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Updated: 17 min 17 sec ago

Construction Gap Improves, but Remains Wide

Mon, 09/19/2016 - 12:05

Summary:

  • Despite strong gains in 2015, sluggish construction persists
  • Supply constraints are wide spread
  • Prices are likely to continue to rise in markets with inadequate supply in relation to job creation

 

While the homeownership rate tumbled in the wake of the great recession and millions of owners shifted to rentership, the total population and number of families continued to expand along with the need to house them. Construction has been limited and focused on the upper-end of the market. Without an expansion of the total stock of homes, prices and rents will continue to rise at the expense of affordability.

In normal times the supply of homes for sale is driven by two sources: new construction and existing homes brought to the market for sale. In the aftermath of the great recession foreclosures and short sales emerged as an important channel for inventory but have receded. Negative equity and student debt now keep some owners from bringing existing stock to the market, but limited inventory also acts as a disincentive for some would-be sellers. As the market normalizes, the emphasis on traditional channels of inventory, new construction in particular, has grown.

 

The relationship between employment and construction can provide insights to the extent of the shortage.  Historically, there is a strong relationship between new construction and the number of newly employed workers.  From 1990 to 2002 the US averaged 1.2 for total permits (single family and multi-family), or 1 permit for every 1.2 new workers. For single family permits this employment-to-permits (EP) ratio was 1.6.  Both of these ratios have been above their historic averages since 2012 and peaked in 2014.[1]  The total EP ratio fell from a high of 2.3 in 2014 to 2.0 in 2015 as strong single family permits growth outpaced steady improvements in new employment. The single-family EP ratio improved as well, from 3.7 to 3.4, but remains further from its long-term average.

 

This imbalance was widespread with 81.3 percent of the 171 metro areas tracked having a single family EP ratio greater than 1.6.  Furthermore, 36.3 percent of the markets had a ratio of 4.0 or higher.  When multi-family construction was included in the total, the distribution was not as extreme, but 52.9 percent had an EP ratio of 2.0 or higher and 29.1 percent were bunched between a ratio of 2.0 and 3.0 indicating an imbalance.

Based on the EP ratio, the gap between the current level of permits and one that would achieve the historic EP ratio or strike a balance between employment and permits can be calculated.[2]  Markets with the biggest absolute shortage of permits tend to be large markets with strong employment and price growth. New York led the list followed by Dallas and San Francisco.  California dominated the top 10 list with three markets including San Jose and San Diego.

The list was also ranked by the 3-year employment to permits ratio (not pictured here).  Trenton (NJ) topped that list with a ratio of 25.1, up from 22.3 in 2014, which resulted from strong employment gains and minimal single family permitting.  Three California markets follow Trenton, but other smaller markets made the list including Springfield (MA) and two Michigan markets in Ann Arbor and Grand Rapids.  Roughly a dozen markets were in balance with ratios near 1.6 including Pensacola, Huntsville, and Columbia (MO).

Supply shortages and price growth have continued through 2016. Reports of bidding wars are common while stories of frustrated would-be home buyers abound. Construction analysts forecast continued improvement and media reports point to gains in the much needed entry-level portion of the market, but builders face headwinds from financing issues, high labor costs, regulations, and limited buildable land.  A decline in negative equity that unlocks existing inventory will help, but the only way to house an expanding workforce and population is through construction.

 

For the full list of Single Family ranking by 3-year employment-to-permits ratio please click here >

 

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[1] To remove annual volatility, a 3-year moving average was calculated.

[2] R = historical average of permits/employment ratio

Inventory balance (excess/shortage) = actual employment / R – actual permits

Market Snapshot: Second Quarter 2016

Wed, 09/14/2016 - 08:18

NAR Research produces a series of Local Market Reports (LMRs) which provide insights into the fundamentals and direction of the nation’s largest metropolitan housing markets. Each report evaluates a number of factors affecting home prices, including:

  • The health of the local job market
  • Foreclosure rates
  • Housing inventory
  • Debt-to-income and mortgage-servicing-costs-to-income ratios

 

The reports for the second quarter of 2016 were released a couple of weeks ago. The visualization below provides a snapshot of these reports. For more detailed data, please visit our Local Market Reports page.

