REUTERS
"U.S. homebuilding stumbles amid unrelenting supply constraints"
By Lucia Mutikani
August 18, 2021
Summary
* Housing starts fall 7.0% in July
* Single-family starts drop 4.5%; multi-family dive 13.1%
* Building permits rise 2.6%; single-family fall 1.7%
WASHINGTON, Aug 18 (Reuters) - U.S. homebuilding fell more than expected in July, the latest sign that surging construction costs and home prices continued to constrain the housing market early in the third quarter.
Though the report from the Commerce Department on Wednesday showed a rebound in building permits after three straight monthly declines, the gain was in the volatile multi-family home segment, which will do little to ease an acute housing shortage that is driving up prices.
The number of houses authorized for construction but not yet started last month was the third highest on record, indicating builders remained hesitant to undertake new projects.
"There is no question that home building has hit some sort of near-term ceiling, with surging home prices reducing affordability and leading to a record drop in the proportion of consumers that feel now is a good time to buy a home," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.
Housing starts dropped 7.0% to a seasonally adjusted annual rate of 1.534 million units last month.
Data for June was revised up to a rate of 1.650 million units from the previously reported 1.643 million units.
Economists polled by Reuters had forecast starts would fall to a rate of 1.600 million units.
Homebuilding fell in the Northeast, Midwest and West, but rose in the populous South.
Starts increased 2.5% on a year-on-year basis in July.
Single-family starts, which account for the largest share of the housing market, fell 4.5% to a rate of 1.111 million units.
Starts for the multi-family segment tumbled 13.1% to a rate of 423,000 units.
Permits for future homebuilding rose 2.6% to a rate of 1.635 million units in July.
Single-family permits fell 1.7% to a rate of 1.048 million units.
They are lagging starts, suggesting a modest rebound in single-family homebuilding.
Permits for multi-family housing projects jumped 11.2% to a rate of 587,000 units, reflecting a rebound in demand for rental accommodation as the economy fully reopens.
The report followed on the heels of a survey from the National Association of Home Builders on Tuesday showing confidence among single-family homebuilders dropped to a 13-month low in August because of higher material costs and home prices, which are cooling demand for houses.
Stocks on Wall Street were mixed in volatile trade.
The dollar was steady against a basket of currencies.
U.S. Treasury prices fell.
HIGH HOUSE PRICES
Building costs remain an issue even though lumber futures have tumbled from a record high of $1,711 per thousand board feet in May.
Land and labor shortages persist.
Homebuilding has struggled to gain traction since racing to a rate of 1.725 million units in March, which was the highest level since June 2006.
Housing demand boomed during the COVID-19 pandemic, which fueled a migration from cities to the suburbs and other low-density areas as Americans sought spacious accommodations for home offices and schooling.
The robust demand, also driven by record-low mortgage rates, far outpaced supply.
The inventory of previously owned homes is near record lows, leading to double-digit annual growth in home prices.
But the pandemic tailwind is gradually fading as vaccinations allow companies to recall workers back to offices in city centers and schools reopen for in-person learning for the new academic year.
Potential homebuyers are also balking at the high house prices.
A report from the Mortgage Bankers Association on Wednesday showed applications for loans to buy a home decreased last week.
Residential investment contracted in the second quarter after three straight quarters of double-digit growth.
A modest rebound is expected in the third quarter.
Last month, building permits fell in the Northeast and South.
They rose in the West and Midwest.
The backlog of homes yet to be started increased 2.6% to 241,000 units, the third-highest reading in the series' history, which should help to keep housing starts supported.
"Some of these permitted units that haven't been started will be canceled, but most will eventually show up as starts as homebuilders work through their pipeline of homes under construction, supply chain bottlenecks are resolved, and prices of critical inputs such as lumber come off the boil," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
Housing completions jumped 5.6% to a rate of 1.391 million units last month.
Single-family home completions increased 3.6% to a rate of 954,000 units.
The pandemic has lengthened the time from when a permit is issued for single-family home construction to completion, which economists blamed on supply constraints.
Realtors estimate that single-family housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to close the inventory gap.
The stock of housing under construction climbed 0.4% to a rate of 1.373 million units last month.
"Solid housing demand and low inventory will incentivize homebuilders and support housing starts, but higher input and labor costs will temper activity," said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.
"We expect a modest pickup in housing starts in third quarter in the wake of last quarter's 2% decline."
Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/world/us/us-hou ... 021-08-18/
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"U.S. new home sales creep up; supply, prices remain constraints"
By Lucia Mutikani
August 24, 2021
Summary
* Single-family home sales increase 1.0% in July
* Sales decline 27.2% on year-on-year basis
*Median house price surges 18.4% to $390,500 from year ago
WASHINGTON, Aug 24 (Reuters) - Sales of new U.S. single-family homes increased in July after three straight monthly declines, but housing market momentum is slowing as surging housing prices amid tight supply sideline some first-time buyers from the market.
