Summer is here and the opportunity to capture the boomer market and their families are in play. What are your amenities…do you offer overnight packages, renowned restaurants, walking and biking trails, historic sites and cultural events? All are attractive to potential retirees as it gives them a fantastic experience and a feel for your community. Begin to capture their hearts by showing off your area as a destination and a place to call home!
Fuel Up for Retiree Recruitment at our annual conference, November 7-9 in Daytona Beach, Florida. Early bird registration is now open so be sure to check out the details at www.AARCConference.org. The AARC continues to be your resource in the retiree attraction market!
Rachel Baker Chair, The AARC
Pending Home Sales Inch Back 0.5 Percent in May
National Association of Realtors | June 27, 2018
WASHINGTON (June 27, 2018) – Pending home sales decreased modestly in May and have now fallen on an annualized basis for the fifth straight month, according to the National Association of Realtors®. A larger decline in contract activity in the South offset gains in the Northeast, Midwest and West.
The Pending Home Sales Index,* www.nar.realtor/pending-home-sales, a forward-looking indicator based on contract signings, decreased 0.5 percent to 105.9 in May from 106.4 in April.
Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. “Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” he said. “Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”
The lackluster spring, according to Yun, has primarily been a supply issue, and not one of weakening demand. If the recent slowdown in activity were because buyer interest is waning, price growth would start slowing, inventory would begin rising and homes would stay on the market longer. Instead, the underlying closing data in May showed that home price gains are still outpacing income growth, inventory declined on an annual basis for the 36th consecutive month, and listings typically went under contract in just over three weeks1.
“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high,” added Yun. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”
Yun now forecasts for existing-home sales in 2018 to decrease 0.4 percent to 5.49 million – down from 5.51 million in 2017. The national median existing-home price is expected to increase around 5.0 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.7 percent.
The PHSI in the Northeast increased 2.0 percent to 92.4 in May, but is still 4.8 percent below a year ago. In the Midwest the index rose 2.9 percent to 101.4 in May, but is still 2.5 percent lower than May 2017.
Pending home sales in the South declined 3.5 percent to an index of 122.9 in May (unchanged from a year ago). The index in the West inched forward 0.6 percent in May to 94.7, but is 4.1 percent below a year ago.
The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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1 According to NAR’s May Realtors® Confidence Index, properties typically stayed on the market for 26 days in May.
* The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: NAR’s June Housing Minute video will be released on June 29, Existing-Home Sales for June will be reported July 23, and the next Pending Home Sales Index will be July 30; all release times are 10:00 a.m. ET.
US housing starts total 1.35 million in May, vs 1.31 million starts expected
Reuters/CNBC | June 19, 2018
- U.S. homebuilding surged to near an 11-year high in May.
- May saw an acceleration in both single-family and multi-family home construction.
- But a second straight monthly drop in permits suggested housing market activity will remain moderate.
U.S. homebuilding surged to near an 11-year high in May amid an acceleration in both single-family and multi-family home construction, but a second straight monthly drop in permits suggested housing market activity will remain moderate.
Housing starts jumped 5.0 percent to a seasonally adjusted annual rate of 1.350 million units last month, the Commerce Department said on Tuesday. That was the highest level since July 2007. Data for April was revised slightly to show starts falling to a rate of 1.286 million units instead of the previously reported pace of 1.287 million units.
Building permits fell 4.6 percent to a rate of 1.301 million units, the lowest level since September 2017. Economists polled by Reuters had forecast housing starts rising to a pace of 1.310 million units last month and permits declining to a rate of 1.350 million units.
Single-family homebuilding, which accounts for the largest share of the housing market, increased 3.9 percent to a rate of 936,000 units last month.
Single-family home construction rose in the Northeast and Midwest, but fell in the South and West. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.
A survey on Monday showed confidence among single-family homebuilders dipped in June, with builders “increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability.” According to the survey, the expensive lumber had “added nearly $9,000 to the price of a new single-family home since January 2017.”
The Trump administration in April 2017 imposed anti-subsidy duties on imports of Canadian softwood lumber. More expensive lumber together with a lack of land and labor have worsened an acute shortage of homes for sale, hobbling the housing market.
Residential investment contracted in the first quarter. The housing market continues to lag overall economic growth, which appears to be accelerating in the second quarter after hitting a speed bump at the start of the year.
Starts for the volatile multi-family housing segment rebounded 7.5 percent to a rate of 414,000 units in May. Permits for the construction of multi-family homes fell 8.8 percent to a pace of 457,000 units.
- Rates are on the move higher again, and that caused mortgage application volume to drop 1.5 percent last week.
- Volume was 15.4 percent lower than a year ago, according to the Mortgage Bankers Association.
- Refinance volume turned back to bleeding, down 2 percent for the week and off nearly 34 percent from a year ago.
The mortgage market found some new energy for a few weeks, when interest rates suddenly dropped, but it was remarkably short-lived.
Rates are on the move higher again, and that caused mortgage application volume to drop 1.5 percent last week from the previous week and 15.4 percent than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted report.
Refinance volume, which saw a significant gain the previous week, turned back to bleeding, down 2 percent for the week and off nearly 34 percent from a year ago, when interest rates were lower. Refinance demand is most sensitive to even the smallest moves in interest rates.
“Despite lingering uncertainty over a potential trade war, investors moved away from Treasurys, pushing yields up for the week,” said Joel Kan, an MBA economist. “Overall mortgage application activity declined as rates rose, but government applications increased, driven largely by increases in FHA applications, reflecting stronger demand by first-time homebuyers.”
FHA, the federal insurance entity that backs home loans, allows for down payments as low as 3.5 percent. First-time homebuyers have been struggling to find affordable homes, as housing continues in a supply crisis. The FHA share of total applications increased to 10.6 percent from 9.7 percent the week before.
The severe shortage of homes for sale is more of an issue for homebuyers than interest rates and continues to weaken purchase demand. Mortgage applications to buy a home fell two percent for the week and were 0.2 percent lower than the same week one year ago. Purchase applications have largely been higher on a year-over-year basis, so this drop could signal more weakness ahead.
Home prices continue to rise, and the gains in some market are getting bigger, as supply falls. More homes came on the market for the spring season, but they were quickly bought up by hungry buyers, often in bidding wars. Homes are spending less and less time on the market, meaning buyers have less time to secure financing, especially if they need more than they expected.
Mortgage rates are now sitting near seven-year highs again, but that could change swiftly on upcoming economic news. The policymaking Federal Open Market Committee is expected to raise its lending interest rate on Wednesday afternoon, but comments from members could move mortgage rates as well.
“The Fed announcement could push rates quickly higher or lower in the afternoon. Less than 24 hours later, the European Central Bank is out with their own hotly anticipated policy update,” said Matthew Graham, chief operating officer of Mortgage News Daily. “In both cases, investors aren’t wondering about rate hikes (we already know the Fed will and the ECB won’t). Rather, it’s the accompanying details that run the risk of causing significant volatility for rates.”