Dec 22, 2011 | Housing Analysis
Home resales moved to a 10-month high in November, the latest in a series of strong showings from the housing sector.
According to the National Association of REALTORS®, November’s Existing Home Sales rose to a seasonally-adjusted, annualized 4.42 million units nationwide — a 4 percent climb from October 2011.
An “existing home” is a home that has been previously occupied and cannot be categorized as new construction.
Home buyers and sellers throughout Massachusetts should take note of November’s numbers because — behind the headlines — there’s a series of statistics that foretell higher home prices ahead.
First, the total number of homes for sale nationwide dipped to 2.58 million, an 18% reduction from November 2010 and represents the fewest number of homes for sale since February 2007.
At the current sales pace, the complete home resale inventory would be sold in 7.0 months.
And, second, the real estate trade group reports that 33% of all homes under contract “failed” for some reason last month.
Contract failures can occur because of mortgage denials in underwriting; home inspection issues; and homes appraising for less than their respective purchase prices.
In other words, despite a reduction in the number of homes for sale, and a rash of failed contracts, Existing Home Sales volume is still on the rise.
Broken-down by buyer-type, here’s to whom home sellers were selling in November :
- First-time buyers : 35% of home resales, up from 34% in October 2011
- Repeat buyers : 46% of home resales, down from 48% in October 2011
- Investor buyers : 19% of home resales, up from 18% in October 2011
Given high demand for home resales and shrinking home supplies, we should expect that home prices will rise through December 2011 and into early-2012, at least. Recent Housing Starts data supports this notion.
Thankfully, mortgage rates remain low. Low mortgage rates help keep homes affordable.
Dec 21, 2011 | Housing Analysis
The new construction housing market continues to show strength across the country.
According to the U.S. Census Bureau, Single-Family Housing Starts rose to 447,000 units on a seasonally-adjusted, annualized basis in November — a 2 percent increase from October.
A “Housing Start” is defined as breaking ground on new home construction.
November’s figures mark the third straight month of Single-Family Housing Starts gains. The new construction metric is now 15 percent above its all-time low, set in February of this year.
None of this should be a surprise to new home buyers in Fitchburg.
Housing data has been trending better since September with sales volumes rising and home inventories falling. Basic economics tells us that home prices should soon rise.
The good news is that low mortgage rates should keep homes affordable.
Since mid-November, the average, conventional 30-year fixed rate mortgage has hovered near 4.000% nationwide with an accompanying 0.7 discount points plus closing costs. 1 discount point equals one percent of your loan size. This is down from near 4.500% six months ago, and the drop has made a big impact on home affordability.
- June 2011 : $200,000 mortgage costs $1,013.37 per month
- December 2011 : $200,000 mortgage costs $954.83 per month
This represents $700 in savings per year. It’s no wonder home builders report the highest buyer foot traffic in 3 years.
Meanwhile, the market shows little signs of slowing down. Building Permits are on the rise, too.
Permits for single-family homes rose to their highest levels of year in November and 89 percent of those homes will start construction within 60 days. This means that Single-Family Housing Starts should stay strong through the early part of 2012, and into the spring.
If you’re planning to buy new construction in Massachusetts , therefore, talk to your real estate agent soon and consider moving up your time frame. With mortgage rates low and next year’s buying season approaching, you may find that the best “deals” will come within the next few weeks only.
Nov 18, 2011 | Housing Analysis
Another day, another signal that the market for newly-built homes is improving.
Single-Family Housing Starts rose to a seasonally-adjusted, annualized 430,000 units in October — a 4 percent increase from September and the highest reading in 3 months.
A “Housing Start” is a home on which ground has been broken.
The increase in surprised Wall Street analysts, although it shouldn’t have.
Earlier this week, the National Association of Homebuilders showed that Homebuilder Confidence is at its highest point since May 2010, the effect of better market conditions and more sold units. Rising housing starts amid a lift in builder confidence is to be expected — the two metrics have moved with loose correlation since mid-2000.
However, as with everything in real estate, Single-Family Housing Starts volume varied by location. The nation’s 4 regions posted wide-ranging results :
- Northeast Region : + 10.0% from September
- Midwest Region : -4.1% from September
- South Region : +11.3% from September
- West Region : -10.2% from September
Buyers of new construction in Fitchburg, Leominster area can infer two key points from last month’s data. (more…)
Oct 20, 2011 | Housing Analysis
Headlines in newspapers can be misleading — especially with respect to housing figures. Media coverage of the most recent Housing Starts data serves as an excellent illustration.
Wednesday, the Census Bureau released its September Housing Starts report. In it, the government said that national Housing Starts rose 15 percent in September as compared to August 2011, tallying 658,000 units on a seasonally-adjusted annualized basis.
The September reading is the highest monthly reading since April 2010, the last month of last year’s home buyer tax credit.
The sudden surge in starts is big news for a housing market that has struggled of late, and the press was eager to carry the story. Here is a sampling of some headlines:
- U.S. Housing Starts Rise 15%, Hit 17-Month High (MarketWatch)
- Home Building Jumps 15% in September (ABC)
- New Construction Surges In September (LA Times)
These headlines are each accurate. However, they’re also misleading.
Yes, Housing Starts did surge in September, but if we remove the “5 or more units” grouping from the Census Bureau data — the catgory that includes apartment buildings and condominium structures — we’re left with Single-Family Housing Starts and Single-Family Housing Starts rose just 1.7 percent last month. (more…)
Sep 23, 2011 | Housing Analysis
Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.
A “Housing Start” is defined as a home on which ground has broken.
We shouldn’t put too much faith in the findings, however. Although housing starts were lower last month, as noted by the Census Bureau, the margin of error in the August Housing Starts report exceeded the actual result.
From the official report:
- August’s Published Results : -1.4% from July
- August’s Margin of Error : ±10.3% from July
Therefore, August’s Housing Starts may have actually increased by up to +8.9% from July, or it may have dropped as much as -11.7%. We won’t know for sure until several months from now, after the Census Bureau has gathered more housing data.
One thing is certain, though — the long-term trend in Housing Starts is “flat”. There has been little change in new home construction since last summer.
The same can’t be said for Building Permits.
Considered a pre-cursor to Housing Starts, Single Family Building Permits climbed 2.5 percent with a minuscule Margin of Error of ±0.9 percent.
As is common in real estate, results varied by region: (more…)