Though the report from the Commerce Department on Tuesday showed a big increase in new housing inventory, the jump was driven by a record rise in homes that are yet to be built.
Builders are taking longer to complete houses, hobbled by expensive raw materials as well as scarce land and workers.
"While demand for new homes remains strong, high prices and backlogs in construction will temper sales in the months ahead," said Nancy Vanden Houten, a U.S. economist at Oxford Economics in New York.
"Homebuilders are reportedly turning away buyers as they attempt to reduce the backlog of sales."
New home sales rose 1.0% to a seasonally adjusted annual rate of 708,000 units last month.
June's sales pace was revised up to 701,000 units from the previously reported 676,000 units.
Economists polled by Reuters had forecast new home sales, which account for 10.6% of U.S. home sales, increasing to a rate of 700,000 units in July.
Sales dropped 27.2% on a year-on-year basis in July.
The median new house price soared 18.4% from a year earlier to a record $390,500 in July.
Sales jumped to a rate of 993,000 units in January, the highest since the end of 2006, driven by historically low mortgage rates and a desire for spacious accommodations as Americans worked from home and took online classes during the COVID-19 pandemic.
The market for new homes is being driven by an acute shortage of previously owned houses.
But builders have struggled to fully take advantage of the supply squeeze, hampered by soaring lumber prices as well as shortages of other building materials and household appliances.
Though lumber prices have dropped sharply from May's record highs, they remain above their pre-pandemic levels.
Reports this month showed single-family building permits fell in July, while confidence among homebuilders hit a 13-month low in August.
A report on Monday showed sales of previously owned homes rose modestly in July.
Stocks on Wall Street were trading higher, with the S&P 500 and Nasdaq indexes hitting record highs, boosted by oil and travel-related shares.
The dollar was flat against a basket of currencies.
U.S. Treasury prices were mostly lower.
LOWER-COST STATES
Last month's gain in new home sales was driven by a 1.3% rise in the populous South and a 14.4% jump in the West.
Sales plunged 24.1% in the Northeast and decreased 20.2% in the Midwest.
"The pandemic has accelerated the migration to suburban markets and metro areas in lower-cost states such as Arizona, Utah, Texas and Florida," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.
"By contrast, new home sales weakened in areas where population growth has slowed, in part due to an outflow of residents seeking more affordable real estate, lower taxes and other lifestyle advantages."
New home sales were concentrated in the $200,000-$749,000 price range.
Sales in the under-$200,000 price bracket, the sought-after segment of the market, accounted for a mere 1% of transactions.
"Affordability is becoming an increasing issue in the new-home market," said Bernard Yaros, and economist at Moody's Analytics in West Chester, Pennsylvania.
"Single-family sales prices are up 20% from their pre-pandemic level, which is a touch lower than the run-up in sales prices in the existing-home market but still enough to deter potential homebuyers."
There were 367,000 new homes on the market in July, the highest since November 2008 and up from 348,000 in June.
Homes yet to be built accounted for record 28.6% of supply.
Completed houses made up only 9.8% of supply.
At July's sales pace it would take 6.2 months to clear the supply of houses on the market, up from 6.0 months in June.
About 75% of homes sold last month were either under construction or yet to be built.
"We expect sales to move upward as the year continues, as sufficient demand is present, but the pace at which acceleration occurs will likely be determined by the speed at which homebuilders can clear their current backlogs and overcome material availability and other supply constraints," said Mark Palim, deputy chief economist at Fannie Mae in Washington.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/world/us/us-new ... 021-08-24/
"U.S. new home sales creep up; supply, prices remain constraints"
By Lucia Mutikani
August 24, 2021
Summary
* Single-family home sales increase 1.0% in July
* Sales decline 27.2% on year-on-year basis
*Median house price surges 18.4% to $390,500 from year ago
WASHINGTON, Aug 24 (Reuters) - Sales of new U.S. single-family homes increased in July after three straight monthly declines, but housing market momentum is slowing as surging housing prices amid tight supply sideline some first-time buyers from the market.
Though the report from the Commerce Department on Tuesday showed a big increase in new housing inventory, the jump was driven by a record rise in homes that are yet to be built.
Builders are taking longer to complete houses, hobbled by expensive raw materials as well as scarce land and workers.
"While demand for new homes remains strong, high prices and backlogs in construction will temper sales in the months ahead," said Nancy Vanden Houten, a U.S. economist at Oxford Economics in New York.
