CNBC
"The 30-year fixed mortgage rate just hit 8% for the first time since 2000 as Treasury yields soar"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED WED, OCT 18 2023
KEY POINTS
* The average rate on the popular 30-year fixed mortgage rate hit 8% Wednesday morning.
* Yields on U.S. Treasurys are soaring.
* Higher mortgage rates have caused applications to plummet.
The average rate on the popular 30-year fixed mortgage rate hit 8% Wednesday morning, according to Mortgage News Daily.
That is the highest level since mid-2000.
The milestone came as bond yields soar to levels not seen since 2007.
Mortgage rates follow loosely the yield on the 10-year U.S. Treasury.
Rates rose sharply this week and last week, as investors digest more reads on the economy.
On Wednesday, it was housing starts, which rose in September, though not as much as expected, according to the U.S. Census Bureau.
Building permits, an indicator of future construction, fell, but by a less than the expected amount.
Last week, retail sales came in far higher than expected, creating more uncertainty over the Federal Reserve’s long-term plan.
These higher rates have caused mortgage demand to plummet, as applications fell nearly 7% last week from the previous week, according to the Mortgage Bankers Association.
“Here’s another milestone that seemed extreme several short months ago,” said Matthew Graham, chief operating officer of Mortgage News Daily.
“The fact is that many borrowers have already seen rates over 8%."
"That said, many borrowers are still seeing rates in the 7s due to buydowns and discount points.”
The homebuilders are using buydowns to help customers afford their homes.
They do this through their mortgage subsidiaries.
While they had used the financing tool very sparingly in the past, it is now the top incentive among builders, according to industry sources.
“Although our mortgage company has been offering slightly below market rate loans most of this cycle (just to be competitive), the full point buydown for the 30-year life of the loan we’ve been referring to recently as a builder incentive is not something we had done in previous cycles, at least not on the broad, majority basis we are doing so today."
"You might have found it on select homes in the past on an extremely limited basis,” said a spokesperson from D.R. Horton, the nation’s largest homebuilder.
The average rate on the 30-year fixed was as low as 3% just two years ago.
To put it in perspective, a buyer purchasing a $400,000 home with a 20% down payment would have a monthly payment today of nearly $1,000 more than it would have been two years ago.
https://www.cnbc.com/2023/10/18/30-year ... -2000.html
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"US single-family starts rise; soaring mortgage rates a challenge"
By Lucia Mutikani
October 18, 2023
Summary
* Housing starts increase 7.0% in September
* Single-family starts rise 3.2%; multi-family soar 17.1%
* Building permits fall 4.4%; single-family increase 1.8%
WASHINGTON, Oct 18 (Reuters) - U.S. single-family homebuilding rebounded in September, boosted by demand for new construction amid an acute housing shortage, but the highest mortgage rates in nearly 23 years could slow momentum and delay the overall housing market recovery.
That was flagged by other data on Wednesday showing applications for loans to purchase a home plunged last week to levels last seen in 1995.
In addition, the jump in housing starts partially recouped the decline in August.
The rebound in homebuilding probably reflected permits approved several months ago before mortgage rates broke above 7%.
A survey this week showed confidence among single-family homebuilders slumped to a nine-month low in October, with builders reporting lower levels of traffic.
"In the very short-term, single-family construction activity is likely to increase with permits rising in every month of 2023 thus far, but at some point mortgage rates are likely to put a lid on new construction activity for home purchase," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Single-family housing starts, which account for the bulk of homebuilding, increased 3.2% to a seasonally adjusted annual rate of 963,000 units last month, the Commerce Department said.
Data for August was revised to show starts dropping to a rate of 933,000 units instead of 941,000 units as previously reported.
Single-family starts rose in the Midwest, West and the densely populated South, but plunged 19.0% in the Northeast.
The housing market had shown signs of stabilizing before mortgage rates resumed their upward trend late in the summer, with the rate on the popular 30-year fixed mortgage vaulting above 7% in August.
According to the Mortgage Bankers Association, the average contract interest rate on a 30-year fixed-rate mortgage rose 3 basis points to 7.70% last week, the highest since November 2000.
Mortgage rates have risen in tandem with the yield on the benchmark 10-year Treasury note, which has spiked to more than a 16-year high, mostly because of expectations that the Federal Reserve will keep interest rates higher for longer in response to the economy's resilience.
Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
Residential investment has contracted for nine straight quarters, the longest such stretch since the housing market bubble burst, triggering the 2008 global financial crisis and the Great Recession.
That downturn probably extended into the third quarter, though overall gross domestic product growth last quarter was likely the fastest since late 2021, thanks to a tight labor market that is underpinning consumer spending.
Stocks on Wall Street were trading lower amid mounting tensions in the Middle East.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell, with the yield on the 10-year bond rising to the highest level since July 2007.
BUILDING PERMITS MIXED
Financial markets expect the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group's FedWatch Tool, given the surge in Treasury yields.
Starts for housing projects with five units or more soared 17.1% to a rate of 383,000 units in September.
Overall housing starts accelerated 7.0% to a rate of 1.358 million units in September.
Economists polled by Reuters had forecast starts rebounding to a rate of 1.380 million units.
Permits for future construction of single-family homes rose 1.8% to a rate of 965,000 units, the highest since May 2022.
Though permits are a leading indicator, economists cautioned against being too optimistic about homebuilding prospects, citing the soaring mortgage rates and souring builder sentiment.
"It's not lights out for homebuilding, but we don't know how many more body blows with the Fed's interest-rate hammer the nation's housing sector can withstand," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Multi-family building permits dropped 14.0% to a rate of 459,000, the lowest level since October 2020.
Building permits as a whole declined 4.4% to a rate of 1.473 million units.
The number of houses approved for construction that are yet to be started rose 0.7% to 281,000 units.
The single-family homebuilding backlog was unchanged at 142,000 units, while the completions rate for this segment increased 5.3% to 998,000 units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge the inventory gap.
The number of housing under construction dropped 0.7% to a rate of 1.676 million units.
The inventory of single-family housing under construction declined 0.7% to a rate of 674,000 units, the lowest level since May 2021.
The stock of multi-family housing under construction slipped 0.7% to 986,000 units, still near record highs.
That together with the decline in permits suggested limited scope for further groundbreaking on new multi-family housing projects.
"The under-construction pipeline remains extremely elevated relative to historical averages, suggesting that a backlog of inventory will be coming to market in the next few months and years," said Colin Johanson, an economist at Barclays in New York.
"This backlog, once in the market, could help alleviate price pressures, although this remains to be seen until the under-construction number begins to show consistent declines."
Reporting by Lucia Mutikani; Additional reporting by Dan Burns; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-s ... 023-10-18/
"US single-family starts rise; soaring mortgage rates a challenge"
By Lucia Mutikani
October 18, 2023
Summary
* Housing starts increase 7.0% in September
* Single-family starts rise 3.2%; multi-family soar 17.1%
* Building permits fall 4.4%; single-family increase 1.8%
WASHINGTON, Oct 18 (Reuters) - U.S. single-family homebuilding rebounded in September, boosted by demand for new construction amid an acute housing shortage, but the highest mortgage rates in nearly 23 years could slow momentum and delay the overall housing market recovery.
That was flagged by other data on Wednesday showing applications for loans to purchase a home plunged last week to levels last seen in 1995.
In addition, the jump in housing starts partially recouped the decline in August.
The rebound in homebuilding probably reflected permits approved several months ago before mortgage rates broke above 7%.
A survey this week showed confidence among single-family homebuilders slumped to a nine-month low in October, with builders reporting lower levels of traffic.
"In the very short-term, single-family construction activity is likely to increase with permits rising in every month of 2023 thus far, but at some point mortgage rates are likely to put a lid on new construction activity for home purchase," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Single-family housing starts, which account for the bulk of homebuilding, increased 3.2% to a seasonally adjusted annual rate of 963,000 units last month, the Commerce Department said.
Data for August was revised to show starts dropping to a rate of 933,000 units instead of 941,000 units as previously reported.
Single-family starts rose in the Midwest, West and the densely populated South, but plunged 19.0% in the Northeast.
The housing market had shown signs of stabilizing before mortgage rates resumed their upward trend late in the summer, with the rate on the popular 30-year fixed mortgage vaulting above 7% in August.