 

 

Home Buyer and Seller Race and Ethnicity Trends

Tue, 09/13/2016 - 15:21

Since 1997, respondents of the Profile of Home Buyers and Sellers have had the option to choose as many or as few options for how they racially and ethnically identify themselves. Using this data, the ethnic and racial diversity of home buyers and sellers can be seen on a trending basis.

The initial tracking of race and ethnicity of home buyers started in 1997, and showed that among recent home buyers 90 percent identified as White/Caucasian, eight percent identified as Hispanic/Latino, five percent identified Black/African-American, four percent identified as Asian/Pacific Islander, and one percent identified as other. Skipping ahead to 2003 all race/ethnicity categories remain consistent going to 2015.  While home buyers remain predominantly White/Caucasian, the other categories each have peak highs. Between 1997 and 2015, each race/ethnicity had peak highs in the following years:

  • White/Caucasian: 1997, 90%
  • Black/African-American: 2005-2007, 7%
  • Hispanic/Latino: 1997, 8%
  • Asian/Pacific Islander: 2006, 6%
  • Other: 2003 and 2014, 3%

Looking at first-time home buyers, the race and ethnicities of non-White/Caucasian buyers is higher than among all buyers. Between 2003 and 2015, the percentage of Black/African-American and Hispanic/Latino first-time home buyers both ranged from six to 11 percent. The percentage of Asian/Pacific Islander first-time home buyers ranged from five to eight percent, and White/Caucasian first-time home buyers ranged from 73 to 80 percent. Between 2003 and 2015, first-time buyers in each race/ethnicity had peak highs in the following years:

  • White/Caucasian: 2013, 80%
  • Black/African-American: 2006, 11%
  • Hispanic/Latino: 2011, 11%
  • Asian/Pacific Islander: 2014, 8%
  • Other: 2003, 4%

 

For more trend lines from the past 35 years of the Profile of Home Buyers and Sellers, follow along using #NARHBSat35.

Settlement Delays Edge Upward

Tue, 09/13/2016 - 14:44

Delays in the time-to-close, the time from when a listing goes under contract to settlement of the deal, rose for the second consecutive month. Delays are measured by comparing the time-to-close this year with the same time frame a year earlier so as to eliminate seasonality. The average delay in time-to-close rose from 3.0 days in July to 3.9 days in August. This is the highest level of delays since January.

Compared to last year, the share of contracts closing in fewer than 30 days fell from 29.7 percent to 20.9 percent. The largest shift was to the portion of the market that takes greater than 45 days to settle, which rose from 36.4 percent to 43.7 percent.

While the jump in delays in late 2015 and lingering effects through the spring and summer were due to TRID, more recent increases are likely Brexit related. The sharp drop in mortgage rates boosted refinancing activity which taxed lenders’ ability to process transactions. Appraisal related delays may have played a role as anecdotes of limited qualified appraisers in the face of high application volume caused delays. Brexit and volume related delays will likely ebb in the weeks and months ahead leaving a better picture of the lingering regulatory-related delays the impact of the CFPB’s recent efforts to ameliorate them.

Comparison of Seasonally and Not Seasonally Adjusted Existing-Home Sales

Mon, 09/12/2016 - 13:38

One problem with interpreting data over time is that many data exhibits movements which recur during the same period each year. This is why it is normal to report in the news seasonally adjusted data figures to reveal the underlying trend in the market. The visualization above shows both seasonally and not seasonally adjusted existing home sales in the past three years. Compare the month-to-month percentage change for both types of home sales.

Taking a closer look at the percentage change from the previous month, it looks that the largest gaps between the two types occur in January and March. For instance, in January 2016, seasonally adjusted home sales increased 0.4% from December while not seasonally adjusted sales decreased 30.7%. This shows that once the seasonal influence is removed from the data, existing home sales actually increased in January.  The fact that holiday celebrations diminish home shopping in November and December that leads to fewer sales in January is one of the reasons which make seasonally adjusted figures different than not seasonally adjusted data, and with the help of seasonally adjusted data, market analysts and policy makers can avoid overreacting to seasonal fluctuations in the data. Seasoned REALTORS®, however, will know that their business normally slows down at the end and beginning of the year for seasonal reasons and will adjust their planning accordingly while new REALTORS® will benefit from reviewing trends in the unadjusted data to learn about typical busy and less busy seasons.

