively.

The March index reading for the West came in gaining four points to 58.

If you’re ready to buy a home, check with a licensed real estate professional specializing in the area where you want to buy.

This is the best way to gain specific information on the area’s market conditions and home prices.

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Surprisingly Strong Jobs Report May Affect Mortgage Rates

March 13, 2013 by

Jobs Report In FocusLast week’s jobs report — a combination of the Department of Labor’s Non-farm Payrolls Report and Unemployment Rate — provided investors and job seekers with unexpected good news.

Job growth for February handily exceeded most economists expectations of 160,000 by adding 236,000 new jobs.

According to the Bureau of Labor Statistics, employment increased in business and professional services, construction and healthcare:

  • Business and professional services added 73,000 jobs
  • Construction added 48,000 jobs. Of these, 17,000 jobs were for residential construction.
  • Healthcare added 32,000 jobs

Since September, construction employment has risen by 151,000. This increase in construction jobs may point to a strengthening in the home building sector.

Stronger home building numbers may lead to increasing home prices for sellers and property appreciation for home owners.

Strong Jobs Numbers Help Stock Market Rally, May Spur Higher Mortgage Rates

Retail has added 252,000 jobs over the past year. Hiring in retail suggests that consumers are spending more, which is a strong indicator of economic growth.

These figures demonstrate a trend toward economic recovery and added a last-minute boost to last week’s stock market rally.

Rising stocks generally cause bond prices including MBS to fall and mortgage rates to rise.

The seasonally adjusted employee participation rate declined by 0.40 percent year over year; in February 2012, the seasonally adjusted was participation rate was 63.9 percent; in February 2012, the participation rate was 63.5 percent.

The Unemployment Rate for February came in at 7.7 percent; this was lower than Investor expectations of 7.8 percent and January’s unemployment rate of 7.9 percent.

The seasonally adjusted unemployment rate has decreased by.60 percent from 8.3 percent in February 2012.

Unemployment Rate Lowest Since December 2008

Long-term unemployment of 27 weeks or more accounted for 40.2 percent of February’s unemployed.

8 million workers are employed part time due to scheduling cutbacks or because they could not find full time work.

The Fed has benchmarked an unemployment rate of 6.5 percent as a sign of sufficient economic recovery that could allow the Fed to curtail its monetary easing program.

Given this perspective, the Unemployment Rate remains high, but appears to be declining gradually.

Economic indicators and recently climbing interest rates suggest that mortgage borrowers may want to lock in their best mortgage rates now.

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Look For Improvements In The Real Estate Market In 2013

March 7, 2013 by

Home Prices Improving March 2013The previous couple years’ doom and gloom outlook is looking like it is turning more upbeat and robust for the rest of 2013.

Home Prices Climb Nearly 10% Over Past Year

In fact, a recently released report by CoreLogic stated that home prices were up 9.7 percent from one year previously.

That kind of increase is a very good sign that the momentum may be building for a strong real estate market this year.

Many other economic experts are predicting that things might be improving this year, including increases in both home prices and sales.

Here are some of the ways that these positive changes may impact home buyers and sellers this year.

For Buyers:

Attractive Financing Options

Interest rates could remain at the lowest levels they have been in years, which can make purchasing a home more affordable.

Stiffer Competition

More buyers will be competing for the homes that are available which could mean bidding wars on homes with more than one interested party.

Be sure to take this into consideration before making your offer, and have a licensed real estate professional representing you in your purchase negotiations.

Great Home Prices

Housing remains affordable in many areas of the country. Although home prices are rising, the cost of real estate is well below what it was ten years ago.

And For Sellers:

Marketing Is Vital

Working with a skilled property professional is imperative to ensure the best advertising and marketing for your listing.

Real estate agents have access to the Multiple Listing Service (MLS), which is where other agents and buyers look for properties that are listed and available for purchase.

Contract Negotiations Prevalent

Multiple offers will become more commonplace. Do your research on how to best handle contract negotiations.

Maximize Your Selling Price

Make sure you get the most for your home. Know what other properties are selling for in your neighborhood, and consider hiring a designer to stage your home for showing.

With the real estate market shifting, both buyers and sellers need to be aware of how the changes could affect them.

Whether you’re looking for your dream house or wanting to get the highest return on your home for sale, a great next step would be speaking with a qualified real estate professional.

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Metro Area Home Values Continue To Shine

March 6, 2013 by

Metro Values Up Case-Shiller 2013The Standard and Poor’s Case-Shiller Home Price Indices released February 26 show strong growth in the majority of 20 cities and corresponding metro areas tracked during 2012.