According to the Mortgage Bankers Association, the average contract interest rate on a 30-year fixed-rate mortgage rose 3 basis points to 7.70% last week, the highest since November 2000.
Mortgage rates have risen in tandem with the yield on the benchmark 10-year Treasury note, which has spiked to more than a 16-year high, mostly because of expectations that the Federal Reserve will keep interest rates higher for longer in response to the economy's resilience.
Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
Residential investment has contracted for nine straight quarters, the longest such stretch since the housing market bubble burst, triggering the 2008 global financial crisis and the Great Recession.
That downturn probably extended into the third quarter, though overall gross domestic product growth last quarter was likely the fastest since late 2021, thanks to a tight labor market that is underpinning consumer spending.
Stocks on Wall Street were trading lower amid mounting tensions in the Middle East.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell, with the yield on the 10-year bond rising to the highest level since July 2007.
BUILDING PERMITS MIXED
Financial markets expect the Fed will leave rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group's FedWatch Tool, given the surge in Treasury yields.
Starts for housing projects with five units or more soared 17.1% to a rate of 383,000 units in September.
Overall housing starts accelerated 7.0% to a rate of 1.358 million units in September.
Economists polled by Reuters had forecast starts rebounding to a rate of 1.380 million units.
Permits for future construction of single-family homes rose 1.8% to a rate of 965,000 units, the highest since May 2022.
Though permits are a leading indicator, economists cautioned against being too optimistic about homebuilding prospects, citing the soaring mortgage rates and souring builder sentiment.
"It's not lights out for homebuilding, but we don't know how many more body blows with the Fed's interest-rate hammer the nation's housing sector can withstand," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Multi-family building permits dropped 14.0% to a rate of 459,000, the lowest level since October 2020.
Building permits as a whole declined 4.4% to a rate of 1.473 million units.
The number of houses approved for construction that are yet to be started rose 0.7% to 281,000 units.
The single-family homebuilding backlog was unchanged at 142,000 units, while the completions rate for this segment increased 5.3% to 998,000 units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge the inventory gap.
The number of housing under construction dropped 0.7% to a rate of 1.676 million units.
The inventory of single-family housing under construction declined 0.7% to a rate of 674,000 units, the lowest level since May 2021.
The stock of multi-family housing under construction slipped 0.7% to 986,000 units, still near record highs.
That together with the decline in permits suggested limited scope for further groundbreaking on new multi-family housing projects.
"The under-construction pipeline remains extremely elevated relative to historical averages, suggesting that a backlog of inventory will be coming to market in the next few months and years," said Colin Johanson, an economist at Barclays in New York.
"This backlog, once in the market, could help alleviate price pressures, although this remains to be seen until the under-construction number begins to show consistent declines."
Reporting by Lucia Mutikani; Additional reporting by Dan Burns; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-s ... 023-10-18/
Re: THE HOUSING MARKET
REUTERS
"U.S mortgage rates soar to highest in more than 23 years"
Reuters
October 25, 2023
Oct 25 (Reuters) - The interest rate on the most popular U.S. home loan last week jumped to the highest since September 2000, marking its seventh straight weekly increase and driving mortgage applications to a 28-year low, a survey showed on Wednesday.
The 7.9% average contract rate for a 30-year fixed-rate mortgage during the week ended Oct. 20 was up 20 basis points from the prior week, the Mortgage Bankers Association said.
"Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995," MBA vice president and deputy chief economist Joel Kan said.
"These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity."
The cost of borrowing to buy a house has risen even as the Federal Reserve has put its inflation-fighting rate-hike campaign on pause, after lifting its benchmark policy rate from near zero in March 2022 to 5.25-5.50% in July of this year.
The 30-year fixed rate mortgage is up 81 basis points since then, tracking a similar rise in the yield on the 10-year Treasury note, the main benchmark for longer-term U.S. borrowing rates.
Reporting by Ann Saphir; Editing by Toby Chopra
https://www.reuters.com/markets/us/us-m ... 023-10-25/
"U.S mortgage rates soar to highest in more than 23 years"
Reuters
October 25, 2023
Oct 25 (Reuters) - The interest rate on the most popular U.S. home loan last week jumped to the highest since September 2000, marking its seventh straight weekly increase and driving mortgage applications to a 28-year low, a survey showed on Wednesday.
The 7.9% average contract rate for a 30-year fixed-rate mortgage during the week ended Oct. 20 was up 20 basis points from the prior week, the Mortgage Bankers Association said.
"Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995," MBA vice president and deputy chief economist Joel Kan said.
"These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity."
The cost of borrowing to buy a house has risen even as the Federal Reserve has put its inflation-fighting rate-hike campaign on pause, after lifting its benchmark policy rate from near zero in March 2022 to 5.25-5.50% in July of this year.
The 30-year fixed rate mortgage is up 81 basis points since then, tracking a similar rise in the yield on the 10-year Treasury note, the main benchmark for longer-term U.S. borrowing rates.
Reporting by Ann Saphir; Editing by Toby Chopra
https://www.reuters.com/markets/us/us-m ... 023-10-25/
Re: THE HOUSING MARKET
REUTERS
"US new home sales scale 19-month high as median price drops"
By Lucia Mutikani
October 25, 2023
Summary
* New home sales increase 12.3% in September
* Median house price falls 12.3% to $418,800 from year ago
WASHINGTON, Oct 25 (Reuters) - Sales of new U.S. single-family homes surged to a 19-month high in September as the annual median house price dropped by the most since 2009 amid discounts offered by builders to woo buyers, but mortgage rates flirting with 8% could curb demand.
A chronic shortage of previously owned houses is driving buyers to new construction, a situation that builders are taking advantage of by giving a range of incentives to improve affordability.
The bulk of homes sold last month were in the $150,000 to $499,999 price range, the report from the Commerce Department showed on Wednesday.
"Homebuilders are offering buyers interest rate buydown incentives that funnel demand into the newly built segment," said Bill Adams, chief economist at Comerica Bank in Dallas.
"They are also shrinking floorplans to boost affordability."
"That is leading to very different dynamics in different parts of the housing market."
New home sales rebounded 12.3% to a seasonally adjusted annual rate of 759,000 units last month, the highest level since February 2022.
August's sales pace was revised up to 676,000 units from the previously reported 675,000 units.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, rebounding to a rate of 680,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales accelerated 33.9% on a year-on-year basis in September.
Last month, new home sales jumped 22.5% in the Northeast and increased 14.6% in the densely populated South.
They rose 7.5% in the West and advanced 4.7% in the Midwest.
LIMITED SUPPLY
Data last week showed home resales dropped to a 13-year low in September as soaring mortgage rates and tight supply combined to sideline first-time buyers from the existing homes market.
Single-family housing starts and building permits increased in September.
But dark clouds are gathering over the new construction market, with confidence among builders deteriorating for a third straight month in October.
Nevertheless builders are trying to maintain the new housing market momentum.
The National Association of Home Builders reported last week that about a third of builders reported cutting home prices in October, a 10-month high, with the average price discount at 6%.
"These smart moves are doing more than just grabbing buyers’ attention, they're making homeownership a reality for many who might have been left out in the cold given the current market conditions," said Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes.
"This helping hand is not only making things easier for buyers but is also bringing some much-needed movement to the market."
The median new house price in September was $418,800 a 12.3% drop from a year ago.
That was the largest percentage decline since February 2009.
Houses in the $150,000 to $499,999 price range accounted for the bulk of transactions.
There was also a notable rise in sales in the $500,000 to $749,000 price bracket.
With a separate report from the Mortgage Bankers Association on Wednesday showing the popular 30-year fixed-rate mortgage averaging 7.9% last week, the highest since September 2000, new homes sales could slow in the months ahead.
Indeed, the MBA reported that the volume of mortgage applications dropped to levels last seen in 1995.
Mortgage rates have risen in tandem with a surge in the 10-year U.S. Treasury yield, which is hovering just below 5%.
Government yields have spiked on concerns that the Federal Reserve could keep interest rates higher for longer as the economy continues to show resilience.
Since March 2022, the U.S. central bank has hiked its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range.
There were 435,000 new homes on the market at the end of last month, up from 432,000 in August.
