Pending home sales up for second straight month

Pending home sales rose for the second straight month in June, according to the National Association of Realtors. Each of the four major US regions posted month-over-month growth, and the Northeast was the only region not to record increases in year-over-year pending home sales.

NAR’s pending Home Sales Index (PHSI) rose 16.6% to 116.1 in June. Contract signings rose 6.3% year over year. A PHSI reading of 100 is equal to the level of contract activity in 2001.

“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, chief economist for NAR. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum-liquidity monetary policy.”

Due to the apparent housing-market turnaround, NAR has raised its forecast for the market. For all of 2020, existing-home sales are now expected to decline by only 3%, with sales hitting 5.6 million by Q4. New home sales are expected to rise by 3%.

Yun predicted that positive GDP growth of 4% in 2021 will boost both existing and new home sales. He projected sales to grow by 7% and 16%, respectively. Mortgage rates are expected to stay near 3% for the next 18 months, and home prices are predicted to appreciate 4% in 2020 before moderating to 3% in 2021 as new supply hits the market.

Regional breakdown

The Northeast PHSI rose by 54.4% to 95.4 in June, but was still 0.9% lower than the same time last year. The Midwest index rose 12.2% to 110.9, up 5.1% from June 2019.

The South PHSI rose 11.9% to 140.3, up 10.3% year over year. The index in the West rose 11.7% to 99.6, up 4.7% from June 2019.

“The Northeast’s strong bounce-back comes after a lengthier lockdown, while the South has consistently outperformed the rest of the country,” Yun said. “These remarkable rebounds speak to exceptionally high buyer demand.”

Yun did warn, however, that the cost of materials could stifle construction growth.

“While the outlook is promising, sharply rising lumber prices are concerning,” he said.

“A reduction in tariffs – even if temporary – would help increase home building and thereby spur faster economic growth.”

Source: Mortgage Professional America 7-31-20 Author: Ryan Smith

Homeownership hits highest level in over a decade

Homeownership hit a level unseen since the Great Recession, according to new U.S. Census data, with the share of American households owning homes reaching 67.9% during the second quarter.

That’s up from 64.1% in the same quarter last year and up from 65.3% in the first three months of the year, attaining the highest homeownership rate since the third quarter of 2008. Prior to that, homeownership hovered above 69% for a large part of 2004, before heading into a long, steady descent that finally culminated in a trough during mid-2016.

The favorable interest rate environment has helped, enticing many would-be home buyers to make purchasing moves despite the pandemic apparently holding several others back from taking the plunge. Part of the increase may also be attributed to a change in data collection methodology brought about by the COVID-19 pandemic; with the risk of coronavirus infection high, door-to-door in-person interviews were suspended for the duration of the second quarter, replaced with telephone interview attempts when contact information was available.

The homeownership increase was broad-based, seen across households of diverse age groups, incomes, ethnicities and races. Black homeownership climbed quarterly from 44.0% to 47.0%, the highest homeownership rate for African Americans since 2008. It’s a sharp turnaround from just four quarters ago, when the homeownership rate for Black households, at 40.6%, was the lowest on record.

The Hispanic demographic, too, saw homeownership grow 2.5 percentage points quarterly and 4.8 percentage points yearly to reach 51.4%, the highest level since 1994.

Geographically, homeownership rate rose the most in the South, climbing 3.5 percentage points quarterly and 5.1 percentage points annually to reach 71.1%. The Midwest had the highest homeownership rate among all regions at 71.4%, up 2.2 percentage points from the first quarter and 3.4 percentage points from the second quarter of 2019. The Northeast’s homeownership rate was 63.3%, up 0.9 points quarterly and 1.1 points yearly, while the West had a homeownership rate of 62.6%, up 2.5 points quarterly and 3.3 points annually.

The national vacancy rate during the second quarter was 0.9%, down from 1.1% in the first quarter and 1.3% in the second quarter of 2019.

Source: Scotsmans Guide 7-28-2020 Author: Arnie Aurellano

Numbers of Prospective Homebuyers on the Upswing

The economic tumult generated by the COVID-19 pandemic isn't slowing the pursuit of homeownership according to the National Association of Homebuilders’ (NAHB) Housing Trends Report covering the second quarter of this year.

The new report, which polled 19,800 adults between June 16–28, found 11% of respondents considering a future home purchase. Within that percentage, 49% stated they were actively engaged in the homebuying process, up from a 41% share one year earlier.

Among the millennials within the respondent base, 57% said they were already actively searching for a home. In comparison, only 37% of baby boomers said they were currently looking for residential property. On a regional measurement, there was a higher percentage of prospective buyers in the Northeast (57%) versus the South (50%), West (45%), and Midwest (44%).

During the second quarter of this year, 59% of the buyers actively engaged in the purchase process said they spent three months or more looking for a property to buy, compared to 55% one year earlier. The second quarter marked the sixth consecutive year-over-year gain in the share of active buyers that allocated three months or more in search of a home to buy.

“The timing of the data collection for this report is important, as results need to be interpreted in the larger context of the US economy and the trajectory of new case counts at the time,” said Rose Quint, AVP for Survey Research at the NAHB.

“In June, the labor market showed signs of recovery, gaining 4.8 million jobs and a lower unemployment rate. The 30-year fixed mortgage rate continued to fall, reaching 3.13% by the last week of the month. The number of COVID cases nationally were stable through the first half of the month, only beginning their ascent around June 15.”

Quint added that the input from respondents to the survey reflected “a period when workers were returning to their jobs, mortgage rates looked increasingly attractive, and the pace of new cases had only recently started to regain speed.”

But what happens if the house hunt turns up empty? The NAHB survey found 19% of active buyers who failed to buy a home will give up on their search until next year or later—an increase from the 16% share recorded one year ago. When asked what they’ll do next if still unable to find a home in the next few months, roughly of the active buyers said they would continue looking in their preferred location, while 37% said they will expand their search area, 21% would accept a smaller or older home, and 19% would opt to buy a more expensive home.

Source: MReport 7-29-2020 Author: Phil Hall