The S&P Case-Shiller Home Price Indices measure home prices nationally and locally by compiling data from individual indexes including a 10-City Composite Index,  a 20-City Composite Index, and a 20-Metro Area Index that includes metro areas for each of the 20 cities used in the 20-City Composite.

Metro Areas Show Nearly Universal Growth

19 of 20 metro areas showed higher home prices in Q 4 2012 with the New York metro area showing a decrease in home prices; this could be due in part to the impact of Hurricane Sandy.

Highlights include:

The Atlanta and Detroit metro areas saw Q4 2012 Atlanta home prices increase by 9.9 percent year-over year, while Detroit home prices rose by 13.6 percent as compared to Q4 2011.

Home prices in the Phoenix Metro area improved by 23 percent compared to Q4 2011 for the highest year-to-year increase of all metro areas in 2012.

The 10 and 20 city indices and national home price composite improved as well.

The 10 and 20-city composites have gained approximately 8 to 9 percent since reaching their most recent lows in March of 2012; current readings indicate that home values have returned to autumn 2003 levels, but remain about 30 percent lower than they were at their peaks in June and July 2006.

On a month-to-month basis, both the 10-and 20- city composite Indices returned to positive readings with each rising by 0.2 percent, which recovered last month’s losses of 0.2 and 0.1 percent respectively.

The national home price composite is determined from information taken from the 9 geographic divisions established by the U.S. Census Bureau.

It rose by 7.3 percent year-to-year, but fell short of the Q3 2012 reading by 0.3 percent.

While some areas are still facing challenges, some cities and metro areas where home values declined the most are rebounding nicely.

All in all, it is quite apparent that the broad U.S. housing markets are recovering. 

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Existing Home Sales Rise As Home Inventory Shrinks

February 28, 2013 by

Existing Home Sales Numbers ReleasedHome sales rose for the 11th consecutive month according to the National Association of REALTORS® Existing Home Sales Report for January.

This is the first time this has occurred since the period between July of 2005 and May of 2006.

National Average Home Price Up Over 12% Annually

The national average home price in January was $173,600, which is 12.3 percent higher than for January 2012. 

Calculated on a seasonally-adjusted annual basis, Existing Home Sales data is compiled using completed sales of single family homes, condominium units and co-ops.

January’s existing home sales rose by 0.4 percent to 4.92 million sales nationally as compared to December’s revised annual rate of 4.90 million sales nationally.

National sales of existing homes increased by 9.1 percent as compared to January 2012.

Regional Home Sales Support Housing Recovery

Regional home sales for January suggest more good news for housing markets. Seasonally- adjusted annual home sales rose in all regions of the U.S. except in the West, while median home prices rose for all regions.

Northeast: Home sales were up by 4.8 percent in January to 650,000 sales, which is 12.1 percent more homes sold than for January 2012. The median home price rose by 2.4 percent from January 2012 to $230,500.

Midwest: Annual home sales in January increased by 3.6 percent to 1.16 million; this is 17.2 percent higher than for January 2012. The median home price in the Midwest rose to $131,800, an increase of 8.6 percent as compared to January 2012.

South: Home sales were up by 1 percent to 1.96 million sales in January; this represents a 14.0 percent increase in annual sales as compared to one year ago. The average home price for the South was $152,100, an increase of 13.4 percent over January 2012.

West: Home sales fell by 5.7 percent to an annual rate of $1.15 million. This represents a 5.7 percent decrease in sales from one year ago. The median home price in January was $239,800 and was 26.6 percent above the region’s median sale price for January 2012.

A falling inventory of homes for sale may be holding back buyers; the inventory of homes for sale fell to a 4.2 month supply from December’s 4.5 month supply of homes. A 6-month supply of homes is considered average.

Home Prices May Rise Quickly

While the spring home buying season will likely see more homes come on the market , economists caution that home prices could rise faster than expected due to increasing demand. A seller’s market could be in the making.

Mortgage rates also appear to be rising; now may be your best time for gaining the advantage of relatively low home prices and mortgage rates.

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Builder Confidence In New Home Sales Stay Near All Time High

February 20, 2013 by

Home Builder Confidence Strong

Many times real estate market experts point to the feelings of the nation’s home builders as a bell-weather signalling the health of the housing sector.

This month’s reading indicates that home builders are feeling pretty good.