At September's sales pace it would take 6.9 months to clear the supply of houses on the market, down from 7.7 months in August.
The housing market likely stabilized in the third quarter, thanks to strong homebuilding and new home sales.
Economists expect the government's snapshot of gross domestic product for the July-September quarter to show residential investment rebounding after contracting for nine straight quarters.
"With mortgage rates continuing to rise and homebuilder optimism surveys softening, we expect new sales to soften over the remainder of the year," said Doug Duncan, chief economist at Fannie Mae.
Reporting by Lucia Mutikani; additional reporting by Ann Saphir; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-n ... 023-10-25/
"US new home sales scale 19-month high as median price drops"
By Lucia Mutikani
October 25, 2023
Summary
* New home sales increase 12.3% in September
* Median house price falls 12.3% to $418,800 from year ago
WASHINGTON, Oct 25 (Reuters) - Sales of new U.S. single-family homes surged to a 19-month high in September as the annual median house price dropped by the most since 2009 amid discounts offered by builders to woo buyers, but mortgage rates flirting with 8% could curb demand.
A chronic shortage of previously owned houses is driving buyers to new construction, a situation that builders are taking advantage of by giving a range of incentives to improve affordability.
The bulk of homes sold last month were in the $150,000 to $499,999 price range, the report from the Commerce Department showed on Wednesday.
"Homebuilders are offering buyers interest rate buydown incentives that funnel demand into the newly built segment," said Bill Adams, chief economist at Comerica Bank in Dallas.
"They are also shrinking floorplans to boost affordability."
"That is leading to very different dynamics in different parts of the housing market."
New home sales rebounded 12.3% to a seasonally adjusted annual rate of 759,000 units last month, the highest level since February 2022.
August's sales pace was revised up to 676,000 units from the previously reported 675,000 units.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, rebounding to a rate of 680,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales accelerated 33.9% on a year-on-year basis in September.
Last month, new home sales jumped 22.5% in the Northeast and increased 14.6% in the densely populated South.
They rose 7.5% in the West and advanced 4.7% in the Midwest.
LIMITED SUPPLY
Data last week showed home resales dropped to a 13-year low in September as soaring mortgage rates and tight supply combined to sideline first-time buyers from the existing homes market.
Single-family housing starts and building permits increased in September.
But dark clouds are gathering over the new construction market, with confidence among builders deteriorating for a third straight month in October.
Nevertheless builders are trying to maintain the new housing market momentum.
The National Association of Home Builders reported last week that about a third of builders reported cutting home prices in October, a 10-month high, with the average price discount at 6%.
"These smart moves are doing more than just grabbing buyers’ attention, they're making homeownership a reality for many who might have been left out in the cold given the current market conditions," said Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes.
"This helping hand is not only making things easier for buyers but is also bringing some much-needed movement to the market."
The median new house price in September was $418,800 a 12.3% drop from a year ago.
That was the largest percentage decline since February 2009.
Houses in the $150,000 to $499,999 price range accounted for the bulk of transactions.
There was also a notable rise in sales in the $500,000 to $749,000 price bracket.
With a separate report from the Mortgage Bankers Association on Wednesday showing the popular 30-year fixed-rate mortgage averaging 7.9% last week, the highest since September 2000, new homes sales could slow in the months ahead.
Indeed, the MBA reported that the volume of mortgage applications dropped to levels last seen in 1995.
Mortgage rates have risen in tandem with a surge in the 10-year U.S. Treasury yield, which is hovering just below 5%.
Government yields have spiked on concerns that the Federal Reserve could keep interest rates higher for longer as the economy continues to show resilience.
Since March 2022, the U.S. central bank has hiked its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range.
There were 435,000 new homes on the market at the end of last month, up from 432,000 in August.
At September's sales pace it would take 6.9 months to clear the supply of houses on the market, down from 7.7 months in August.
The housing market likely stabilized in the third quarter, thanks to strong homebuilding and new home sales.
Economists expect the government's snapshot of gross domestic product for the July-September quarter to show residential investment rebounding after contracting for nine straight quarters.
"With mortgage rates continuing to rise and homebuilder optimism surveys softening, we expect new sales to soften over the remainder of the year," said Doug Duncan, chief economist at Fannie Mae.
Reporting by Lucia Mutikani; additional reporting by Ann Saphir; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-n ... 023-10-25/
Re: THE HOUSING MARKET
REUTERS
"Wages boost US labor costs, house price inflation picks up"
By Lucia Mutikani
October 31, 2023
Summary
* Employment cost index increases 1.1% in third quarter
* Wages, salaries rise 1.2%; benefits advance 0.9%
* Consumer confidence softens further in October
* House price inflation accelerates in September
WASHINGTON, Oct 31 (Reuters) - U.S. labor costs increased solidly in the third quarter amid strong wage growth while house price inflation accelerated in August, the latest signs that the Federal Reserve could keep interest rates high for some time.
The reports on Tuesday pose a threat to efforts by the U.S. central bank to bring inflation to its 2% target.
Fed officials started a two-day policy meeting on Tuesday.
The U.S. central bank is expected to leave interest rates unchanged but maintain its hawkish bias at the conclusion of that meeting as a recent spike in U.S. Treasury yields and stock market sell-off have tightened financial conditions.
"Those wage increases are likely to keep inflation running above target while higher house prices could lead to a pick-up in shelter inflation," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
"For now the Fed will remain on-hold, but the evident upside risk to inflation means Chair (Jerome) Powell and committee will keep potential further rate hikes on the table."
The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.1% last quarter after increasing 1.0% in the April-June period, the Labor Department's Bureau of Labor Statistics reported.
Economists polled by Reuters had forecast the ECI would rise 1.0%.
Labor costs increased 4.3% on a year-on-year basis, the smallest gain since the fourth quarter of 2021, after advancing by 4.5% in the second quarter.
Growth in annual compensation is gradually slowing after peaking at 5.1% last year, in line with some easing in labor market conditions.
It, however, remains well above the pre-pandemic pace.
The rise in compensation helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth rate in nearly two years.
The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months.
They were up 4.6% on a year-on-year basis after advancing by the same margin in the second quarter.
Strong wage growth is being driven by worker shortages that still persist in some services industries.
September's job openings data on Wednesday will shed light on the state of demand for labor.
Though consumers continue to worry about the economy's outlook, more are planning vacations over the next six months and are not contemplating scaling back in a major way on purchases of motor vehicles and other big-ticket items, according to a survey from the Conference Board on Tuesday.
Their concerns about the economy center around the violence in the Middle East as well as domestic politics, likely reflecting the protracted battle to elect a speaker in the U.S. House of Representatives.
The Conference Board's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 26.3 from 25.5 in September.
This measure correlates to the unemployment rate from the Labor Department. Overall, the consumer confidence index dropped moderately to 102.6 this month from 104.3 in September.
"The U.S. consumer is in okay financial shape," said Bill Adams, chief economist at Comerica Bank in Dallas.
"For well-off Americans, inflation is a source of frustration but not enough to force cutbacks in overall spending."
Stocks on Wall Street were trading lower.
The dollar gained versus a basket of currencies.
U.S. Treasury prices rose.
CONSUMER CONFIDENCE EBBS
The compensation report showed private-sector wages gained 1.1% after rising 1.0% in the April-June quarter.
They advanced 4.5% on a year-on-year basis.
There were notable increase in wages in the financial activities and education and health services sectors.
But wage growth slowed in the leisure and hospitality industry, which had experienced worker shortages.
Manufacturing also reported a moderation in wage gains.
State and local government wages shot up 1.8% after increasing 0.8% in the prior quarter.
They were driven by rises in education and health services as well as public administration.
State and local government wages increased 4.8% on a year-on-year basis, the most since the government started tracking the series in 2001.
Inflation-adjusted wages for all workers rose 0.9% on a year-on-year basis after jumping 1.7% in the second quarter.
While slowing, wages should continue to underpin spending.
Benefits rose 0.9% last quarter after climbing by the same margin in the April-June period.
They increased 4.1% on a year-on-year basis.
Economists expected the higher wages and benefits to pressure corporate profits, with Nationwide chief economist Kathy Bostjancic noting that "some companies are losing a bit of their pricing power."