"Homebuilders are reportedly turning away buyers as they attempt to reduce the backlog of sales."
New home sales rose 1.0% to a seasonally adjusted annual rate of 708,000 units last month.
June's sales pace was revised up to 701,000 units from the previously reported 676,000 units.
Economists polled by Reuters had forecast new home sales, which account for 10.6% of U.S. home sales, increasing to a rate of 700,000 units in July.
Sales dropped 27.2% on a year-on-year basis in July.
The median new house price soared 18.4% from a year earlier to a record $390,500 in July.
Sales jumped to a rate of 993,000 units in January, the highest since the end of 2006, driven by historically low mortgage rates and a desire for spacious accommodations as Americans worked from home and took online classes during the COVID-19 pandemic.
The market for new homes is being driven by an acute shortage of previously owned houses.
But builders have struggled to fully take advantage of the supply squeeze, hampered by soaring lumber prices as well as shortages of other building materials and household appliances.
Though lumber prices have dropped sharply from May's record highs, they remain above their pre-pandemic levels.
Reports this month showed single-family building permits fell in July, while confidence among homebuilders hit a 13-month low in August.
A report on Monday showed sales of previously owned homes rose modestly in July.
Stocks on Wall Street were trading higher, with the S&P 500 and Nasdaq indexes hitting record highs, boosted by oil and travel-related shares.
The dollar was flat against a basket of currencies.
U.S. Treasury prices were mostly lower.
LOWER-COST STATES
Last month's gain in new home sales was driven by a 1.3% rise in the populous South and a 14.4% jump in the West.
Sales plunged 24.1% in the Northeast and decreased 20.2% in the Midwest.
"The pandemic has accelerated the migration to suburban markets and metro areas in lower-cost states such as Arizona, Utah, Texas and Florida," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.
"By contrast, new home sales weakened in areas where population growth has slowed, in part due to an outflow of residents seeking more affordable real estate, lower taxes and other lifestyle advantages."
New home sales were concentrated in the $200,000-$749,000 price range.
Sales in the under-$200,000 price bracket, the sought-after segment of the market, accounted for a mere 1% of transactions.
"Affordability is becoming an increasing issue in the new-home market," said Bernard Yaros, and economist at Moody's Analytics in West Chester, Pennsylvania.
"Single-family sales prices are up 20% from their pre-pandemic level, which is a touch lower than the run-up in sales prices in the existing-home market but still enough to deter potential homebuyers."
There were 367,000 new homes on the market in July, the highest since November 2008 and up from 348,000 in June.
Homes yet to be built accounted for record 28.6% of supply.
Completed houses made up only 9.8% of supply.
At July's sales pace it would take 6.2 months to clear the supply of houses on the market, up from 6.0 months in June.
About 75% of homes sold last month were either under construction or yet to be built.
"We expect sales to move upward as the year continues, as sufficient demand is present, but the pace at which acceleration occurs will likely be determined by the speed at which homebuilders can clear their current backlogs and overcome material availability and other supply constraints," said Mark Palim, deputy chief economist at Fannie Mae in Washington.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/world/us/us-new ... 021-08-24/
Re: THE HOUSING MARKET
REUTERS
"U.S. existing home sales climb for second straight month in July"
By Evan Sully
AUGUST 23, 2021
(Reuters) -U.S. existing home sales increased for the second consecutive month in July as inventories improved moderately, while prices eased from the prior month’s record level.
Existing home sales increased 2.0% to a seasonally adjusted annual rate of 5.99 million units last month from June’s upwardly revised pace of 5.87 million units, the National Association of Realtors said on Monday.
Sales were unchanged in the Northeast, but increased in the Midwest, South and the West.
Economists polled by Reuters had forecast sales would decline to a rate of 5.83 million units in July.
Home resales, which account for the bulk of U.S. home sales, increased 1.5% on a year-on-year basis.
The median sales price slipped to $359,900 from June’s record level, but was still up 17.8% from the year-earlier period.
The sales rate increase suggests the drop-off in sales after a sharp run-up late in 2020 and early this year may have run its course.
“We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” Lawrence Yun, NAR’s chief economist, said in a statement.
“Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”
Homebuilding fell more than expected in July amid supply constraints, the Commerce Department reported last week, as surging construction costs and home prices continued to constrain the housing market.
There was, however, a rebound in building permits following three consecutive monthly declines.
Demand for housing soared throughout the coronavirus pandemic.
Since then, the combination of robust demand and record-low mortgage rates has far outpaced supply.
This has also made it harder for potential homebuyers to enter the market.
For example, a report from the Mortgage Bankers Association last week showed that applications for loans to purchase a house declined in the week ending Aug. 13.