The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) for February changed by one point to 46 as compared to 47 for January’s reading. 

Over the last four months, HMI readings have stayed within a three-point range between 45 and 47, indicating a plateau after rising from 25 to 45 in 2012.

Housing Market Index Near Highest Levels Since 2006

The good news is that February’s reading remains near the HMI’s highest level since April 2006, when the HMI reading reached 51.

Some builders may be taking a wait-and-see stance in their confidence as high national unemployment rates and rising costs for building materials impact home buying ability and home prices.

Regional factors influencing builder confidence include difficulties in finding building sites and labor required for building new homes.

3 Important Categories Affect The Home Builders Index

The HMI is a seasonally-adjusted index comprised of three survey categories of home builder confidence.

Readings above 50 indicate that more builders are finding conditions good than bad within each category and overall:

  • Builder confidence in current new single-family home sales fell by one point to 51 in February, but sustained a positive rating.
  • Builder confidence in new single-family home sales over the next six months achieved a reading of 50 in February, up from 49 in January.
  • Builder confidence in foot-traffic in new single-family homes fell by four points from 36 in January to 32 in February.

February results for four regional categories consist of 3-month moving averages for new home sales: the Northeast gained 3 points to 39, The West gained 4 points to 55, the Midwest fell 2 points to 48 and the South fell by 2 points to 47.

With demand for homes increasing, home prices and mortgage rates are likely to rise during spring and summer as warmer weather brings out more potential buyers.

Check with your real estate and mortgage professional for the most updated market details in your area. 

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Over 70% Of US Metro Market Housing Markets Improve In February

February 14, 2013 by

Improving Market IndexThe National Association of Homebuilders recently released its Improving Markets Index for the month of February.

The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating “measurable and sustained growth”.

259 U.S. markets are qualified as “improving” this month, a 17-market jump from the month prior and includes participants from all 50 states as well as the District of Columbia.

Experts point to improving market conditions in at least one market in all 50 states as a strong indication that the housing recovery is gaining substantial momentum.

This increasing momentum may suggest that now may be a very good time to purchase a home.

Compared to September 2011, when there were just 12 improving metro market areas, the widespread positive movement indicates how conditions are steadily improving nationwide.

So what qualifies a market as “improving”? The NAHB uses strict criteria.

First, the group gathers data from the three separate, independent sources :

  1. Employment growth from the Bureau of Labor Statistics
  2. Housing price appreciation from Freddie Mac
  3. Single-family housing permits growth from the U.S. Census Bureau.

Next, for each of the above data sets, the National Association of Homebuilders separates for local data in each U.S. major metropolitan area.

And, lastly, armed with data, the NAHB looks for areas in which growth has occurred for all three data points for six consecutive months; and for which the most recent “bottom” is at least six months in the past.

In this way, the Improving Market Index doesn’t just measure housing market strength — it measures general economic strength.

Of the 22 markets added to the Improving Market Index in November, the following cities were included : Chico, California; Columbus, Georgia; Fort Wayne, Indiana; Topeka, Kansas; and Wenatchee, Washington.

Several markets dropped off the list, too, including Champaign, Illinois; Lebanon, Pennsylvania; and Amarillo, Texas.

The complete list of 259 metropolitan areas on February’s IMI, plus breakouts of the metropolitan areas newly added and dropped is available online at http://www.nahb.org/imi.

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Case-Shiller Index Shows Near 6% Home Price Gain

February 7, 2013 by

Case-Shiller Index November 2012Home prices continue their upward climb. 

Last week, the S&P/Case-Shiller Index showed home prices gaining 5.5 percent during the 12-month period ending November 2012, marking the largest one-year gain in home prices since May 2010.

The Case-Shiller Index measures changes in home prices by tracking same-home sales throughout 20 housing markets nationwide; and the change in sales price from sale-to-sale.

Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.

Between November 2011 and November 2012, home values rose in 19 of the 20 Case-Shiller Index markets, with previously-hard hit areas such as Phoenix, Arizona leading the national price recovery.

The Phoenix market gained 1.4% for the month and was up 22.8% for the previous 12 months combined. 

The top three monthly “gainers” for November 2012 were:

  • Phoenix, Arizona : +1.4 percent
  • San Francisco, California :  +1.4 percent
  • Minneapolis, Minnesota : +1.0 Percent

Only New York City posted annual home value depreciation. On average, homes lost -1.2% in value there.

It should be noted, however, that the Case-Shiller Index is an imperfect gauge of home values.