In contrast with January and March, these gaps between adjusted and unadjusted data are small in October and February. It seems that there is not any seasonal component in the data series in these two months. Thus, both datasets exhibit the same movements in these months.

July 2016 Housing Affordability Index

Mon, 09/12/2016 - 10:05

At the national level, housing affordability is up from a year ago for the first time since February of 2015 when it improved 2.0 percent. Mortgage rates are 3.77 this July, which is the lowest rate since June 2013 when rates fell to 3.67.

  • Housing affordability increased from a year ago in July pushing the index up 1.7 percent from 154.5 to 157.1. The median sales price for a single family home sold in July in the US was $246,000 up 5.4 percent from a year ago.
  • Nationally, mortgage rates were down 42 basis points from one year ago (one percentage point equals 100 basis points) while incomes modestly rose 2.0 percent.
  • The South had the biggest increase in price at 6.7 percent. The West had an increase of 6.0 percent while the Midwest had a 5.1 percent gain in price. The Northeast had the smallest increase of 3.5 percent.
  • Regionally, all regions saw increases in affordability from a year ago. The West had the biggest increase of 2.6 percent closely followed by the Northeast with an increase of 2.5 percent. The Midwest had a modest gain in affordability of 1.1 percent while the South had the smallest gain of 0.7 percent.
  • By region, affordability is up in all regions from last month. The Midwest (3.2 percent) had the biggest increase. The West and South each had an increase of 2.9 percent. The Northeast had the smallest increase in affordability of 0.5 percent.
  • Despite month to month changes, the most affordable region is the Midwest where the index is 194.8. The least affordable region remains the West where the index is 117.5.  For comparison, the index is 162.3 in the South, 155.4 in the Northeast.
  • Mortgage applications picked up this week and rates are historically low. Purchase mortgage applications are also currently up this week. New home sales are up but inventory is still too low to relieve the pressure of home price growth. Median family incomes continue to lag behind the pace of increasing home prices.
  • What does housing affordability look like in your market? View the full data release here.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

Twenty Five Years of Customer Satisfaction

Sun, 09/11/2016 - 22:03

Common Sense- a happy customer is a repeat customer or refers new business.  The Profile of Home Buyers and Sellers, which began 35 years ago, has been collecting information on satisfaction of an agent from the seller’s perspective since 1989 and from the buyer’s perspective since 1995. Although the basic question of customer satisfaction with their agent has evolved over the past twenty years, the definitive measure of customer satisfaction lies in the question “would you use the same real estate professional again in the future?”. In 2004, the survey question was expanded to ask if you would use the same agent again or recommend the agent to others. Throughout the past 25 years the evolution of this question has changed, but consistently two-thirds of all respondents have been satisfied with their agent.

Since collecting data on satisfaction of agent, typically 67% of buyers would definitely use the same real estate agent again or recommend the agent. Within the home seller group, satisfaction was typically measured at 65 percent.

To follow along with this series as we discuss the findings of 35 years’ worth of Profile data, check out the hashtag #NARHBSat35 on your social channels.  NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.

 

Historical Low Time on Market to Sell a Home

Wed, 09/07/2016 - 10:38

Since 1987, NAR’s Profile of Home Buyers and Sellers has tracked the number of weeks on the market a home is listed.

In 2014 and 2015, homes sold on the market at a median of four weeks. This is the shortest time homes have sold on the market in the last twenty years. In 2001, 2004, and 2005 at the height of the housing market, homes also sold within a month of being listed. The last two years—2014 and 2015—the time on market declined due to a lack of inventory for available homes.

As the market downturn began in parts of the country, the median time on market for homes started to creep up to six weeks and later to eight weeks in 2006 and 2008 respectively. More distressed homes were put on the market and there were fewer buyers, pushing the time up. By 2009, homes sold at a median of 10 weeks. This was partly attributed to the U.S. government’s cash infusion issued to first-time home buyers in the form of a tax credit, spurring more buyers into the market and pushing up demand.