“Going forward, the market for existing homes will be supported by strong demand and mortgage rates that remain relatively low,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.
“However, inventory remains lean despite the increase in July, and that will keep a floor under home prices, which are unaffordable for many prospective buyers.”
Data on new home sales for July are due on Tuesday.
Sales are forecast to rise to a seasonally adjusted annual rate of 700,000 units, according to a survey of economists polled by Reuters, after hitting a 14-month low in June.
“Continued economic recovery is key to maintaining sales momentum,” said Danielle Hale, chief economist at Realtor.com.
“Anything that disrupts progress, such as rising COVID cases, could knock home sales off course.”
Reporting by Evan Sully; Editing by Dan Burns and Paul Simao
https://www.reuters.com/article/usa-eco ... SL1N2PU142
"U.S. existing home sales climb for second straight month in July"
By Evan Sully
AUGUST 23, 2021
(Reuters) -U.S. existing home sales increased for the second consecutive month in July as inventories improved moderately, while prices eased from the prior month’s record level.
Existing home sales increased 2.0% to a seasonally adjusted annual rate of 5.99 million units last month from June’s upwardly revised pace of 5.87 million units, the National Association of Realtors said on Monday.
Sales were unchanged in the Northeast, but increased in the Midwest, South and the West.
Economists polled by Reuters had forecast sales would decline to a rate of 5.83 million units in July.
Home resales, which account for the bulk of U.S. home sales, increased 1.5% on a year-on-year basis.
The median sales price slipped to $359,900 from June’s record level, but was still up 17.8% from the year-earlier period.
The sales rate increase suggests the drop-off in sales after a sharp run-up late in 2020 and early this year may have run its course.
“We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” Lawrence Yun, NAR’s chief economist, said in a statement.
“Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”
Homebuilding fell more than expected in July amid supply constraints, the Commerce Department reported last week, as surging construction costs and home prices continued to constrain the housing market.
There was, however, a rebound in building permits following three consecutive monthly declines.
Demand for housing soared throughout the coronavirus pandemic.
Since then, the combination of robust demand and record-low mortgage rates has far outpaced supply.
This has also made it harder for potential homebuyers to enter the market.
For example, a report from the Mortgage Bankers Association last week showed that applications for loans to purchase a house declined in the week ending Aug. 13.
“Going forward, the market for existing homes will be supported by strong demand and mortgage rates that remain relatively low,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.
“However, inventory remains lean despite the increase in July, and that will keep a floor under home prices, which are unaffordable for many prospective buyers.”
Data on new home sales for July are due on Tuesday.
Sales are forecast to rise to a seasonally adjusted annual rate of 700,000 units, according to a survey of economists polled by Reuters, after hitting a 14-month low in June.
“Continued economic recovery is key to maintaining sales momentum,” said Danielle Hale, chief economist at Realtor.com.
“Anything that disrupts progress, such as rising COVID cases, could knock home sales off course.”
Reporting by Evan Sully; Editing by Dan Burns and Paul Simao
https://www.reuters.com/article/usa-eco ... SL1N2PU142
Re: THE HOUSING MARKET
REUTERS
"U.S. mortgage applications rise as mortgage rates edge down - MBA"
By Evan Sully
AUGUST 25, 2021
(Reuters) - Mortgage applications increased last week, as purchasing applications posted their largest increase since early July while mortgage rates edged down.
The Mortgage Bankers Association (MBA) said on Wednesday its average contract interest rate for traditional 30-year mortgages declined to 3.03% from 3.06% in the week ending Aug. 20.
The seasonally adjusted market composite index tracking mortgage applications rose 1.6% from a week earlier, reflecting a 0.9% increase in applications to refinance existing loans.
Purchase applications rose 3.0%, the MBA said.
After hitting record lows late last year below 2.9%, mortgage rates climbed in the first part of this year and peaked in the spring.
Rates had been drifting lower since, held down in large part by the U.S. Federal Reserve’s extraordinary stimulus measures aimed at helping the economy rebound from the coronavirus pandemic, but ticked higher last week after data showed a hiring surge last month.
“The purchase index was at its highest level since early July, despite still continuing to lag 2020’s pace,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“There was also some easing in average loan sizes, which is potentially a sign that more first-time buyers looking for lower-priced homes are being helped by the recent uptick in for-sale inventory for both newly built homes and existing homes.”
Existing home sales climbed for the second consecutive month in July, a report from the National Association of Realtors showed Monday.
New home sales also increased in July after three consecutive monthly declines, the Commerce Department said Tuesday.
However, momentum in the housing market appears to be slowing down as housing prices have continued to surge this year amid tight supply.