A third report from the Federal Housing Finance Agency showed house prices increased 0.6% in August, driven by an acute shortage of previously owned homes.
House prices rose 0.8% in July.
While lofty house prices are boosting household wealth, they could keep inflation elevated in the near-term.
In the 12 months through August, house prices accelerated 5.6% after advancing 4.6% in July.
With the rate on the popular fixed 30-year mortgage near 8%, some economists see limited scope for house prices to keep rising, which would result in rents contributing less to inflation.
Higher rents were the major drivers of inflation in September after cooling somewhat in prior months.
Even as house prices continue to march higher, there are signs that shelter inflation could moderate next year.
A fourth report from the Commerce Department's Census Bureau showed the rental vacancy rate jumped 6.6% in the third quarter, the highest since the first quarter of 2021, from 6.3% in the April-June period.
"We still think it is likely that the surge in mortgage rates will slow the rise in prices in the secondary market going forward," said Lou Crandall, chief economist at Wrightson ICAP in New York.
Reporting by Lucia Mutikani; Editing by Paul Simao and Deepa Babington
https://www.reuters.com/markets/us/us-l ... 023-10-31/
"Wages boost US labor costs, house price inflation picks up"
By Lucia Mutikani
October 31, 2023
Summary
* Employment cost index increases 1.1% in third quarter
* Wages, salaries rise 1.2%; benefits advance 0.9%
* Consumer confidence softens further in October
* House price inflation accelerates in September
WASHINGTON, Oct 31 (Reuters) - U.S. labor costs increased solidly in the third quarter amid strong wage growth while house price inflation accelerated in August, the latest signs that the Federal Reserve could keep interest rates high for some time.
The reports on Tuesday pose a threat to efforts by the U.S. central bank to bring inflation to its 2% target.
Fed officials started a two-day policy meeting on Tuesday.
The U.S. central bank is expected to leave interest rates unchanged but maintain its hawkish bias at the conclusion of that meeting as a recent spike in U.S. Treasury yields and stock market sell-off have tightened financial conditions.
"Those wage increases are likely to keep inflation running above target while higher house prices could lead to a pick-up in shelter inflation," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
"For now the Fed will remain on-hold, but the evident upside risk to inflation means Chair (Jerome) Powell and committee will keep potential further rate hikes on the table."
The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.1% last quarter after increasing 1.0% in the April-June period, the Labor Department's Bureau of Labor Statistics reported.
Economists polled by Reuters had forecast the ECI would rise 1.0%.
Labor costs increased 4.3% on a year-on-year basis, the smallest gain since the fourth quarter of 2021, after advancing by 4.5% in the second quarter.
Growth in annual compensation is gradually slowing after peaking at 5.1% last year, in line with some easing in labor market conditions.
It, however, remains well above the pre-pandemic pace.
The rise in compensation helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth rate in nearly two years.
The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months.
They were up 4.6% on a year-on-year basis after advancing by the same margin in the second quarter.
Strong wage growth is being driven by worker shortages that still persist in some services industries.
September's job openings data on Wednesday will shed light on the state of demand for labor.
Though consumers continue to worry about the economy's outlook, more are planning vacations over the next six months and are not contemplating scaling back in a major way on purchases of motor vehicles and other big-ticket items, according to a survey from the Conference Board on Tuesday.
Their concerns about the economy center around the violence in the Middle East as well as domestic politics, likely reflecting the protracted battle to elect a speaker in the U.S. House of Representatives.
The Conference Board's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, rose to 26.3 from 25.5 in September.
This measure correlates to the unemployment rate from the Labor Department. Overall, the consumer confidence index dropped moderately to 102.6 this month from 104.3 in September.
"The U.S. consumer is in okay financial shape," said Bill Adams, chief economist at Comerica Bank in Dallas.
"For well-off Americans, inflation is a source of frustration but not enough to force cutbacks in overall spending."
Stocks on Wall Street were trading lower.
The dollar gained versus a basket of currencies.
U.S. Treasury prices rose.
CONSUMER CONFIDENCE EBBS
The compensation report showed private-sector wages gained 1.1% after rising 1.0% in the April-June quarter.
They advanced 4.5% on a year-on-year basis.
There were notable increase in wages in the financial activities and education and health services sectors.
But wage growth slowed in the leisure and hospitality industry, which had experienced worker shortages.
Manufacturing also reported a moderation in wage gains.
State and local government wages shot up 1.8% after increasing 0.8% in the prior quarter.
They were driven by rises in education and health services as well as public administration.
State and local government wages increased 4.8% on a year-on-year basis, the most since the government started tracking the series in 2001.
Inflation-adjusted wages for all workers rose 0.9% on a year-on-year basis after jumping 1.7% in the second quarter.
While slowing, wages should continue to underpin spending.
Benefits rose 0.9% last quarter after climbing by the same margin in the April-June period.
They increased 4.1% on a year-on-year basis.
Economists expected the higher wages and benefits to pressure corporate profits, with Nationwide chief economist Kathy Bostjancic noting that "some companies are losing a bit of their pricing power."
A third report from the Federal Housing Finance Agency showed house prices increased 0.6% in August, driven by an acute shortage of previously owned homes.
House prices rose 0.8% in July.
While lofty house prices are boosting household wealth, they could keep inflation elevated in the near-term.
In the 12 months through August, house prices accelerated 5.6% after advancing 4.6% in July.
With the rate on the popular fixed 30-year mortgage near 8%, some economists see limited scope for house prices to keep rising, which would result in rents contributing less to inflation.
Higher rents were the major drivers of inflation in September after cooling somewhat in prior months.
Even as house prices continue to march higher, there are signs that shelter inflation could moderate next year.
A fourth report from the Commerce Department's Census Bureau showed the rental vacancy rate jumped 6.6% in the third quarter, the highest since the first quarter of 2021, from 6.3% in the April-June period.
"We still think it is likely that the surge in mortgage rates will slow the rise in prices in the secondary market going forward," said Lou Crandall, chief economist at Wrightson ICAP in New York.
Reporting by Lucia Mutikani; Editing by Paul Simao and Deepa Babington
https://www.reuters.com/markets/us/us-l ... 023-10-31/
Re: THE HOUSING MARKET
GOBankingRates
"Biden Unveils Plan To Increase US Homeownership — How It Benefits Low-to-Middle-Income Families Looking To Build Generational Wealth"
Story by Dawn Allcot
5 NOVEMBER 2023
While many upper-income individuals in big cities are eschewing homeownership in favor of renting, as recently reported by GOBankingRates, owning a home remains part of the American dream for many low-to-middle-income families.
The Biden Administration is seeking ways to help families make that happen with a number of new initiatives for first-time homebuyers.
Neighborhood Homes Tax Credit Offers Down Payment Assistance and More
The Biden-Harris Administration recently announced the Neighborhood Homes Tax Credit, along with down payment assistance for select first-time homebuyers.
The program is designed to create a path to homeownership for first-generation or low-wealth buyers whose parents have never owned a home, either.
The Neighborhood Homes Tax Credit has not yet been signed by Congress.
If it does pass, it will allocate $16 billion in funding to build or rehabilitate 400,000 new homes across the U.S., according to a statement from the White House issued on Monday, Oct. 16.
Additionally, the package will provide $10 billion in down payment assistance and $100 million to supplement first-time homebuyers.
Policy Changes Could Make It Easier to Qualify for Mortgages at Lower Rates
Additional changes to existing policies could make it easier for some prospective homebuyers to qualify for a loan.
The Department of Housing and Urban Development (HUD) would allow lenders to factor in a positive rental history and on-time student loan payments when they evaluate an applicant’s creditworthiness.
That means even someone without a strong history of revolving credit, car loans, or personal loans could qualify for a mortgage at a lower interest rate as long as they show that they have paid their bills, including rent, responsibly in the past.
The policy, introduced by HUD through the FHA, also allows homebuyers to use a portion of rental income from Accessory Dwelling Units in the house they are purchasing or building to count as effective income when qualifying for an FHA-insured mortgage, according to the White House release.
If someone builds or buys a home with an accessory apartment, or intends to add-on to the house with an additional dwelling, a portion of that unrealized rental income can factor into their mortgage qualifications.