In the consecutive two years in 2010 and 2011, the median weeks on market drops back down eight and nine weeks respectively as investors jumped in to snatch up cheaper properties, often competing with first-time home buyers. Time on market then hit a peak in 2012 at eleven weeks. This number falls drastically to five weeks the following year in 2013, indicating tight inventory, tight credit availability, and a lack of new construction of homes to keep up with demand.

To follow this series as we discuss the findings of 35 years of profile data, check out the hashtag #NARHBSat35 on your social channels. NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.

State Job Growth Comparisons, July 2016

Wed, 09/07/2016 - 08:53

Uses of Home Equity Loans Show Benefits of Homeowership

Tue, 09/06/2016 - 15:48

According to the Census Bureau’s latest data, the U.S. homeownership rate edged lower to 63.1 percent in the second quarter of 2016, with the homeownership rates falling across all age groups. [1] This is the lowest rate recorded since 1980, based on this quarterly survey.[2] The declining trend in homeownership is disheartening because homeownership is very much a part of the American dream. According to NAR’s 2015 Q4 HOME Survey, 87 percent of U.S. households view homeownership as part of the American Dream, and among renters,  83 percent want to own a home in the future.[3]

What are the financial benefits of homeownership? One way to answer this is to look at how homeowners use their home equity gains. According to the February 2016 Survey of Consumer Expectations of the Federal Reserve Bank of New York (FRBNY)[4], respondents who availed of a home equity loan or a line of credit used the loan for activities relating to home improvement, paying down debt, for business and financial investments, and education financing—all of which enable the current homeowner and their children to move up the economic ladder and enjoy a better quality of life. According to the latest survey, respondents used the loan for home improvement, which can add further value to the property (50.5%); to help pay down other debt such as credit card, auto loan, and medical bills (46.6%); to pay for college/education (9.7%); to make a downpayment on a second home or investment property (6.3%), to make other financial investments (5.5%) or invest in a business (1.7%).  About six percent use the equity gain for vacation or for regular living expenses, which can be viewed as “consumption spending”. However, the FRBNY survey seems to indicate that most borrowers of home equity loans or lines of credit are responsibly using home equity credit for activities that improve their long-term financial condition or that enable the homeowner to tap the money when it is needed the most (e.g., help a family member).

 

Home equity gains not only help the current homeowner, but it also appears to raise the income of homeowner’s children as adults. A study by the Federal Reserve Bank of Boston economists Dr. Daniel Cooper and Dr. Maria Jose Luengo-Prado which was presented at a REALTOR® University Speaker Series found that for every 10 percent gain in home prices, the income of homeowner’s children as adults increases by nine percent (relative to case where home prices have not increased), while the income of renters’ children as adults fall by 15 percent.[5]

The benefits of homeownership go beyond the financial aspects. In fact, according to the NAR’s 2015 Q4 HOME Survey, the primary reason for owning a property is less tied to it being a “financial investment” than as a “home” to raise a family in  a stable environment.  According to NAR’s survey, the primary reason pertains to “lifestyle considerations such as getting married, starting a family, or retiring” (35 percent of homebuyers). Another major reason is the  “desire to settle down in one location” (18 percent of homebuyers). The latter may be related to the need for parents to provide a stable environment for their children to thrive socially and academically. Indeed, there is much evidence that residential instability correlates with lower educational and social development among.[6]  “Improvement  in financial situation” was cited as the primary  reason by 15 percent of homebuyers.

In short, the dream of homeownership is one that a majority of households desire because homeownership is viewed as a way to establish and raise one’s family in a stable and safe environment. The responsible use of equity gains from homeownership provides a source of income and wealth that can enable the current homeowner and one’s children to move up the economic ladder of opportunity and success.

[1] Thanks to Danielle Hale, Managing Director, Housing Statistics, for her review of this blog. All errors are solely the author’s.

[2] The U.S. Census Bureau’s quarterly estimate of the homeownership rate based on the Current Population Survey and Housing Vacancy Survey is the widely quoted data. Other annual estimates are also available such as from the Census’s American Community Survey.

