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NEW-HOME PURCHASE APPS SLUMP AS BUILDERS REMAIN CONSTRAINED
June, as usual, was a slowdown month for new home purchases as the spring sales season wound down. Here's Mortgage Professional America on how much:
New-home purchase applications declined on year-over-year and month-over-month bases in June, indicating continued challenges for builders, according to Builder Applications Survey data released by the Mortgage Bankers Association (MBA).
Applications decreased 8.8% compared to June 2017 and slumped 12% from the May level. The monthly change does not include any adjustment for typical seasonal patterns.
"Applications for new-home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5% relative to the first six months of 2017. Our sense is that builders remain constrained by the tight job market for construction labor and rising input costs, particularly lumber costs," said Mike Fratantoni, chief economist and senior vice president of research and industry technology at MBA.
BEST CITIES FOR 1ST-TIME HOME BUYERS
WalletHub was out Monday with its latest ranking of cities that are best for first-time home buyers, and, not surprisingly, it finds that the nation's biggest cities are not high on the list.
WalletHub compared 300 cities of varying sizes across 27 key indicators of market attractiveness, affordability and quality of life. Broken Arrow, Oklahoma (on the outskirts of Tulsa for the uninitiated) tops the list, followed by Tampa; Centennial, Colorado; Boise; and Grand Rapids, Michigan.
REALTOR.COM REPORTS HIGHEST MEDIAN LISTING PRICE EVER
U.S. homes sold in just 54 days on average in June and the median listing price hit $299,000, setting records as the nation's inventory of active home listings continued to decline year-over-year in June, according to the realtor.com® June 2018 monthly housing trend report.
Limited options, fast selling properties and escalating home prices have been a persistent challenge for would-be buyers and June data largely shows more of the same. The inventory of homes for sale in the U.S. grew 4% in June over May, representing a typical seasonal increase. On an annual basis, inventory decreased 4%, a slower rate than the 8% average decrease in the previous 12 months. Approximately 547,000 new listings appeared on realtor.com® in June, 2% higher than a year ago. This provided some relief to tight inventory conditions despite new listings dipping 2% lower than May 2018.
Listings on realtor.com® sold in just 54 days on average, six days less (10% faster) than last June and one day less than May. Of the top 100 markets, there are six in which listings spent 30 days or less on the market on average:
San Jose-Sunnyvale-Santa Clara, Calif.: 23 days on market
Seattle-Tacoma-Bellevue, Wash.: 24 days on market
San Francisco-Oakland-Hayward, Calif.: 25 days on market
Omaha-Council Bluffs, Neb.: 26 days on market
Salt Lake City, Utah: 26 days on market
Colorado Springs, Colo.: 30 days on market
"The pace of sales in the early days of summer continues to be as fierce and unforgiving as it's ever been, especially for entry-level buyers," said Javier Vivas, director of economic research for realtor.com®. "On the bright side, buyers saw more new listings hit the market than they saw last June, causing inventory to drop at a slower rate. However, much of the new inventory is composed of higher-priced, newer and larger homes, forcing a very hungry pool of buyers to adjust their budgets."
The median listing price of $299,000 is t
SINGLE-FAMILY RENTAL COMPANIES ARE COZYING UP TO HOME BUILDERS
The burgeoning single-family rental business, shut out of much of the housing market by a lack of inventory, is now eyeing new-home stock for the product it needs. Curbed reports:
Single-family rental (SFR) companies such as Invitation Homes and American Homes 4 Rent got their start by buying houses out of foreclosure in bulk after the housing collapse 10 years ago. But with housing inventory shortages breaking out across the country over the last few years, it’s gotten harder for SFR companies to add to their rental stock. To get around this, SFR companies are beginning to buy homes directly from the source—home builders.
SFR companies’ need for new housing inventory has led to their increasingly cozy relationship with home builders, one that‘s also contributing to a rise in “built-to-rent” housing, where a home builder sells a house directly to an entity that intends to rent it.
While the scale of built-to-rent activity is still relatively small and mostly casual, there are already signs that more formal partnerships or mergers between SFR companies and home builders are on the horizon. There are also new companies that build entire single-family subdivisions with the express purpose of renting the units themselves.
LUMBER WHACKS BUILDER CONFIDENCE
Builder confidence took it on the chin--with a two-by-four--this month, falling 2 points to 68 in June on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
Why? In a word, lumber.
"The decline was due in large part to sharply elevated lumber prices, although sentiment remains on solid footing," the NAHB stated in its news release.
“Builders are optimistic about housing market conditions as consumer demand continues to grow,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.”
“Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead,” said NAHB Chief Economist Robert Dietz. “However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”
All three HMI indexes inched down a single point in June. The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57 while the West and Midwest remained unchanged at 76 and 65, respectively. The South fell one point to 71.
April New Home Sales Inch Down 1.5 Percent, Stay Close to Post-Recession High
May 23, 2018
Sales of newly built, single-family homes edged down 1.5 percent in April to a seasonally adjusted annual rate of 662,000 units after a downwardly revised March report, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Even with this minor dip, new home sales continue to trend upward and reflect builders’ overall confidence in the market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Builders are optimistic that more prospective buyers will enter the market in the months ahead.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 662,000 units is the number of homes that would sell if this pace continued for the next 12 months.
“With job growth, rising incomes and overall economic strengthening, we can expect housing demand to continue to grow, particularly among millennials and other newcomers to the market,” said NAHB Senior Economist Michael Neal. “However, builders need to manage rising construction costs as well as regulatory hurdles to keep their homes competitively priced.”
Regionally, new home sales rose 11.1 percent in the Northeast and 0.3 percent in the South. Sales remained unchanged in the Midwest and dropped 7.9 percent in the West after a very strong March reading.
The inventory of new home sales for sale was 300,000 in April, which is a 5.4-month supply at the current sales pace. The median sales price of new houses sold was $312,400.
Multifamily Builders and Developers Remain Positive about the Apartment and Condo Market as Demand Continues
May 24, 2018
Confidence in the multifamily housing market remained positive in the first quarter of 2018, according to the Multifamily Production Index (MPI) and the Multifamily Vacancy Index (MVI) released today by the National Association of Home Builders (NAHB). The MPI remained unchanged from last quarter, coming in at a reading of 53, while the MVI remained essentially unchanged at 42.
The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units—apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units—apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units edged down two points to 54, while the component measuring market rate rental units increased two points to 56 and the component measuring for-sale units remained even at 49.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained essentially unchanged with an increase of one point to 42. The MVI is a weighted average of current occupancy indexes for class A, B, and C multifamily units, and can vary from 0 to 100, where any number over 50 indicates more property managers report more vacant apartments. A reading of 42 is seen as a healthy number for the multifamily market.
“Multifamily builders and developers are reporting solid demand around the country, as shown in the vacancy rate for the first quarter,” said Steve Lawson, president of The Lawson Companies in Virginia Beach, Va., and