“The flexibilities will help more first-time homebuyers, seniors, and inter-generational families leverage ADUs to build generational wealth through homeownership while creating new affordable housing in their communities,” said the White House release.
Additional Policy Changes Carve a Path to Homeownership
HUD, through FHA, is also updating the 203(k) Rehabilitation Mortgage Insurance Program.
The policy changes could make it easier for homebuyers and homeowners to finance repair costs prior to a home’s purchase or to refinance their mortgage and tap into their home equity to fund improvements.
Under the new policies, they might have more time to complete repairs and improvements prior to purchase.
The USDA, simultaneously, is working on launching a pilot program to expand eligibility criteria for Community Land Trust Organizations through the Section 502 Direct Loan Program.
Community Land Trusts are non-profit organizations devoted to making homeownership more affordable.
Prospective homeowners can lease, rather than purchase, the land, making the overall cost of their home more affordable since they are only purchasing the house.
The homeowners must agree to sell the home at a restricted price in order to maintain affordable housing in the community for generations, according to GroundedSolutions.org.
Building on Past Success
These initiatives are designed to build on the past success of the Biden Administration to expand access to homeownership.
Data released by the White House shows that first-time homebuying rates are the highest they’ve been since 2000.
The FHA has helped 1.8 million homeowners secure mortgages since Biden took office; 1.5 million of those new homeowners (83.6%) were first-time buyers.
In the past year, the USDA provided 7,100 direct housing loans, subsidizing homebuyers with interest rates as low as 1%.
The average homebuyer that benefited from the program has an income of just $42,918.
Bottom Line
If homeownership is one of your dreams or a marker of financial success to you, 2024 might be the year it happens.
These programs could help lower- and middle-income Americans begin to build generational wealth through a tangible asset — a family home that is likely to appreciate in value over time while providing a sense of security and stability.
https://www.msn.com/en-us/money/realest ... 98947&ei=7
"Biden Unveils Plan To Increase US Homeownership — How It Benefits Low-to-Middle-Income Families Looking To Build Generational Wealth"
Story by Dawn Allcot
5 NOVEMBER 2023
While many upper-income individuals in big cities are eschewing homeownership in favor of renting, as recently reported by GOBankingRates, owning a home remains part of the American dream for many low-to-middle-income families.
The Biden Administration is seeking ways to help families make that happen with a number of new initiatives for first-time homebuyers.
Neighborhood Homes Tax Credit Offers Down Payment Assistance and More
The Biden-Harris Administration recently announced the Neighborhood Homes Tax Credit, along with down payment assistance for select first-time homebuyers.
The program is designed to create a path to homeownership for first-generation or low-wealth buyers whose parents have never owned a home, either.
The Neighborhood Homes Tax Credit has not yet been signed by Congress.
If it does pass, it will allocate $16 billion in funding to build or rehabilitate 400,000 new homes across the U.S., according to a statement from the White House issued on Monday, Oct. 16.
Additionally, the package will provide $10 billion in down payment assistance and $100 million to supplement first-time homebuyers.
Policy Changes Could Make It Easier to Qualify for Mortgages at Lower Rates
Additional changes to existing policies could make it easier for some prospective homebuyers to qualify for a loan.
The Department of Housing and Urban Development (HUD) would allow lenders to factor in a positive rental history and on-time student loan payments when they evaluate an applicant’s creditworthiness.
That means even someone without a strong history of revolving credit, car loans, or personal loans could qualify for a mortgage at a lower interest rate as long as they show that they have paid their bills, including rent, responsibly in the past.
The policy, introduced by HUD through the FHA, also allows homebuyers to use a portion of rental income from Accessory Dwelling Units in the house they are purchasing or building to count as effective income when qualifying for an FHA-insured mortgage, according to the White House release.
If someone builds or buys a home with an accessory apartment, or intends to add-on to the house with an additional dwelling, a portion of that unrealized rental income can factor into their mortgage qualifications.
“The flexibilities will help more first-time homebuyers, seniors, and inter-generational families leverage ADUs to build generational wealth through homeownership while creating new affordable housing in their communities,” said the White House release.
Additional Policy Changes Carve a Path to Homeownership
HUD, through FHA, is also updating the 203(k) Rehabilitation Mortgage Insurance Program.
The policy changes could make it easier for homebuyers and homeowners to finance repair costs prior to a home’s purchase or to refinance their mortgage and tap into their home equity to fund improvements.
Under the new policies, they might have more time to complete repairs and improvements prior to purchase.
The USDA, simultaneously, is working on launching a pilot program to expand eligibility criteria for Community Land Trust Organizations through the Section 502 Direct Loan Program.
Community Land Trusts are non-profit organizations devoted to making homeownership more affordable.
Prospective homeowners can lease, rather than purchase, the land, making the overall cost of their home more affordable since they are only purchasing the house.
The homeowners must agree to sell the home at a restricted price in order to maintain affordable housing in the community for generations, according to GroundedSolutions.org.
Building on Past Success
These initiatives are designed to build on the past success of the Biden Administration to expand access to homeownership.
Data released by the White House shows that first-time homebuying rates are the highest they’ve been since 2000.
The FHA has helped 1.8 million homeowners secure mortgages since Biden took office; 1.5 million of those new homeowners (83.6%) were first-time buyers.
In the past year, the USDA provided 7,100 direct housing loans, subsidizing homebuyers with interest rates as low as 1%.
The average homebuyer that benefited from the program has an income of just $42,918.
Bottom Line
If homeownership is one of your dreams or a marker of financial success to you, 2024 might be the year it happens.
These programs could help lower- and middle-income Americans begin to build generational wealth through a tangible asset — a family home that is likely to appreciate in value over time while providing a sense of security and stability.
https://www.msn.com/en-us/money/realest ... 98947&ei=7
Re: THE HOUSING MARKET
REUTERS
"US housing starts rise moderately; tight supply supporting new construction"
By Lucia Mutikani
November 17, 2023
Summary
* Single-family housing starts increase 0.2% in October
* Single-family building permits rise 0.5%
* Multi-family starts jump 4.9%; permits increase 2.2%
WASHINGTON, Nov 17 (Reuters) - U.S. single-family homebuilding increased marginally in October and activity could remain moderate in the near term amid higher mortgage rates, which sent homebuilder confidence tumbling to an 11-month low in November.
Nevertheless, new construction remains supported by an acute shortage of houses on the market, with the report from the Commerce Department on Friday showing permits for future single-family homebuilding rising to the highest level in nearly 1-1/2 years last month.
Residential investment rebounded in the third quarter, ending nine straight quarters of decline.
"Homebuilders have an opportunity to capitalize on the low supply of homes on the market," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
"If mortgage rates move lower in the latter half of next year, we could see some improved demand for residential real estate."
Single-family housing starts, which account for the bulk of homebuilding, rose 0.2% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department's Census Bureau said.
Data for September was revised up to show starts rising to a rate of 968,000 units instead of 963,000 units as previously reported.
Single-family homebuilding peaked in May.
Starts surged 12.0% in the Northeast and increased 12.3% in the West, but dropped 4.9% in the densely populated South and fell 0.9% in the Midwest, which is generally considered the most affordable housing region.
A survey on Thursday showed confidence among home builders slumped this month.
The National Association of Home Builders noted that builders anticipated lower sales over the next six months, with mortgage rates stuck above 7% since mid-August.
"This suggests that building activity could decline over the winter, especially with loan rates for builders continuing to rise," said Ben Ayers, a senior economist at Nationwide in Columbus, Ohio.
The rate on the popular 30-year fixed mortgage averaged 7.79% in late October, the highest since November 2000, according to data from mortgage finance agency Freddie Mac.
It has since retreated following data this month showing the labor market cooling, and averaged a still-high 7.44% this week.
Mortgage rates could grind lower in the weeks ahead as the yield on the benchmark 10-year Treasury note has declined in the wake of inflation-friendly economic data that have left financial markets anticipating an interest rate cut from the Federal Reserve next spring.
U.S. Treasury prices were higher on Friday, with the 10-year yield briefly dropping to a two-month low.
The dollar slipped against a basket of currencies.
Stocks on Wall Street fell.
HUGE MULTI-FAMILY BACKLOG
Starts for housing projects with five units or more jumped 4.9% to a rate of 382,000 units in October.