“Strong demand, still-low mortgage rates and a modest increase in the inventory of existing homes are supportive of home sales,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.
“However, supplies are still historically tight, and home prices at or near record levels will continue to temper the pace of home sales.”
Reporting by Evan Sully; Editing by Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL1N2PW16P
"U.S. mortgage applications rise as mortgage rates edge down - MBA"
By Evan Sully
AUGUST 25, 2021
(Reuters) - Mortgage applications increased last week, as purchasing applications posted their largest increase since early July while mortgage rates edged down.
The Mortgage Bankers Association (MBA) said on Wednesday its average contract interest rate for traditional 30-year mortgages declined to 3.03% from 3.06% in the week ending Aug. 20.
The seasonally adjusted market composite index tracking mortgage applications rose 1.6% from a week earlier, reflecting a 0.9% increase in applications to refinance existing loans.
Purchase applications rose 3.0%, the MBA said.
After hitting record lows late last year below 2.9%, mortgage rates climbed in the first part of this year and peaked in the spring.
Rates had been drifting lower since, held down in large part by the U.S. Federal Reserve’s extraordinary stimulus measures aimed at helping the economy rebound from the coronavirus pandemic, but ticked higher last week after data showed a hiring surge last month.
“The purchase index was at its highest level since early July, despite still continuing to lag 2020’s pace,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“There was also some easing in average loan sizes, which is potentially a sign that more first-time buyers looking for lower-priced homes are being helped by the recent uptick in for-sale inventory for both newly built homes and existing homes.”
Existing home sales climbed for the second consecutive month in July, a report from the National Association of Realtors showed Monday.
New home sales also increased in July after three consecutive monthly declines, the Commerce Department said Tuesday.
However, momentum in the housing market appears to be slowing down as housing prices have continued to surge this year amid tight supply.
“Strong demand, still-low mortgage rates and a modest increase in the inventory of existing homes are supportive of home sales,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.
“However, supplies are still historically tight, and home prices at or near record levels will continue to temper the pace of home sales.”
Reporting by Evan Sully; Editing by Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL1N2PW16P
Re: THE HOUSING MARKET
CNBC
"Fed is stoking another real estate price bubble that will wipe out home equity, investor Peter Boockvar warns"
Stephanie Landsman @STEPHLANDSMAN
PUBLISHED FRI, AUG 27 2021
Investor Peter Boockvar is sounding the alarm on a housing price bubble brought on by the Federal Reserve’s Covid pandemic policies.
He warns first-time homebuyers are most vulnerable to dramatic losses.
“I feel bad for the people who bought homes over the past year because they’re the ones that paid the very elevated prices,” the chief investment officer at Bleakley Advisory Group told CNBC’s “Trading Nation” on Thursday.
He singles out those who put down 5% amid historically low mortgage rates.
If home prices correct by 10%, Boockvar sees a world of pain.
‘Their equity is basically wiped out’
“Their equity is basically wiped out,” he said.
“For those who have owned for a while that have built up equity, they will be much more insulated.”
His warning comes as Fed policymakers convene virtually for the annual Jackson Hole, Wyoming, symposium.
Boockvar, who went on inflation watch in mid-2020, has been critical of Fed policy through the pandemic.
By maintaining unprecedented quantitative easing measures through the economic recovery, he notes the central bank created a spike in housing demand that has been overwhelming supply.
The result is skyrocketing prices.
“The problem is it stimulated so much demand that the supply side couldn’t keep up — whether it was builders who couldn’t get materials or couldn’t find labor or couldn’t find enough lots,” said Boockvar, a CNBC contributor.
Since housing is the most interest rate-sensitive part of the U.S. economy, Boockvar is concerned the repercussions will be far-reaching.
“It’s very hurtful for the buyer — particularly the first-time buyer who wants to own a home who is now getting priced out and then in turn is renting,” said Boockvar.
“But renting prices are going up dramatically, as well.”
He suggests there’s evidence the air is leaking out of the bubble.
“People are now seeing sticker shock in home prices and they’re backing off,” added Boockvar.
“Buyers are calling a time out."
"They said ‘I can’t afford this’ or ‘I want to wait to see home prices cool down.’”
Wall Street may get more clarity on the housing market next week with the pending sales of existing homes, the FHFA house price index and S&P CoreLogic Case-Shiller results.
He expects the data, which will reflect trends from earlier this summer, will be strong.
“We’re still going to see these double-digit home price increases,” Boockvar said.
