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Real Estate Big Data

With housing demand so high, why are sales stagnant?

(REAL ESTATE NEWS) The housing market is on fire, yet some serious constraints are holding back sales levels – let’s discuss.

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housing optimism

If you have a pulse and are on the internet, you already know that the housing market is white hot, with bidding wars in more cities than ever. So why in the world are home sales stagnating?

Pending home sales rose only 0.4 percent in March, according to the National Association of Realtors’ (NAR’s) Pending Home Sales Index (PHSI), decreasing 3.0 percent on an annualized basis – the third consecutive month of annual dips.

Despite a strong economy, NAR points yet again to “unrelenting inventory constraints” which they recently said would only be relieved by builders stepping up production, more homeowners putting their home on the market, and/or investors releasing inventory.

NAR’s Chief Economist, Dr. Lawrence Yun says contract activity is moving sideways and not breaking higher despite the strong job-creating economy.

“Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” said Dr. Yun.

He continued, “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”

Dr. Yun forecasts that existing home sales will hit 5.61 million this year (up slightly from 5.51 million last year), also forecasting the national median home price will rise 4.4 percent.

He notes that affordability and availability are holding back home sales, combined with price appreciation outpacing incomes, and mortgage rates rising, sales will soon peak.

“Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,” said Yun. “That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers – especially first-time buyers – will be left on the sidelines.”

This story originally published on April 30, 2018.

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Real Estate Big Data

Yet more confusing news concerning pending home sales

(REAL ESTATE BIG DATA) Pending home sales numbers are just as confusing of a tell of the flow of the market right now as actual home sales. What can we expect later?

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pending home sales

So the country is in a constant shifting landscape of information, with some of it seeming to contradict each other. Just yesterday I wrote about how home sales actually increased in April in the midst of COVID-19 confusion, but here I am again to inform about a drop in pending home sales. I have to keep you on your toes, because like I said yesterday, humans are experts in adapting and being confusing.

The National Association of Realtors (NAR) has studied massive quantities of data every month to track the real estate market since starting way back in 2001, and this month set a record for the greatest decline in contract signings since then. Year-over-year it fell 33.8% to an index of 100, this means compared to last month they fell 21.8%.

Dr. Lawrence Yun, NAR’s chief economist said of the pending home sales decline, “With nearly all states under stay-at-home orders in April, it is no surprise to see the markedly reduced activity in signing contracts for home purchases.”

But he also has high hopes because of many factors coming up saying “In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

This optimistic view comes from Flash Surveys the NAR conduct to find what Realtors are experiencing, and 34% reported successfully completing almost all aspects of transactions while following social distancing.

People still want homes, and Coronavirus isn’t going to stop some people. Especially if it’s moving to more rural parts of the country where in the South and the Midwest the decline was only 15.4% and 15.9% respectively, as compared to the West which dropped 20% and a whopping 48.2% in the Northeast.

Yun also is surprised by the data from time to time, “Given the surprising resiliency of the housing market in the midst of the pandemic, the outlook for the remainder of the year has been upgraded for both home sales and prices, with home sales to decline by only 11% in 2020 with the median home price projected to increase by 4%, In the prior forecast, sales were expected to fall by 15% and there was no increase in home price.”

So all in all even if pending sales decreased, prices fall, but also inventory drops, it’s easy to say the future holds – question mark?

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Real Estate Big Data

April home sales shows how confusing we are as people

(REAL ESTATE BIG DATA) April home sales have shown some interesting figures, and could be indicative of humans or COVID-19, we’re still not sure which.

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April home sales

If humans have a couple of giant, recognizable traits, one would be adaptability, and the other would be being confusing. Regardless of the circumstances surrounding COVID-19 April home sales defied conventional logic, and our understanding of sales history.

Having 2 months of solid lock down, and not a predictable end in sight, one would expect all industries, especially housing, to start crumbling and possibly collapse. Who would want to risk going outside, and looking at someone else’s home when there’s a virus running rampant? Also keeping in mind that at any moment you could be told you no longer have a job, so couldn’t get a new home anyway. Why take that risk?

The turn of many realtors and associations towards tech, and virtual showings must have made a major impact because April home sales actually increased .6%. That may not seem like much, but we need silver linings where we can find them. This small increase could be the result of a few different things that maybe we can capitalize on.

Home sales

First for the sake of safety, some people such as chief investment officer at Bleakley Advisory Group, Peter Bookvar think people are trying to get out of the large city centers, and head to rural areas. Not only for better social distancing to steer clear of the Coronavirus, but homes and land are cheaper.

Speaking of cheaper homes, the overall median home price dropped from $339,000 in April of last year to $309,000 this year. Knowing you have to pay a whole car less this year might incentivize you into that new home. Plus with inventory dropping from 331,000 in March to 325,000 in April, homes are running out pretty fast.

Even as the inventory quickly dissipates, newly constructed homes are still out there making up 1 in 5 sales which is up from 1 in 6 last year. Sure the number of homes being constructed and listed have slowed 13%, but not as drastically as existing home listings dropping 36.3%

As far as locations of the homes being sold, the South dominates with an increase of 4.7% in sales, while the others dropped 26.5% in the Northeast and Midwest, and 33.5% for the West.

We see a ton of ups and downs in all different sectors of the housing industry, without a lot of correlation between any of it. But home sales are up this month, and that’s something to be happy about.

Basically COVID-19, instead of throwing a wrench into the gears, added a couple of new ones we’re still trying to figure out. I guess keep your head up, and be as positive as possible; regardless of how confusing the markets, and we as people are, we can also adapt and be stronger in the end.

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Real Estate Big Data

Time to fake gasp: Housing starts plummeted in April

(REAL ESTATE NEWS) The global pandemic has hard hit several sectors, and new home construction is one of them (to no one’s surprise).

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housing starts + construction

COVID-19 has hit the housing market, to literally no one’s surprise. Housing starts plummeted 30.2% in April as our globe struggled with how to social distance and survive an economic shut down. Home building activity hit a five-year low, according to the U.S. Commerce Department.

Compared to April 2019, housing starts dipped 29.7% across all four regions, despite many states allowing builder activity to continue as “essential” during stay-at-home orders sidelined many. During the same period, permits for housing fell 21%.

Starts didn’t fall for lack of trying, rather supply chain interruptions that we suspect will continue into the summer during this adjustment phase of reopening the economy.

May will likely continue the trend of restricted building activity. Most economists expect a widespread contraction in the second quarter. Housing alone isn’t braced for impact, rather combining that with a hit to the gross domestic product (GDP) as consumer spending and business investment continue to retract.

One silver lining is that despite this negative news, new home construction didn’t decline nearly as sharply as various other sectors of the American economy, a hopeful sign for the market.

Further, on the “relatively low level of single family starts and completions,” the The Calculated Risk blog calls this period the “wide bottom,” as they forecast “following the recession, and now I expect some further increases in single family starts and completions once the crisis abates.”

So take a big deep breath and fake gasp at the fake shock you’re feeling about housing starts slowing in April. And get ready to do it again in four weeks about May, then again in June. We’re not at the bottom, nor are we nearing it, and the market is changing, but no one is surprised that as the global pandemic hits the global economy, there will be ripples throughout every sector.

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