[3] National Association of REALTORS®, 2015 Q4 Housing Opportunities and Market Experience (HOME) Survey,http://www.realtor.org/reports/2015-q4-homeownership-opportunities-and-market-experience-home-survey s

[4] 2016 Survey of Consumer Expectations-Housing Survey, Federal Reserve Board of New York. https://www.newyorkfed.org/medialibrary/interactives/sce/sce/downloads/data/FRBNY_SCE_Housing_chartpacket2016.pdf

[5] Dr. Daniel Cooper’s presentation can be found at http://economistsoutlook.blogs.realtor.org/2016/08/08/house-price-growth-when-children-are-teenagers-a-path-to-higher-earnings-a-realtor-university-speaker-series-presentation/

[6] Sandstrom, Heather and Huerta, Sandra,“The Negative Effects of Instability on Child Development,” Low-Income Working Families Discussion Paper 3, Urban Institute, September 2013.

Labor Day 2016: Celebrating the work of REALTORS®

Fri, 09/02/2016 - 13:41

Looking at data from the 2016 Member Profile we recognize REALTORS® for their hard work and successes this Labor Day.

  • Sixty-five percent of REALTORS® are licensed as sales agents, 21 percent as brokers, 16 percent as broker associates, and two percent as appraisers.
  • The majority of REALTORS® specialize in residential brokerage at 73 percent, followed by commercial brokerage at two percent.
  • The typical member has been in the real estate industry for a median of 10 years, and has been at their present firm for a median of three years.
  • Ninety-six percent of REALTORS® were certain that they will remain active as a real estate professional during the next two years.
  • In 2015 the typical member had a median of 11 transactions, and a median sales volume of $1.8 million.
  • REALTORS® worked a median of 40 hours per week in 2015, with 57 percent working 40 or more hours per week.
  • Only four percent of members cite real estate as their first career, prior full-time careers include:
    • Management/Business/Financial: 16 percent
    • Sales/Retail: 16 percent
    • Office/Admin support: 9 percent
    • Education: Six percent
    • Healthcare: Five percent
    • Homemaker: Five percent
    • None, real estate is first career: Four percent
    • Construction and Government/Protective services: Three percent
  • For 74 percent of REALTORS® real estate is their only occupation. This percentage increases with experience. Eighty-six percent of members with 16 years or more of experience cited real estate as their only occupation.

View the Labor Day infographic and find out more about REALTORS® in the 2016 Member Profile.

Attic, Garage, Or Basement. Oh My!

Fri, 09/02/2016 - 10:41

Buyers come from a variety of living arrangements before purchasing a home. Some rented the space they end up purchasing, others owned their previous residence, and others lived with parents or relatives before buying.

Since 1989 the Profile of Home Buyers and Sellers has collected data on where buyers were living before buying their home. Among first-time home buyers, about three-quarters rented an apartment or house since 2003. Before 2003, it was even more common for first-time buyers to rent before buying—eight in 10 did so. One interesting trend emerges among first time buyers over the last 26 years. It became increasingly common for a first-time buyer to move into homeownership after living with a parent, relative, or friends’ home. In 1993, just 12 percent of first-time buyers moved from a relative/friend’s home into homeownership but from 2010 through 2015 that share rose to 19 percent of buyers (a high of 21 percent in 2010). Successful home buyers know, it’s a smart financial move to save their downpayment especially while living in a situation where they may not have to pay rent.

Among repeat buyers the trendline data tells a different story. More repeat buyers rented prior to buying than in the past. In 2015, the data had a new high of 27 percent of repeat buyers renting before buying their home. Sellers who had a distressed property in the past needed to rent before they could purchase another home. The increase in renting may have occurred as sellers waited during housing market uncertainty to purchase another home and tight inventory drew out that process until they were able to find the ideal home to purchase. While the trendline has steadily increased from 17 percent in 2006, the lowest share of repeat buyers renting before buying was in 1989 at 10 percent. While there is an increased share of first-time buyers who lived with relatives/friends before buying, this has also increased among repeat buyers. From 2011 to 2015, the share of repeat buyers who lived with a relative before buying was six percent, which doubled from three percent in 1993.

To follow along with this series as we discuss the findings of 35 years’ worth of Profile data, check out the hashtag #NARHBSat35 on your social channels.  NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.