With a huge stock of multi-family housing under construction and the rental vacancy rate hitting a 2-1/2 high in the third quarter, there is little room for major gains for this housing segment.
Higher rents have played a big part in boosting inflation well above the Fed's 2% target and the large supply of multi-family housing in the pipeline is expected to significantly help tame underlying price pressures next year.
"The big wave of multifamily supply headed toward the rental market increases our conviction that core inflation will slow in 2024, allowing the Fed to reduce interest rates," said Bill Adams, chief economist at Comerica Bank in Dallas.
Overall housing starts rose 1.9% to a rate of 1.372 million units in October.
Economists polled by Reuters had forecast starts slipping to a rate of 1.350 million units.
Permits for future construction of single-family homes rose 0.5% to a rate of 968,000 units last month, the highest level since May 2022.
The increase was concentrated in the Northeast and West.
Permits declined in the South and Midwest.
Multi-family building permits rebounded 2.2% to a rate of 469,000.
Building permits as a whole increased 1.1% to a rate of 1.487 million units last month.
The number of houses approved for construction that are yet to be started rose 1.8% to 281,000 units.
The single-family homebuilding backlog was unchanged at 140,000 units for the third straight month, with the completions rate for this segment dropping 0.9% to 993,000 units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge the inventory gap.
The number of housing under construction dipped 0.1% to a rate of 1.674 million units.
The inventory of single-family housing under construction declined 0.6% to a rate of 669,000 units, the lowest level since May 2021.
The stock of multi-family housing under construction edged up 0.1% to 987,000 units, not far from recent record highs.
"Our view that the supply of second-hand homes on the market will remain limited over the next two years means demand will continue to be diverted to new builds," said Thomas Ryan, property economist at Capital Economics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Nick Zieminski
https://www.reuters.com/markets/us/us-s ... 023-11-17/
"US housing starts rise moderately; tight supply supporting new construction"
By Lucia Mutikani
November 17, 2023
Summary
* Single-family housing starts increase 0.2% in October
* Single-family building permits rise 0.5%
* Multi-family starts jump 4.9%; permits increase 2.2%
WASHINGTON, Nov 17 (Reuters) - U.S. single-family homebuilding increased marginally in October and activity could remain moderate in the near term amid higher mortgage rates, which sent homebuilder confidence tumbling to an 11-month low in November.
Nevertheless, new construction remains supported by an acute shortage of houses on the market, with the report from the Commerce Department on Friday showing permits for future single-family homebuilding rising to the highest level in nearly 1-1/2 years last month.
Residential investment rebounded in the third quarter, ending nine straight quarters of decline.
"Homebuilders have an opportunity to capitalize on the low supply of homes on the market," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
"If mortgage rates move lower in the latter half of next year, we could see some improved demand for residential real estate."
Single-family housing starts, which account for the bulk of homebuilding, rose 0.2% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department's Census Bureau said.
Data for September was revised up to show starts rising to a rate of 968,000 units instead of 963,000 units as previously reported.
Single-family homebuilding peaked in May.
Starts surged 12.0% in the Northeast and increased 12.3% in the West, but dropped 4.9% in the densely populated South and fell 0.9% in the Midwest, which is generally considered the most affordable housing region.
A survey on Thursday showed confidence among home builders slumped this month.
The National Association of Home Builders noted that builders anticipated lower sales over the next six months, with mortgage rates stuck above 7% since mid-August.
"This suggests that building activity could decline over the winter, especially with loan rates for builders continuing to rise," said Ben Ayers, a senior economist at Nationwide in Columbus, Ohio.
The rate on the popular 30-year fixed mortgage averaged 7.79% in late October, the highest since November 2000, according to data from mortgage finance agency Freddie Mac.
It has since retreated following data this month showing the labor market cooling, and averaged a still-high 7.44% this week.
Mortgage rates could grind lower in the weeks ahead as the yield on the benchmark 10-year Treasury note has declined in the wake of inflation-friendly economic data that have left financial markets anticipating an interest rate cut from the Federal Reserve next spring.
U.S. Treasury prices were higher on Friday, with the 10-year yield briefly dropping to a two-month low.
The dollar slipped against a basket of currencies.
Stocks on Wall Street fell.
HUGE MULTI-FAMILY BACKLOG
Starts for housing projects with five units or more jumped 4.9% to a rate of 382,000 units in October.
With a huge stock of multi-family housing under construction and the rental vacancy rate hitting a 2-1/2 high in the third quarter, there is little room for major gains for this housing segment.
Higher rents have played a big part in boosting inflation well above the Fed's 2% target and the large supply of multi-family housing in the pipeline is expected to significantly help tame underlying price pressures next year.
"The big wave of multifamily supply headed toward the rental market increases our conviction that core inflation will slow in 2024, allowing the Fed to reduce interest rates," said Bill Adams, chief economist at Comerica Bank in Dallas.
Overall housing starts rose 1.9% to a rate of 1.372 million units in October.
Economists polled by Reuters had forecast starts slipping to a rate of 1.350 million units.
Permits for future construction of single-family homes rose 0.5% to a rate of 968,000 units last month, the highest level since May 2022.
The increase was concentrated in the Northeast and West.
Permits declined in the South and Midwest.
Multi-family building permits rebounded 2.2% to a rate of 469,000.
Building permits as a whole increased 1.1% to a rate of 1.487 million units last month.
The number of houses approved for construction that are yet to be started rose 1.8% to 281,000 units.
The single-family homebuilding backlog was unchanged at 140,000 units for the third straight month, with the completions rate for this segment dropping 0.9% to 993,000 units.
Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge the inventory gap.
The number of housing under construction dipped 0.1% to a rate of 1.674 million units.
The inventory of single-family housing under construction declined 0.6% to a rate of 669,000 units, the lowest level since May 2021.
The stock of multi-family housing under construction edged up 0.1% to 987,000 units, not far from recent record highs.
"Our view that the supply of second-hand homes on the market will remain limited over the next two years means demand will continue to be diverted to new builds," said Thomas Ryan, property economist at Capital Economics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Nick Zieminski
https://www.reuters.com/markets/us/us-s ... 023-11-17/
Re: THE HOUSING MARKET
REUTERS
"US existing home sales slump to more than 13-year low, prices accelerate"
By Lucia Mutikani
November 21, 2023
Summary
* Existing home sales drop 4.1% in October
* Housing inventory declines 5.7% on year-on-year basis
* Median house price rises 3.4% year-on-year to $391,800
WASHINGTON, Nov 21 (Reuters) - U.S. existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.
The report from the National Association of Realtors on Tuesday also showed that the median house price last month was the highest for any October.
Barring a rebound in November and December, home resales this year are on track for their worst performance since 1992.
"The combination of high prices, high mortgage rates, and millions of homeowners unwilling to move, given they've locked in low rates, has frozen the market," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010 when the sales were declining following the expiration of a government tax credit for homebuyers.
Home resales are counted at the closing of a contract.
October's sales likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage jumped to levels last seen in late 2000.
Economists polled by Reuters had forecast home sales would slide to a rate of 3.90 million units.
Sales fell in the Northeast, West and the densely populated South.
They were unchanged in the Midwest, the most affordable region.
Home resales, which account for a big chunk of U.S. housing sales, plunged 14.6% on a year-on-year basis in October.
The rate on the popular 30-year fixed-rate mortgage averaged 7.31% in the final week of September, before peaking at 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.
Though it has since retreated following data this month showing the labor market cooling and inflation subsiding, the rate averaged a still-high 7.44% last week.
Minutes of the Federal Reserve's Oct. 31-Nov. 1 meeting published on Tuesday showed that "a few participants observed that activity in the housing sector had flattened out in recent months, likely reflecting the effects of further increases in mortgage rates from already elevated levels."
The housing market has borne the brunt of the U.S. central bank's aggressive monetary policy tightening, with residential investment contracting for nine straight quarters, before rebounding in the third quarter, thanks to builders trying to take advantage of the housing shortage.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices were mixed.
TIGHT SUPPLY
There were 1.15 million previously owned homes on the market last month, down 5.7% from a year ago.
Most homeowners have mortgage rates under 5%, making many reluctant to sell.
Before the pandemic, there were nearly 2 million homes for sale.
