Is more affordable housing on the horizon? – Real Estate Market News

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Market blue update

If you follow the housing market closely, you can understand that the market is ripe for a slight correction. You can see the evidence in the data, which we’ll look at later. But for a general overview, let’s move on to the Big Story.

Big story

To understand why house prices may level out or decline slightly in the near future, just look at recent data on new and existing home sales. Let’s start with where the prices are now.

IN average price of an existing house according to the National Association of REALTORS® in May was $ 350,300. This is a new all-time high and is 23.6% higher than May 2020 prices. When considering new home sales average selling price grew by 18.1% over the same period last year and amounted to $ 374,400.

These numbers are not entirely different from other indices. Case-Shiller Home Price Index Rises 14.9% per annum… Meanwhile, a separate FHFA-backed home sales index shows prices have risen by a record 15.7% since April last year.

So why do I think this is ready for moderation? Simple economics. Sales are falling. Sales of existing homes were down 0.9% last month. In terms of new homes, sales fell 5.9%. It is true that some of this has to do with supply. Due to the lack of available options, people can wait to find a suitable home.

But this is gradually becoming less of an issue in the new domestic market, where supply is 4.8 months compared to current sales. This is 2.5 months ahead of the proposal for existing homes. Start of construction of new houses increased by 50.3% for the same time last year.

Second, mortgage rates, although still quite attractive, have started to rise slightly. The more upward pressure on rates, the more downward pressure you will see on people’s home buying budgets. Prices can’t go up forever.

More news you can use

As always, analysis from Econodayone used to compose this part of the report.

Consumer Price Index (CPI)

Consumer prices are up 0.6% in May and 5% since May last year. Of greatest interest to this audience, however, will be the fact that the housing index rose 0.3%, with a 0.2% increase in both rents and homeowners’ equivalent rents, at what it would cost a homeowner to rent a comparable unit.

Retail sales

Retail sales fell 1.3% in May, mainly due to non-allocation of stimulus this month and a decline in unemployment checks to aid the pandemic. However, of particular interest may be caused by the fact that sales of building materials fell by 5.9% in May. This may indicate a slowdown in the pace of renovation or construction of houses.

Housing Market Index

In June, builders’ confidence in the housing market eased slightly, dropping 2 points to 81. Each of the components also fell 2 points, with current sales reaching 86, sales stabilizing at 79 over the next 6 months and potential traffic. buyers are viewing homes at 71. Overall, the report continues to point to a hot market.

New residential construction

Moving from direct impact on delivery to the most further, we start with completion. They were down 4.1% to 1.368 million. However, this is 16.1% more than a year ago. The number of completed single-family homes declined 2.6% to 1.004 million, while the number of completed homes with five or more apartments fell to 387,000.

The number of launches increased by 3.6% compared to the previous month and amounted to 1.572 million, which is 15.3% higher than a year ago. For single-family businesses, the number of start-ups was 1.098 million, with 465,000 multi-family starts.

Finally, the number of building permits fell 3% in May to 1.681 million, 34.9% higher than last year. The number of permits for one family in May was 1.13 million, down 1.6%. Finally, 494,000 apartment building permits were issued.

Sale of existing homes

Seasonally adjusted home sales in the secondary market were 5.8 million per year, down 0.9% from the month, but up 44.6% on the year. To be honest, there weren’t many home purchases last May.

As noted earlier, the supply is extremely limited in 2.5 months compared to current business and sales. Meanwhile, selling prices remain high. You will want to be patient with your clients.

Sale of new homes

New home sales were down 5.9% from an annualized level of 769,000 in May. As mentioned earlier, prices are currently quite high at $ 374,400 – and that’s the median. This is 18.1% more than a year earlier. The good news is that supply is up 14,000 to 330,000, and overall, this is much better than the 4.8-month sales of existing homes compared to the current pace.

Gross Domestic Product (GDP)

Total GDP grew 6.4% in first quarter final reading. Economic growth was fueled by an 11.4% increase in consumer spending.

An interesting statistic of the housing business is that in terms of real GDP, investment in housing has grown by 12.9% over last year.

Case-Shiller Home Price Index

On a seasonally adjusted basis, home prices in this index for 20 cities rose 1.6%, a 3-month average. Overall, prices are up 2.1% and 14.9% since April last year.

FHFA House Price Index

In general, prices for this index in April rose by 1.8%. Unlike Case-Shiller, these prices are based on any average and only regular credits count. The increase since April last year was 15.7%.

Consumer confidence

Consumer confidence rose 7.3 points in June to a new pandemic peak of 127.3. Those of us in real estate will also be delighted to know that plans to buy a home have been increased.

Pending Home Sales Index

Incomplete home sales rose 8% to 114.7. This is a great sign for the June and July sales figures for existing homes because it represents the number of contract homes for sale, most of which will be closed in the future.

Mortgage loan rates

Although they have risen slightly recently, mortgage rates are still very good and, according to Freddie Mac, they were still below 3% last week for a 30-year fixed mortgage. However, they cannot stay low forever. When your customers are ready, encourage them to take advantage.

Paying 0.6 pips in fees and dropping 20%, the average rate on a 30-year fixed mortgage was 2.98%, down 4 basis points over the week and down from 3.07% a year ago.

The average rate on a 15-year fixed mortgage with a 0.7-point payment and the same down payment was 2.26%, down 8 basis points over the week and down from 2.56% last year.

Finally, the average rate on a 5-year Treasury Indexed Adjustable Rate Hybrid (ARM) with 0.3 pts paid and a 20% down payment rose to 2.54%. This is below 3% last year.

Now that you have the knowledge you need, go out and amaze your customers. Do you want more confidence through the transparency of your clients’ credit process? Subscribe to Rocket ProSM In sight Today!

one Important Legal Notice: Econoday has tried to verify the information contained in this calendar. However, any aspect of such information is subject to change without notice. Econoday does not provide investment advice, nor does it represent or warrant that any information is accurate or complete at any time. Copyright 2021 Econoday, Inc. All rights reserved.

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