“There’s still a dearth of inventory.”
https://www.cnbc.com/2021/08/27/housing ... warns.html
"Fed is stoking another real estate price bubble that will wipe out home equity, investor Peter Boockvar warns"
Stephanie Landsman @STEPHLANDSMAN
PUBLISHED FRI, AUG 27 2021
Investor Peter Boockvar is sounding the alarm on a housing price bubble brought on by the Federal Reserve’s Covid pandemic policies.
He warns first-time homebuyers are most vulnerable to dramatic losses.
“I feel bad for the people who bought homes over the past year because they’re the ones that paid the very elevated prices,” the chief investment officer at Bleakley Advisory Group told CNBC’s “Trading Nation” on Thursday.
He singles out those who put down 5% amid historically low mortgage rates.
If home prices correct by 10%, Boockvar sees a world of pain.
‘Their equity is basically wiped out’
“Their equity is basically wiped out,” he said.
“For those who have owned for a while that have built up equity, they will be much more insulated.”
His warning comes as Fed policymakers convene virtually for the annual Jackson Hole, Wyoming, symposium.
Boockvar, who went on inflation watch in mid-2020, has been critical of Fed policy through the pandemic.
By maintaining unprecedented quantitative easing measures through the economic recovery, he notes the central bank created a spike in housing demand that has been overwhelming supply.
The result is skyrocketing prices.
“The problem is it stimulated so much demand that the supply side couldn’t keep up — whether it was builders who couldn’t get materials or couldn’t find labor or couldn’t find enough lots,” said Boockvar, a CNBC contributor.
Since housing is the most interest rate-sensitive part of the U.S. economy, Boockvar is concerned the repercussions will be far-reaching.
“It’s very hurtful for the buyer — particularly the first-time buyer who wants to own a home who is now getting priced out and then in turn is renting,” said Boockvar.
“But renting prices are going up dramatically, as well.”
He suggests there’s evidence the air is leaking out of the bubble.
“People are now seeing sticker shock in home prices and they’re backing off,” added Boockvar.
“Buyers are calling a time out."
"They said ‘I can’t afford this’ or ‘I want to wait to see home prices cool down.’”
Wall Street may get more clarity on the housing market next week with the pending sales of existing homes, the FHFA house price index and S&P CoreLogic Case-Shiller results.
He expects the data, which will reflect trends from earlier this summer, will be strong.
“We’re still going to see these double-digit home price increases,” Boockvar said.
“There’s still a dearth of inventory.”
https://www.cnbc.com/2021/08/27/housing ... warns.html
Re: THE HOUSING MARKET
REUTERS
"U.S. pending home sales drop for second straight month in July"
By Evan Sully
AUGUST 30, 2021
(Reuters) -Contracts to purchase previously owned U.S. homes declined for the second consecutive month in July in step with limited supply that’s been unable to keep up with demand from potential homebuyers.
The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.8% after dropping a revised 2.0% in June.
Economists polled by Reuters had forecast pending home sales would increase 0.4%.
Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” Lawrence Yun, NAR’s chief economist, said in a statement. “
"Inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”
Home prices have surged nationwide in large part due to limited supply, with the median price for new single-family homes now topping $390,000 and for existing homes just under $360,000.
Compared with one year ago, pending home sales were down 8.5%.
“The highly competitive real estate market we saw in the first six months of 2021 squeezed available inventory to record-lows and pushed prices to new highs just as summer emerged, leaving many first-time buyers feeling frustrated,” said George Ratiu, manager of economic research for Realtor.com.
“However, in a noticeable shift, homeowners responded to market trends and started listing homes in larger numbers.”
Only the West region posted a month-over-month gain in contract activity in July, while the Midwest, Northeast and the South all reported declines.
All four regions saw transactions decrease on a year-over-year basis.
“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers – sometimes double-digit bids on one property – have dissipated in most regions,” Yun said.
“Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”
Existing home sales increased for the second consecutive month in July as inventories improved moderately.
New home sales also increased last month, but this followed three straight months of declines.
Reporting by Evan Sully; Editing by Andrea Ricci
https://www.reuters.com/article/usa-eco ... SKBN2FV162
"U.S. pending home sales drop for second straight month in July"
By Evan Sully
AUGUST 30, 2021
(Reuters) -Contracts to purchase previously owned U.S. homes declined for the second consecutive month in July in step with limited supply that’s been unable to keep up with demand from potential homebuyers.
The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.8% after dropping a revised 2.0% in June.
Economists polled by Reuters had forecast pending home sales would increase 0.4%.
Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.
“The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” Lawrence Yun, NAR’s chief economist, said in a statement. “
"Inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”
Home prices have surged nationwide in large part due to limited supply, with the median price for new single-family homes now topping $390,000 and for existing homes just under $360,000.
Compared with one year ago, pending home sales were down 8.5%.