Lawrence Yun, the NAR's chief economist, told reporters that realtors will be speaking with their representatives in the U.S. Congress about a government tax incentive for homeowners who have been living in their homes for a long period to encourage them to put their houses on the market.
Yun also noted that even if mortgage rates continued to slide, in tandem with U.S. 10-year Treasury yields, affordability would remain a challenge in the absence of adequate supply.
The lack of previously owned houses is boosting demand for new homes.
At October's sales pace, it would take 3.6 months to exhaust the current inventory of existing homes, up from 3.3 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
There is an acute shortage of houses in the $100,000-$250,000 price range.
Though builders have been breaking more ground on new housing projects, they are being constrained by the higher borrowing costs.
With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend on a year-over-year basis.
The median existing house price rose 3.4% from a year earlier to $391,800, the highest for any October.
About 28% of the homes sold last month were above the listing price.
Properties typically remained on the market for 23 days in October, up from 21 days a year ago.
Sixty-six percent of homes sold in October were on the market for less than a month.
First-time buyers accounted for 28% of sales, as they did a year ago.
This share is well below the 40% that economists and realtors say is needed for a robust housing market.
All-cash sales accounted for 29% of transactions compared to 26% a year ago.
Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from the prior year.
"The odds of substantially improved sales in the near term remain very low," said Daniel Vielhaber, an economist at Nationwide in Columbus, Ohio.
"Looking into the first half of 2024, supply promises to remain a significant roadblock as mortgage rates are expected to remain high."
Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama
https://www.reuters.com/markets/us/us-e ... 023-11-21/
"US existing home sales slump to more than 13-year low, prices accelerate"
By Lucia Mutikani
November 21, 2023
Summary
* Existing home sales drop 4.1% in October
* Housing inventory declines 5.7% on year-on-year basis
* Median house price rises 3.4% year-on-year to $391,800
WASHINGTON, Nov 21 (Reuters) - U.S. existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.
The report from the National Association of Realtors on Tuesday also showed that the median house price last month was the highest for any October.
Barring a rebound in November and December, home resales this year are on track for their worst performance since 1992.
"The combination of high prices, high mortgage rates, and millions of homeowners unwilling to move, given they've locked in low rates, has frozen the market," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010 when the sales were declining following the expiration of a government tax credit for homebuyers.
Home resales are counted at the closing of a contract.
October's sales likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage jumped to levels last seen in late 2000.
Economists polled by Reuters had forecast home sales would slide to a rate of 3.90 million units.
Sales fell in the Northeast, West and the densely populated South.
They were unchanged in the Midwest, the most affordable region.
Home resales, which account for a big chunk of U.S. housing sales, plunged 14.6% on a year-on-year basis in October.
The rate on the popular 30-year fixed-rate mortgage averaged 7.31% in the final week of September, before peaking at 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.
Though it has since retreated following data this month showing the labor market cooling and inflation subsiding, the rate averaged a still-high 7.44% last week.
Minutes of the Federal Reserve's Oct. 31-Nov. 1 meeting published on Tuesday showed that "a few participants observed that activity in the housing sector had flattened out in recent months, likely reflecting the effects of further increases in mortgage rates from already elevated levels."
The housing market has borne the brunt of the U.S. central bank's aggressive monetary policy tightening, with residential investment contracting for nine straight quarters, before rebounding in the third quarter, thanks to builders trying to take advantage of the housing shortage.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices were mixed.
TIGHT SUPPLY
There were 1.15 million previously owned homes on the market last month, down 5.7% from a year ago.
Most homeowners have mortgage rates under 5%, making many reluctant to sell.
Before the pandemic, there were nearly 2 million homes for sale.
Lawrence Yun, the NAR's chief economist, told reporters that realtors will be speaking with their representatives in the U.S. Congress about a government tax incentive for homeowners who have been living in their homes for a long period to encourage them to put their houses on the market.
Yun also noted that even if mortgage rates continued to slide, in tandem with U.S. 10-year Treasury yields, affordability would remain a challenge in the absence of adequate supply.
The lack of previously owned houses is boosting demand for new homes.
At October's sales pace, it would take 3.6 months to exhaust the current inventory of existing homes, up from 3.3 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
There is an acute shortage of houses in the $100,000-$250,000 price range.
Though builders have been breaking more ground on new housing projects, they are being constrained by the higher borrowing costs.
With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend on a year-over-year basis.
The median existing house price rose 3.4% from a year earlier to $391,800, the highest for any October.
About 28% of the homes sold last month were above the listing price.
Properties typically remained on the market for 23 days in October, up from 21 days a year ago.
Sixty-six percent of homes sold in October were on the market for less than a month.
First-time buyers accounted for 28% of sales, as they did a year ago.
This share is well below the 40% that economists and realtors say is needed for a robust housing market.
All-cash sales accounted for 29% of transactions compared to 26% a year ago.
Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from the prior year.
"The odds of substantially improved sales in the near term remain very low," said Daniel Vielhaber, an economist at Nationwide in Columbus, Ohio.
"Looking into the first half of 2024, supply promises to remain a significant roadblock as mortgage rates are expected to remain high."
Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama
https://www.reuters.com/markets/us/us-e ... 023-11-21/
Re: THE HOUSING MARKET
REUTERS
"Higher mortgage rates weigh on US new home sales in October"
By Lucia Mutikani
November 27, 2023
Summary
* New home sales drop 5.6% to a rate of 679,000 units
* Median house price plunges 17.6% to $409,300 from year ago
WASHINGTON, Nov 27 (Reuters) - Sales of new U.S. single-family homes fell more than expected in October as higher mortgage rates squeezed out buyers even as builders cut prices, but the setback is likely temporary amid a persistent shortage of previously owned houses on the market.
The decline in sales reported by the Commerce Department on Monday was in line with a recent deterioration in homebuilder sentiment, which came as the rate on the popular 30-year fixed-mortgage approached 8%, leaving builders anticipating slower buyer traffic.
Mortgage rates have since retreated from two-decade highs and are at levels last seen in late September, which could pave the way for a rebound in sales.
"The market for new homes remains very solid by any historical standard and continues to be boosted by extremely low existing home inventory," said Daniel Vielhaber, an economist at Nationwide in Ohio.
New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department's Census Bureau said.
September's sales pace was revised lower to 719,000 units from the previously reported 759,000 units.
Economists polled by Reuters had forecast new home sales, which account for 15.2% of U.S. home sales, would fall to a rate of 723,000 units.
The share is the largest in at least a decade.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 17.7% on a year-on-year basis in October.
Monthly sales rose in the Northeast and densely populated South.
But they tumbled in the Midwest, the most affordable region, and in the West, where housing is expensive.
The supply of previously owned houses on the market is nearly 50% below its pre-pandemic level, according to the National Association of Realtors, which last week reported that home resales plunged to more than a 13-year low in October.
Most homeowners have mortgage rates under 3%, making many reluctant to sell, boosting demand for new construction.
Stocks on Wall Street were mixed.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
SALES REBOUND EYED
The rate on the 30-year fixed-rate mortgage jumped to an average of 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.
Mortgage rates soared as the Federal Reserve aggressively raised interest rates to fight inflation.
The 30-year fixed rate mortgage has fallen in recent weeks, and averaged a still-high 7.29% last week, tracking the decline in the 10-year Treasury yield amid optimism that the U.S. central bank was likely done hiking interest rates and could start easing monetary policy by mid-2024.
"We would look for a rebound in new home sales, which are a more timely indicator of housing demand, in November or December as mortgage rates fall again," said Veronica Clark, an economist at Citigroup in New York.
The median new house price in October was $409,300, a 17.6% drop from a year ago.
That was the largest percentage decline since the government started tracking records in 1964 and probably reflected incentives, including price cuts, being offered by builders to attract buyers.
The National Association of Homebuilders said this month that more than a third of builders reported cutting home prices in November.
Price cutting has been the norm this year.
Economists cautioned against reading too much in the price drop, noting that other measures like the Federal Housing Finance Agency's house price index showed strong price growth.
"High prices are also weighing on homebuying activity," said Daniel Silver, an economist at JPMorgan in New York.
"Although the median sale price in the new home sales report fell, we should keep in mind that this is not a very reliable house price gauge because it does not control for changes in the mix of sales."