Raw Count of Home Sales (July 2016)

Thu, 09/01/2016 - 11:18
  • Existing-home sales dropped 3.2 percent in July from one month prior while new home sales rose 12.4 percent.  These headline figures are seasonally adjusted figures and are reported in the news.  However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.
  • Specifically, 514,000 existing-homes were sold in July while new home sales totaled 57,000.  These raw counts represent a 12 percent decline for existing-home sales from one month prior while new home sales rose 8 percent.  What was the trend in recent years?  Sales from June to July decreased by 1 percent on average in the prior three years for existing-homes and decreased by 11 percent for new homes.  So this year, existing-homes underperformed to its recent norm while new homes sales outperformed.
  • Why are seasonally adjusted figures reported in the news?  To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production – are seasonally adjusted to account for regular events we can anticipate that have an effect on data around the same time each year.  For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of holiday gift buying activity.  Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends.  That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month.  When seasonally adjusted data say an increase, then this is implying a truly strengthening condition.
  • What to expect about home sales in the upcoming months in terms of raw counts?  Independent of headline seasonally adjusted figures, expect less activity in August and even slower activity in September for existing-home sales. For example, in the past 3 years, August sales were unchanged or decreased by 3 to 9 percent from July while in September sales decreased by 7 to 18 percent from August. For the new home sales market, the raw sales activity for both months is very volatile. For example, in the past 3 years, August sales dropped by 5 to 6 percent in 2013 and 2015 while it increased 3 percent in 2014. Similarly, September sales were unchanged in 2013 while they increased by 3 percent in 2014 and decreased by 15 percent in 2015. 

Raw Count of Home Sales (July 2016)

Thu, 09/01/2016 - 11:14
  • Existing-home sales dropped 3.2 percent in July from one month prior while new home sales rose 12.4 percent.  These headline figures are seasonally adjusted figures and are reported in the news.  However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.
  • Specifically, 514,000 existing-homes were sold in July while new home sales totaled 57,000.  These raw counts represent a 12 percent decline for existing-home sales from one month prior while new home sales rose 8 percent.  What was the trend in recent years?  Sales from June to July decreased by 1 percent on average in the prior three years for existing-homes and decreased by 11 percent for new homes.  So this year, existing-homes underperformed to its recent norm while new homes sales outperformed.
  • Why are seasonally adjusted figures reported in the news?  To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production – are seasonally adjusted to account for regular events we can anticipate that have an effect on data around the same time each year.  For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of holiday gift buying activity.  Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends.  That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month.  When seasonally adjusted data say an increase, then this is implying a truly strengthening condition.
  • What to expect about home sales in the upcoming months in terms of raw counts?  Independent of headline seasonally adjusted figures, expect less activity in August and even slower activity in September for existing-home sales. For example, in the past 3 years, August sales were unchanged or decreased by 3 to 9 percent from July while in September sales decreased by 7 to 18 percent from August. For the new home sales market, the raw sales activity for both months is very volatile. For example, in the past 3 years, August sales dropped by 5 to 6 percent in 2013 and 2015 while it increased 3 percent in 2014. Similarly, September sales were unchanged in 2013 while they increased by 3 percent in 2014 and decreased by 15 percent in 2015. 

July Pending Home Sales

Thu, 09/01/2016 - 10:56
  • NAR released a summary of pending home sales data showing that July’s pending home sales are up 1.3 percent bouncing back from last month and also improved 1.4 percent from a year ago.
  • Pending sales are homes that have a signed contract to purchase on them but have yet to close. They tend to lead existing-home sales data by 1 to 2 months.
  • All regions showed increases from a year ago except the Midwest, which had a decline of 1.1 percent. The West saw the biggest gain from a year ago at 6.2 percent while the South had the smallest gain of 0.4 percent. The Northeast had a gain of 1.1 percent.
  • From last month, the West had the largest incline at 7.3 percent. The South and the Northeast both shared a modest gain of 0.8 percent. The only region to experience a decline was the Midwest, which had a decline of 2.9 perfect from last month.
  • The pending home sales index level was 111.3 for the US, making it the second-highest level in 2016, behind April’s record 115.0.
  • The 100 level is based on a 2001 benchmark and is consistent with a healthy market and existing home sales above the 5 million mark.