First, as mentioned, the index tracks changes in the detached, single-family housing market only. It specifically ignores sales of condominiums, co-ops and multi-unit homes. 

Second, the Case-Shiller Index data set is limited to just 20 U.S. cities. There are more than 3,000 cities nationwide, which illustrates that the Case-Shiller sample set is limited. 

And, lastly, the home sale price data used for the Case-Shiller Index is nearly two months behind its release date, rendering its conclusions somewhat out-of-date. 

That said, the Case-Shiller Index joins the bevy of home value trackers pointing to home price growth over the last year. The Federal Housing Finance Agency (FHFA), for example, reported similar home price growth with its November 2012 House Price Index (HPI).

Home values rose 0.6 percent between October and November 2012 nationwide, the FHFA said, and climbed 5.6 percent during the 12 months ending November 2012. 

Economists attribute increasing home prices to higher buyer demand, record-low mortgage rates and the gradual improvement of the U.S. economy.

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Pending Home Sales Post 20th Consecutive Month Of Annual Gains

January 29, 2013 by

Pending Home Sales IndexThe National Association of REALTORS® (NAR) reports that the Pending Home Sales Index fell 4.3 percent in December as compared to the month prior. The index now reads 101.7.

The Pending Home Sales Index measures the number of U.S. homes that have gone “into contract”, but have not yet closed. The report is based on data collected from local real estate associations, and from national brokers.

Despite December’s drop, however, the annual rate at which contracts for a home purchase were drawn increased 6.9 percent from one year ago, and marked the 20th consecutive month of annual purchase contract gains.

NAR reports that 80% of homes under contract are closed with 60 days, with the majority of the remained homes “sold” within months 3 and 4.

Analysts believe that December’s Pending Home Sales Index drop is not a result of a weakening housing market. Rather, it’s a function of a falling national home supply; in particular, a shortage of homes in the West Region offered a prices under $100,000.

The national housing inventory is currently at an 11-year low. However, regionally, results varied :

  • Northwest : -5.4 percent from November; +8.4 percent from one year ago
  • Midwest : +0.9 percent from November; +14.4 percent from one year ago
  • South : -4.5 percent from November; +10.1 percent from one year ago
  • West: -8.2 percent from November; -5.3 percent from one year ago

Although December’s Pending Home Sales Index dropped as compared to November, the year-to-year growth of pending home sales suggests a broader improvement in the U.S. housing market. Furthermore, the index is a strong indicator of existing home sales, which means that this season’s home sales should outpace those from 2012.

The Pending Home Sales Index is bench-marked to 100, the value from 2001, which was the index’s first year of existence. 2001 was considered a strong year for the housing market so last month’s 101.7 is considered a positive measure for the housing market.

Analysts project a strong Spring market nationwide.

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Existing Homes For Sale At Lowest Point In 11 Years

January 24, 2013 by

Existing Home SupplyHome sales dropped last month, but not because demand was lacking. There are fewer homes for sale than at any time in the last 11 years.

According to the National Association of REALTORS®, Existing Home Sales for December 2012 fell to a seasonally-adjusted, annualized rate of 4.94 million homes from November’s tally of 4.99 million existing homes.

The Existing Home Sales report is based on the number of closings for previously-owned, single-family homes, townhomes, condominiums and co-ops. It’s estimated that existing homes account for 85 to 90 percent of all home sales nationwide.

2012 was a good year for housing. Sales of existing homes climbed 12.8 percent as compared to the December 2011 tally, which may be a strong indicator of future mortgage originations and short-term demand for home-related goods.

Based on preliminary sales figures, the number of home resales in 2012 grew 9.2 percent to 4.65 million homes as compared to 4.26 million homes sold during 2011. This marks the highest number of home resales sold in 5 years — a time which predates the recession of last decade.

In addition, the median price of a homes resale read $180,800 in December, which is a 11.5 percent increase as compared to December 2011, and the tenth consecutive month of year-over-year median price growth.

Not since November 2005 has the median home resale price climbed this quickly

Furthermore, the supply of existing homes fell to 4.4 months in December, down 0.4 months from November. At the current pace of sales, the national home resale inventory will be sold by June. This is an important statistic because home supply of less than 6.0-months is thought to represent a “seller’s market”.

There are also just 1.82 million existing homes for sale nationwide — the fewest since January 2001, and a 22 percent reduction from one year ago. With buyer demand high and home inventory down, home prices are likely to rise nationwide throughout 2013.

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