Category: Residential

Pending home sales spike a record 44.3% in May, as homebuyers rush back into the market

Pending home sales spiked a stunning 44.3% in May compared with April, according to the National Association of Realtors.

That is the largest one-month jump in the history of the survey, which dates to 2001. It beat expectations of a 15% gain. Sales were still 5.1% lower compared with May 2019, however.

Pending sales measure signed contracts on existing homes, so it shows that buyers were out shopping during the month of May. Sales had fallen 22% for the month in April, as the economy shut down to slow the spread of the coronavirus.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

The market, however, still needs more supply, Yun noted. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

The supply of existing homes for sale at the end of May was nearly 19% lower annually, according to the NAR. Single-family housing starts in May were not as strong as expected, although building permits, a measure of future construction, did gain some steam.

The supply of homes is still extremely low, but is improving in some markets. Active listings were up by more than 10% for the month in San Francisco, Denver and Colorado Springs, as well as Honolulu.

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Housing market should ‘cool off’ later in year, Moody’s economist Zandi says

“The confluence of high unemployment and the end of the forbearance measures means that we’ll get more defaults and ultimately more foreclosures, more foreclosure sales, and that’ll put some weakness into the housing market,” economist Mark Zandi said on “Power Lunch.”

The housing sector has been one of the most resilient areas of the economy during the coronavirus downturn, but Mark Zandi, chief economist at Moody’s Analytics, said Tuesday that he expects the growth to moderate later in the year.

Sales of new homes last month rose nearly 13% year over year, according to the Census Bureau. But Zandi said the sector will weaken as some of the government aid and regulations used to prop up the economy expire.

“The confluence of high unemployment and the end of the forbearance measures means that we’ll get more defaults and ultimately more foreclosures, more foreclosure sales, and that’ll put some weakness into the housing market,” he said on CNBC’s “Power Lunch.”

Millions of homeowners have taken advantage of forbearance programs that allow borrowers to miss mortgage payments, helping to insulate the housing market from a historic rise in unemployment.

Meanwhile, concerns about the coronavirus have sparked increased interest for homes in suburban and rural areas, according to real estate firms, leading to demand outstripping supply. More construction, particularly in the lower and middle areas of the price distribution, is needed to help the supply issues, Zandi said.

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Homebuilder sentiment posts biggest monthly surge ever, a sign housing is rebounding from coronavirus

Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index.

A faster-than-expected turnaround in homebuyer demand, following a sharp drop-off at the start of the coronavirus pandemic, has the nation’s homebuilders bullish on their business again.

Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30.

“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon, a homebuilder and developer from Shrewsbury, New Jersey. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.”

Meanwhile, mortgage applications to purchase a newly built home jumped 10.9% annually in May, according to the Mortgage Bankers Association.

Of the homebuilder index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43. This last component was surprising, given how many builders reported more online inquiries and virtual tours during the pandemic.

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Coronavirus will shrink US home prices by 2-3% nationally, Zillow forecasts, but deeper dive could be in store

Home prices have only fallen nationally once since the Great Depression, and that was following the subprime mortgage crisis and the Great Recession. Now, barely eight years after hitting bottom, and after a mighty recovery, prices are predicted to fall nationally again, down 2-3% this year, according to Zillow.

The real estate listing company notes that it is basing its forecast on proprietary data and a baseline prediction of a 4.9% decrease in U.S. GDP in 2020 and a subsequent 5.7% increase in 2021.

It also predicts a very fast 50-60% decline in home sales, which would bottom by the end of this spring and recover at a pace of about 10% each month through 2021.

“Housing fundamentals are strong — much more so than they were leading into the Great Recession — and that bodes well for housing in general,” said Svenja Gudell, Zillow’s chief economist. “Despite the difficulties, we’re seeing several signs that there is still a good amount of demand for housing, and buyers, sellers and agents are growing more comfortable moving transactions forward where possible.”

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Only 50% of Americans believe it’s a good time to buy a home, an all-time low, Gallup poll says

People are more pessimistic about the housing market due to the coronavirus pandemic and its economic fallout

Americans have quickly soured on the prospects of the nation’s real-estate market as the coronavirus pandemic has swept the country.

Only 50% of Americans said that now is a good time to buy a home, according to a survey of roughly 1,000 people released Friday by polling firm Gallup. That represents the lowest share of Americans to have a positive view on the country’s housing market in the time that Gallup has tracked people’s sentiments on real estate.

A year ago, 61% of Americans thought it was a good time to buy, while 36% said they believed it wasn’t. The previous low was set back in 2006 when only 52% of Americans thought it was a good time to buy amid the subprime mortgage-fueled housing bubble. Gallup began tracking American’s feelings on the housing market periodically back in the 1970s and has polled on this question annually since 2003.

Additionally, only 40% of Americans think that the average price of a home where they live will increase over the next year, down from 62% a year ago, despite some economists predicting that home prices will continue to rise, even amid the economic disruptions caused by the coronavirus pandemic.

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Top 10 ZIPs with the Highest Foreclosure Rates in Q1 2020

ATTOM Data Solutions’ newly released Q1 2020 U.S. Foreclosure Market Report reveals that foreclosure activity in the first quarter of 2020 was below pre-recession averages for 61 percent of U.S. housing markets (134 out of the 220) with a population greater than 200,000.