All the Single Ladies

Tue, 08/30/2016 - 15:28

Since 1981, single females have been second only to married couples in the home buying market. When the Profile of Home Buyers and Sellers started 35 years ago, 11 percent of home buyers were single females. The share of single females rose to a peak of 22 percent in 2006 and in 2015 was at 15 percent.

In comparison, single male buyers have been between 6 and 12 percent with no consistent trend. Since 2012, single male buyers have been 9 percent of recent home buyers. Married couples had a peak of 81 percent of buyers in 1985, but in have dropped to 67 percent of all buyers in 2015.

The single female share likely fell as there was more competition from investors and vacation buyers in the market, who were competing for similar square footage size and type of home. Single females also have a high share of first-time home buyers, which also fell in recent years.

While single female buyers are buying homes while making lower household incomes than single males, 48 percent of married couples and unmarried couples made financial sacrifices to get into a home of their own.

Single females typically purchased for the desire to own a home of their own (37 percent) or because of a change in their family situation (12 percent). When they purchase a home, convenience to friends and family is more important to single females than other types of buyers. Twenty percent of single females have children under the age of 18 in their home compared to 45 percent of married couples, 28 percent of unmarried couples, and 14 percent of single males.

To follow along with this series as we discuss the findings of 35 years’ worth of Profile data, check out the hashtag #NARHBSat35 on your social channels.  NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.

July 2016 Existing-Home Sales

Mon, 08/29/2016 - 11:18
  • NAR released a summary of existing-home sales data showing that housing market activity had its first year over year decline since November 2015. July’s existing-home sales slipped to the 5.39 million seasonally adjusted annual rate and existing-home sales are down 1.6 percent from a year ago.
  •  The national median existing-home price for all housing types was $244,100 in July, up 5.3 percent from a year ago.
  • Regionally, all four regions showed growth in prices from a year ago, with the South leading at 6.6 percent. The West had an increase of 6.4 percent, and the Midwest followed with a 5.0 percent increase. The Northeast had the smallest gain of 3.3 percent from July 2015.
  • From June, three regions experienced declines in sales with the West being the only region to have an increase of 2.5 percent. The Northeast had the biggest regional dip in sales with decline of 13.2 percent. The Midwest had a decline of 5.2 percent while the sales in the South declined 1.8 percent.
  • All regions showed a dip in sales from a year ago except the Midwest where sales remained flat. The Northeast had the biggest drop of 5.7 percent followed by the South with a decline of 1.8 percent. The West had the smallest drop of 0.8 percent. The South leads all regions in percentage of national sales at 41.2 percent while the Northeast has the smallest share at 12.2 percent.
  • July’s inventory figures are slightly up 0.9 percent from last month to 2.13 million homes for sale and the level is below historical averages. Inventories are down 5.8 percent from a year ago. It will take 4.7 months to move the current level of inventory at the current sales pace. It takes approximately 36 days for a home to go from listing to a contract in the current housing market, but down from 42 days a year ago.
  • Single family sales decreased 2.0 percent while condos also had a more significant decline of 12.3 percent compared to last month. Single family home sales declined 0.8 percent and condo sales are also down 8.1 percent from a year ago. Both single family and condos had an increase in price with single family up 5.4 percent and condos up 4.1 percent from July 2015.

Demographic Trend Lines in Housing: Exciting? Yes! Here’s Why

Fri, 08/26/2016 - 09:22

This year the Profile of Home Buyers and Sellers will hit its 35 year birthday.  A lot can happen in 35 years!  The benefit to collecting home buyer and seller data for 35 years is that demographic changes become explicitly apparent in time series exhibits. The other benefit is when data remains relatively flat, you can quickly see that as well.  The median age of home buyers has both: flat data and data changes.  Let’s take a look at what that means.

Taking the change first, the median age of repeat buyers (those who owned a home in the past and are buying another home) has increased, nearly every year, for the last 35 years. In 1981, the first year the data was collected, the median age of a repeat buyer was just 36 years old. In 2015, the median age of a repeat buyer was 53 years old.