Houses in the $150,000 to $499,999 price range accounted for a large share of the transactions last month.
There were 439,000 new homes on the market at the end of October, slightly up from 433,000 in September.
Most of the inventory was houses under construction.
At October's sales pace it would take 7.8 months to clear the supply of houses on the market, up from 7.2 months in September.
The government also reported on Monday that permits for future home construction were higher than previously estimated in October, increasing 1.8% to a rate of 1.498 million units.
Building permits were earlier this month reported to have risen 1.1% to a pace of 1.487 million units.
Strong demand for new construction resulted in residential investment rebounding in the third quarter after contracting for nine straight quarters.
With mortgage rates still a constraint, some economists doubted residential investment would continue to expand in the fourth quarter, adding to expectations for a sharp moderation in the broader economy.
Growth estimates for the fourth quarter are mostly below a 2% annualized rate.
The economy grew at a 4.9% pace in the July-September quarter.
"The risk to our forecast is to the upside if builders continue to successfully attract potential homebuyers with incentives," said Bernard Yaros, lead U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/us-n ... 023-11-27/
"Higher mortgage rates weigh on US new home sales in October"
By Lucia Mutikani
November 27, 2023
Summary
* New home sales drop 5.6% to a rate of 679,000 units
* Median house price plunges 17.6% to $409,300 from year ago
WASHINGTON, Nov 27 (Reuters) - Sales of new U.S. single-family homes fell more than expected in October as higher mortgage rates squeezed out buyers even as builders cut prices, but the setback is likely temporary amid a persistent shortage of previously owned houses on the market.
The decline in sales reported by the Commerce Department on Monday was in line with a recent deterioration in homebuilder sentiment, which came as the rate on the popular 30-year fixed-mortgage approached 8%, leaving builders anticipating slower buyer traffic.
Mortgage rates have since retreated from two-decade highs and are at levels last seen in late September, which could pave the way for a rebound in sales.
"The market for new homes remains very solid by any historical standard and continues to be boosted by extremely low existing home inventory," said Daniel Vielhaber, an economist at Nationwide in Ohio.
New home sales dropped 5.6% to a seasonally adjusted annual rate of 679,000 units last month, the Commerce Department's Census Bureau said.
September's sales pace was revised lower to 719,000 units from the previously reported 759,000 units.
Economists polled by Reuters had forecast new home sales, which account for 15.2% of U.S. home sales, would fall to a rate of 723,000 units.
The share is the largest in at least a decade.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 17.7% on a year-on-year basis in October.
Monthly sales rose in the Northeast and densely populated South.
But they tumbled in the Midwest, the most affordable region, and in the West, where housing is expensive.
The supply of previously owned houses on the market is nearly 50% below its pre-pandemic level, according to the National Association of Realtors, which last week reported that home resales plunged to more than a 13-year low in October.
Most homeowners have mortgage rates under 3%, making many reluctant to sell, boosting demand for new construction.
Stocks on Wall Street were mixed.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
SALES REBOUND EYED
The rate on the 30-year fixed-rate mortgage jumped to an average of 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.
Mortgage rates soared as the Federal Reserve aggressively raised interest rates to fight inflation.
The 30-year fixed rate mortgage has fallen in recent weeks, and averaged a still-high 7.29% last week, tracking the decline in the 10-year Treasury yield amid optimism that the U.S. central bank was likely done hiking interest rates and could start easing monetary policy by mid-2024.
"We would look for a rebound in new home sales, which are a more timely indicator of housing demand, in November or December as mortgage rates fall again," said Veronica Clark, an economist at Citigroup in New York.
The median new house price in October was $409,300, a 17.6% drop from a year ago.
That was the largest percentage decline since the government started tracking records in 1964 and probably reflected incentives, including price cuts, being offered by builders to attract buyers.
The National Association of Homebuilders said this month that more than a third of builders reported cutting home prices in November.
Price cutting has been the norm this year.
Economists cautioned against reading too much in the price drop, noting that other measures like the Federal Housing Finance Agency's house price index showed strong price growth.
"High prices are also weighing on homebuying activity," said Daniel Silver, an economist at JPMorgan in New York.
"Although the median sale price in the new home sales report fell, we should keep in mind that this is not a very reliable house price gauge because it does not control for changes in the mix of sales."
Houses in the $150,000 to $499,999 price range accounted for a large share of the transactions last month.
There were 439,000 new homes on the market at the end of October, slightly up from 433,000 in September.
Most of the inventory was houses under construction.
At October's sales pace it would take 7.8 months to clear the supply of houses on the market, up from 7.2 months in September.
The government also reported on Monday that permits for future home construction were higher than previously estimated in October, increasing 1.8% to a rate of 1.498 million units.
Building permits were earlier this month reported to have risen 1.1% to a pace of 1.487 million units.
Strong demand for new construction resulted in residential investment rebounding in the third quarter after contracting for nine straight quarters.
With mortgage rates still a constraint, some economists doubted residential investment would continue to expand in the fourth quarter, adding to expectations for a sharp moderation in the broader economy.
Growth estimates for the fourth quarter are mostly below a 2% annualized rate.
The economy grew at a 4.9% pace in the July-September quarter.
"The risk to our forecast is to the upside if builders continue to successfully attract potential homebuyers with incentives," said Bernard Yaros, lead U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/us-n ... 023-11-27/
Re: THE HOUSING MARKET
CNBC
"Pending home sales drop to a record low, even worse than during the financial crisis"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED THU, NOV 30 2023
KEY POINTS
* Pending home sales in October dropped to the lowest level since the National Association of Realtors began tracking them in 2001.
* Mortgage rates in October rose sharply, with the average on the 30-year fixed loan briefly soaring over 8%.
* Rates have since pulled back but are still above 7%, and supply is still tight.
Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in October from September.
They hit the lowest level since the National Association of Realtors began tracking this metric in 2001, meaning it’s even worse than readings during the financial crisis more than a decade ago.
Sales were down 8.5% from October of last year.
Because the index measures signed contracts, it is the most recent indicator of housing demand.
It reflects the buyers who were out shopping in October, which was when the popular 30-year fixed mortgage rate briefly shot higher than 8%.
Rates have since pulled back to around 7.3%, according to Mortgage News Daily.
The realtors continue to say it’s not just high rates but still very low supply of homes for sale that is deflating activity.
“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, chief economist for the NAR, said in a release.
“Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
Pending sales fell in all regions month to month except in the Northeast.
They fell most steeply in the West, which is where homes are most expensive.
Sales were down everywhere compared with a year ago.
Tight supply and still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.
The Realtors noted that sales of homes priced above $750,000 have been increasing simply because there is more supply on the high end of the market.
https://www.cnbc.com/2023/11/30/pending ... d-low.html
"Pending home sales drop to a record low, even worse than during the financial crisis"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED THU, NOV 30 2023
KEY POINTS
* Pending home sales in October dropped to the lowest level since the National Association of Realtors began tracking them in 2001.
* Mortgage rates in October rose sharply, with the average on the 30-year fixed loan briefly soaring over 8%.
* Rates have since pulled back but are still above 7%, and supply is still tight.
Pending home sales, a measure of signed contracts on existing homes, dropped 1.5% in October from September.
They hit the lowest level since the National Association of Realtors began tracking this metric in 2001, meaning it’s even worse than readings during the financial crisis more than a decade ago.
Sales were down 8.5% from October of last year.
Because the index measures signed contracts, it is the most recent indicator of housing demand.
It reflects the buyers who were out shopping in October, which was when the popular 30-year fixed mortgage rate briefly shot higher than 8%.
Rates have since pulled back to around 7.3%, according to Mortgage News Daily.
The realtors continue to say it’s not just high rates but still very low supply of homes for sale that is deflating activity.
“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, chief economist for the NAR, said in a release.
“Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
Pending sales fell in all regions month to month except in the Northeast.
They fell most steeply in the West, which is where homes are most expensive.
Sales were down everywhere compared with a year ago.
Tight supply and still-strong demand have kept pressure on home prices, which not only continue to hit new highs but appear to be accelerating in their gains.
The Realtors noted that sales of homes priced above $750,000 have been increasing simply because there is more supply on the high end of the market.
https://www.cnbc.com/2023/11/30/pending ... d-low.html