“The highly competitive real estate market we saw in the first six months of 2021 squeezed available inventory to record-lows and pushed prices to new highs just as summer emerged, leaving many first-time buyers feeling frustrated,” said George Ratiu, manager of economic research for Realtor.com.
“However, in a noticeable shift, homeowners responded to market trends and started listing homes in larger numbers.”
Only the West region posted a month-over-month gain in contract activity in July, while the Midwest, Northeast and the South all reported declines.
All four regions saw transactions decrease on a year-over-year basis.
“Homes listed for sale are still garnering great interest, but the multiple, frenzied offers – sometimes double-digit bids on one property – have dissipated in most regions,” Yun said.
“Even in a somewhat calmer market, a number of potential buyers are still choosing to waive appraisals and inspections.”
Existing home sales increased for the second consecutive month in July as inventories improved moderately.
New home sales also increased last month, but this followed three straight months of declines.
Reporting by Evan Sully; Editing by Andrea Ricci
https://www.reuters.com/article/usa-eco ... SKBN2FV162
Re: THE HOUSING MARKET
CNBC
"Soaring home prices shattered another record in June, S&P Case-Shiller says"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, AUG 31 2021
KEY POINTS
* Home prices rose 18.6% annually in June, up from a 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index.
* Prices are now 41% higher than their last peak during the housing boom in 2006.
* Home prices continue to surge due to strong demand and persistent low supply.
Home prices rose 18.6% annually in June, up from the 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index.
That is the largest annual gain in the history of the index dating back to 1987.
Prices nationally are now 41% higher than their last peak during the housing boom in 2006.
Unlike other median price surveys, which can be skewed by the type of homes selling, this measures repeat sales of similar homes over time.
The 10-City composite rose 18.5%, up from 16.6% in the previous month.
The 20-City composite was up 19.1%, up from 17.1% in the previous month.
Phoenix, San Diego, and Seattle reported the strongest price increases of the 20 cities.
Prices in Phoenix increased 29.3% year-over-year.
In San Diego they rose 27.1%, and in Seattle they were up 25.0%.
All 20 cities reported higher price increases in the year ending June 2021 versus the year ending May 2021.
“The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI.
“In June, all 20 cities rose, and all 20 gained more in the 12 months ended in June than they had gained in the 12 months ended in May.”
Prices in just about every city in the 20-city index, except for Chicago, are at all-time highs, he said, as are the national composition and the 10- and 20-city indices.
Home prices continue to surge due to strong demand and persistent low supply.
While supply has been increasing month to month, it was still down 12% in July year-over-year, according to the National Association of Realtors.
Peter Boockvar, chief investment officer at Bleakley Advisory group, said prices are rising at “a really out of control pace that is unsustainable and unhealthy.”
Home sales, however, have started to cool.
Signed contracts on existing homes dropped in July, according to the National Association of Realtors.
Prices usually lag sales by about six months, so that could be a sign that price gains will stop accelerating as they have been for over a year.
“According to new Ally Home data, 45% of buyers say they have delayed purchasing a home due to market conditions, with 29% citing high home prices and 20% indicating homes selling too quickly as factors in this delay,” says Glenn Brunker, president of Ally Home.
Low mortgage rates continue to keep prices strong.
Rates will rise if the Federal Reserve slows its purchases of mortgage-backed bonds, but so far that is not expected to happen in the near term.
https://www.cnbc.com/2021/08/31/home-pr ... -says.html
"Soaring home prices shattered another record in June, S&P Case-Shiller says"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, AUG 31 2021
KEY POINTS
* Home prices rose 18.6% annually in June, up from a 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index.
* Prices are now 41% higher than their last peak during the housing boom in 2006.
* Home prices continue to surge due to strong demand and persistent low supply.
Home prices rose 18.6% annually in June, up from the 16.8% increase in May, according to the S&P CoreLogic Case-Shiller national home price index.
That is the largest annual gain in the history of the index dating back to 1987.
Prices nationally are now 41% higher than their last peak during the housing boom in 2006.
Unlike other median price surveys, which can be skewed by the type of homes selling, this measures repeat sales of similar homes over time.
The 10-City composite rose 18.5%, up from 16.6% in the previous month.
The 20-City composite was up 19.1%, up from 17.1% in the previous month.
Phoenix, San Diego, and Seattle reported the strongest price increases of the 20 cities.
Prices in Phoenix increased 29.3% year-over-year.
In San Diego they rose 27.1%, and in Seattle they were up 25.0%.
All 20 cities reported higher price increases in the year ending June 2021 versus the year ending May 2021.
“The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI.
“In June, all 20 cities rose, and all 20 gained more in the 12 months ended in June than they had gained in the 12 months ended in May.”