Why is that? A couple of factors could be behind the increase in age. Longer life spans have allowed more retirees to enjoy retirement, but also to move longer distances, and purchase a new home in a new area—closer to friends and family or closer to lifestyle considerations such as recreation and health facilities. Additionally, using our Profile data, we can also see that the tenure in the home is longer than in the past, so trading up to the next home is happening at a later age.

As for first-time home buyers, there has been a lot of discussion recently among analysts and the media about the typical millennial (born 1980-1995) delaying marriage, delaying child rearing, and delaying the move out of a parent’s home and into one of their own. While delays in these milestone events is happening among millennials, for those who can manage to overcome numerous hurdles (student loan debt, stagnant wage growth, affordability constraints, and tight credit to name a few) and buy a home, it’s happening at the same age as past generations. Increasingly today, when first-time buyers do buy a home they don’t feel like they have to wait until marriage. Forty-four percent of first-time buyers in 2015 were not married, compared to 32 percent in 1981. With the exception of one year’s worth of data (1993) the median age of home buyers has remained steady between 28 and 32 years of age. A boring trend line of data in that it remains relatively flat, but a meaningful one.

To follow along with this series as we discuss the findings of 35 years’ worth of Profile data, check out the hashtag #NARHBSat35 on your social channels.  NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.

Vacancies Decline in REALTORS®’ CRE Markets

Fri, 08/26/2016 - 08:24

Commercial fundamentals in REALTORS®’ markets continued gaining strength during the second quarter of 2016. Based on NAR’s Commercial Real Estate Market Trends report, leasing activity advanced.

With demand for commercial space rising, developers have taken note and ramped up construction. New commercial construction mirrored the broader economic slowdown, posting a 5.3 percent gain from the prior quarter. However, demand continues to outpace the supply pipeline, leading to rising occupancy.

Vacancy rates continued declining, ranging from a low of 5.0 percent for apartments to a high of 13.2 percent for hotel properties. Office vacancies declined 365 basis points year-over-year, to 12.3 percent.  Industrial availability witnessed a yearly decrease of 95 basis points—to 9.8 percent. Retail vacancies slid 70 basis points on a yearly basis, to 11.8 percent. With declining vacancies, lease concessions declined 5.5 percent.

 

 

To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.

35th Anniversary for the Profile of Home Buyers and Sellers

Thu, 08/25/2016 - 11:15

On October 31st, NAR will release the 2016 Profile of Home Buyers and Sellers. NAR has been producing this survey research report since 1981. To mark the 35th year of publication, we will be highlighting some of the key trends gleaned from the Profile series with new infographics and trendlines.

The report has grown and evolved with changing home buying trends and the need for more information. The 1981 survey was just 59 questions long. The 2016 survey contained 132 questions. Although the report has evolved, data has been collected for more than three decades describing the demographic characteristics of home buyers and sellers, buyers and sellers experience in the home transaction process as well as market characteristics including the use of real estate agents. One measure of how the market has changed is the manner in which the data is collected. In 1981 only a paper copy of the survey was offered. Today recent home buyers can take the survey via paper or online, and in English or Spanish. Because of its long history and timely information available each year, the report is valued by REALTORS®, market analysts and policymakers.

Data is collected from a nationally representative sample of recent home buyers who purchased a primary residence in the 12-month period between July and June. Data is also representative of the geographic distribution of home sales. Consumer names are obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records.

Today the data set provides such a wealth of data that it is used to create a number of “spin-off” reports including: Home Buyer and Seller Generational Trends Report, Recent Home Buyer Profiles, Profile of Home Buyers and Sellers in Sub-regions, Real Estate in a Digital Age, Veterans and Active Military Home Buyers and Sellers Profile, and Moving with Kids.

To jump start the anniversary we begin with a trendline collected since 1981 showing the method sellers uses to sell their home. Today there is an overwhelming use of real estate agents in the home selling transaction. In 2015, a high of 89 percent of sellers opted to sell their home with the help of a real estate agent. Just eight percent of sellers sold via FSBO—the lowest share recorded since 1981.

Follow along with new content for the anniversary with the hashtag #NARHBSat35.

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