Inventory said to be holding back sales
According to the National Association of Realtors (NAR), there is a really good news, really bad news scenario regarding existing home sales (completed transactions) for May – existing home sales declined 1.5 percent for the month, but NAR points to tight inventory levels holding back closings. The trade association reports that sales maintained a strong lead (up 9.6 percent) over May 2011 levels, adding that home prices are on a “sustained uptrend in all regions.”
Dr. Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. “The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring,” he said.
“Even with the monthly decline,” Dr. Yun added, “home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier.”
The inventory slide and housing’s recovery
NAR reports that total housing inventory at the end of May slipped 0.4 percent to a 6.6 month supply at the current sales pace, while listed inventory is 20.4 percent below a year ago when there was a 9.1 month supply. Unsold inventory has trended down from a record 4.04 million in July 2007, and supplies reached a cyclical peak of 12.1 months in July 2010.
Dr. Yun interprets the data to mean that “The recovery is occurring despite excessively tight credit conditions and higher downpayment requirements, which are negating the impact of record high affordability conditions.”
Low mortgage rates, rising home prices
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to a record low 3.80 percent in May from 3.91 percent in April; the rate was 4.64 percent in May 2011; recordkeeping began in 1971.
The national median existing-home price for all housing types rose 7.9 percent to $182,600 in May from a year ago, the third consecutive month of year over year price gains. The NAR reports that the last time there were three back-to-back price increases from the same month a year earlier was from March to May of 2006.
“Some of the price gain results from a shrinking share distressed homes in the sales mix,” Dr. Yun explained. Distressed homes accounted for one in four sales in May (15 percent foreclosures, 10 percent short sales), down 3.0 percent for the month, and 6.0 percent for the year. Foreclosures sold for an average discount of 19 percent below market value in May, while short sales were discounted an average of 14 percent.
Prices up, but sales are slipping
First-time buyers accounted for 34 percent of purchasers in May, down 1.0 percent for the month and 2.0 percent for the year. All-cash sales fell 1.0 percent for the month to 28 percent, down 2.0 percent for the year.
Single-family home sales slipped 1.0 percent for the month, but are 10.4 percent May 2011 with the new median existing single-family home price hitting $182,900 in May, up 7.7 percent from a year ago.
Existing condominium and co-op sales fell 5.7 percent in April, but are 4.2 percent higher than one year ago. The median existing condo price was $180,000 in May, fully 8.8 percent above May 2011.
NAR reports that investors, who account for the majority of cash transactions purchased 17 percent of homes in May, down from 20 percent in April and 19 percent in May 2011. “These figures reflect a modest increase in traditional repeat home buyers in May,” Dr. Yun said.
Regional performances varied
NAR is reporting widespread inventory shortages in lower price ranges across all regions except the Northeast, adding that the West has tight supply in all price ranges except for the top price points. “Realtors® in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property,” Dr. Yun added.
Existing-home sales in the Northeast fell 4.8 percent to an annual level of 590,000 in May but are 7.3 percent higher than May 2011. The median price in the Northeast was $250,700, up 3.8 percent from a year ago.
Existing-home sales in the Midwest rose 1.0 percent in May to a pace of 1.04 million and are 19.5 percent above a year ago. The median price in the Midwest was $147,700, up 6.4 percent from May 2011.
In the South, existing-home sales slipped 0.6 percent to an annual level of 1.78 million in May but are 9.2 percent higher May 2011. The median price in the South was $159,700, up 7.8 percent from a year ago.
Existing-home sales in the West declined 3.4 percent to an annual pace of 1.14 million in May but are 3.6 percent above a year ago. The median price in the West was $233,900, up 13.4 percent from May 2011.
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Boomers retirement may be the true reason behind the labor shortage
(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.
In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.
Why Boomers are leaving the labor force
CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:
- Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
- The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
- Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.
As Boomers retire, how does this impact the overall labor economy?
According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.
Is the real estate industry endorsing Carson’s nomination to HUD?
(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?
NAR strongly backs Dr. Carson’s nomination
When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”
At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?
The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.
In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…
Job openings hit 14-year high, signaling economic improvement
The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.
Job openings hit a high point
To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.
The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.
Good news, bad news, depending on your profession
That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.
Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.
If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.
If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.
Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.
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