The areas named in this category were Denver, Colorado (89 percent below); Detroit, Michigan (80 percent below); Las Vegas, Nevada (80 percent below); Dallas-Fort Worth (79 percent below); and Indianapolis, Indiana (78 percent below). The analysis also noted other major markets with Q1 2020 foreclosure activity below pre-recession averages included Sacramento, San Francisco, San Jose, Memphis and Grand Rapids.

ATTOM’s latest foreclosure market report shows there were 156,253 U.S. properties with a foreclosure filing in Q1 2020. That number is up 42 percent from Q4 2019, but down 3 percent from Q1 2019.

According to the report, nationwide one in every 873 U.S. housing units had a foreclosure filing in Q1 2020. States with the highest foreclosure rates in in Q1 2020 were New Jersey (one in 406 housing units with a foreclosure filing); Delaware (one in 433); Illinois (one in 448); Maryland (one in 583); and Florida (one in 628).

The report also stated that among 220 metro areas with a population of at least 200,000, those with the highest foreclosure rates in the first quarter of 2020 were Trenton, New Jersey (one in every 286 housing units); Atlantic City, New Jersey (one in 293); Rockford, Illinois (one in 296); Lake Havasu City, Arizona (one in 331); and Peoria, Illinois (one in 351).

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Demand for rural homes shows ‘profound, psychological change’ due to coronavirus, Redfin CEO says

There has been a “flip” to demand in rural areas and away from cities, Redfin CEO Glenn Kelman said.

The CEO of real estate brokerage Redfin said Friday that demand for homes has shifted to rural areas as people react to the coronavirus pandemic and look to move out of dense urban areas.

“We have seen that people are more interested in that house at the foot of the mountains by the lake,” Glenn Kelman said on CNBC’s “Closing Bell.” “Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city. We’ll see how it comes back, but there seems to be a profound, psychological change among consumers who are looking for houses.”

The coronavirus pandemic has led to ballooning unemployment in the United States, and construction has paused in many cities across the country. Governors in many states, including in the northeastern part of the country, have extended their orders for staying at home into mid-May.

There has not been a big drop in home prices, Kelman said, because new listings have declined more than demand from buyers. Kelman said buying demand is down about 20%, but listing demand is down about 60%, which has kept prices from falling.

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How Will COVID-19 Lockdowns Hit The Housing Market? It Gets A Little Clearer

Actual data for U.S. homes sold after the lockdowns began will not be available for a while, and everyone is grappling with preliminary indications of just how ugly this is going to get.

“In May, what market? I don’t see no market”

Realtor

The “combined COVID-19 and oil shock” are going to do a number on the U.S. housing market, Fannie Mae warned in its monthly report on Wednesday. Actual data for homes sold after the lockdowns began will not be available for a while, and everyone is grappling with preliminary indications of just how ugly this is going to get.

The Home Purchase Sentiment Index (HPSI) plunged 11.7 points in March to 80.8, the largest single-month drop in the data, Fannie Mae said, “reflecting quickly diminishing homebuyer sentiment.”

A survey conducted by the National Association of Realtors in the first week of April, cited by Fannie Mae, showed that 90% of the responding realtors reported declining buyer interest, with half of them reporting declines of over 50%.

Contract signings in early April plunged by about 35% to 40% from a year ago, Fannie Mae estimated, based on Google Trends data.

Existing home sales will plunge 34% in the second quarter, to an annualized rate of 3.76 million homes, it said, “a sales pace similar to the lowest quarters of the Great Recession.”

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U.S. housing market is missing 3.3 million homes, Freddie Mac says

The shortage increases by about 300,000 a year as homebuilding lags

America’s housing market is undersupplied by 3.3 million units, and the shortage is getting worse every year, Freddie Mac said in a report on Friday.

“New housing supply is not keeping up with rising demand,” said Sam Khater, Freddie Mac’s chief economist, who said the shortage is increasing by about 300,000 units a year as homebuilders fail to keep up with demand.

Oregon is the most under-supplied state, followed by Colorado, Florida, and California, Khater said. The next two states are a bit of a surprise: Minnesota and Texas, where land shortages are not an issue.

“More than half of all states have a housing shortage, and the shortage is no longer concentrated in coastal markets but is spreading to the middle of the country in more affordable states like Texas and Minnesota,” Khater said.

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U.S. home prices rise 3.8% in December

Phoenix reports highest year-over-year gains in December

U.S. home prices increased 3.8% in December from a year earlier, a faster pace than the prior month’s 3.5%, according to S&P CoreLogic Case-Shiller National Home Price Index.

Measuring the nation’s largest urban areas, the 20-City composite index rose 2.9% in December from a year ago, faster than November’s 2.5% pace, according to the report issued on Tuesday.

Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said the housing market continued its trend of stable growth in December.

“At the national level, home prices are 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak,” Lazzara said.

According to the index, Phoenix; Charlotte, North Carolina; and Tampa reported the highest year-over-year gains among all of the 20 cities.

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