Prices in just about every city in the 20-city index, except for Chicago, are at all-time highs, he said, as are the national composition and the 10- and 20-city indices.
Home prices continue to surge due to strong demand and persistent low supply.
While supply has been increasing month to month, it was still down 12% in July year-over-year, according to the National Association of Realtors.
Peter Boockvar, chief investment officer at Bleakley Advisory group, said prices are rising at “a really out of control pace that is unsustainable and unhealthy.”
Home sales, however, have started to cool.
Signed contracts on existing homes dropped in July, according to the National Association of Realtors.
Prices usually lag sales by about six months, so that could be a sign that price gains will stop accelerating as they have been for over a year.
“According to new Ally Home data, 45% of buyers say they have delayed purchasing a home due to market conditions, with 29% citing high home prices and 20% indicating homes selling too quickly as factors in this delay,” says Glenn Brunker, president of Ally Home.
Low mortgage rates continue to keep prices strong.
Rates will rise if the Federal Reserve slows its purchases of mortgage-backed bonds, but so far that is not expected to happen in the near term.
https://www.cnbc.com/2021/08/31/home-pr ... -says.html
Re: THE HOUSING MARKET
REUTERS
"Surging COVID-19 cases dampen U.S. consumer confidence, house prices post record gains"
By Lucia Mutikani
August 31, 2021
Summary
* Consumer confidence drops sharply in August
* House prices surge in June
WASHINGTON, Aug 31 (Reuters) - U.S. consumer confidence fell to a six-month low in August as worries about soaring COVID-19 infections and higher inflation dimmed the outlook for the economy.
The survey from the Conference Board on Tuesday showed consumers less inclined to buy a home and big-ticket items like motor vehicles and major household appliances over the next six months, supporting the view that consumer spending will cool in the third quarter after two straight quarters of robust growth.
Still, more consumers planned to go on vacation, indicating a rotation in spending from goods to services was underway as economic activity continues to normalize following the upheaval caused by the coronavirus pandemic.
Increased spending on services, which account for the bulk of economic activity, should keep a floor under consumer spending.
"The report does raise the warning flag that if the pandemic worsens, and given the continued unwillingness of many to get vaccinated that is a real possibility, we could see people stashing away funds just in case," said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.
"We could see growth moderate faster than expected."
The Conference Board's consumer confidence index dropped to a reading of 113.8 this month, the lowest since February, from 125.1 in July.
Economists polled by Reuters had forecast the index falling to 124.0.
The cutoff for the survey was Aug. 25, before the killing of 13 service members in Afghanistan and Hurricane Ida slammed Louisiana.
The measure, which places more emphasis on the labor market, held up well compared to other surveys.
The University of Michigan's survey of consumers showed sentiment tumbling to near decade lows in August because of rising prices for goods like food and gasoline, as well as the resurgence in COVID-19 cases that has been driven by the Delta variant of the coronavirus.
"While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead," said Lynn Franco, senior director of economic indicators at the Conference Board in Washington.
Consumers' inflation expectations over the next 12 months rose to 6.8% from 6.6% last month.
There are signs, however, that price pressures have peaked, with data last week showing the Federal Reserve's preferred inflation measure posting its smallest gain in five months in July.
Wall Street's main indexes hovered near record highs.
The dollar was steady against a basket of currencies.
U.S. Treasury prices were lower.
LABOR MARKET HOLDING UP
The Conference Board's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, slipped to a still-high reading of 42.8 this month from 44.1 in July, which was the highest since July 2000.
This measure closely correlates to the unemployment rate in the Labor Department's closely watched employment report.
"It continues to send a pretty favorable signal about labor market conditions," said Daniel Silver, an economist at JPMorgan in New York.
Nonfarm payrolls likely increased by 750,000 in August after rising 943,000 in July, according to a Reuters survey of economists.
The unemployment rate is forecast falling to 5.2% from 5.4% last month.
Though fewer households intended to buy long-lasting manufactured goods such as motor vehicles and household appliances like washing machines and clothes dryers this month, more expected to travel domestically, with many intending to fly to their destinations.
Households accumulated at least $2.5 trillion in excess savings during the pandemic, laying a strong foundation for consumer spending.
Gross domestic product growth estimates for the third quarter are around a 5% annualized rate.
The economy grew at a 6.6% pace in the second quarter.
The Conference Board survey also showed less enthusiasm among consumers for home purchases over the next six months amid higher house prices, which are sidelining some first-time buyers from the market.
Demand for housing soared early in the pandemic as Americans sought more spacious accommodations for home offices and home schooling, but supply severely lagged, fueling house price growth.
COVID-19 vaccinations have allowed some employers to recall workers to offices.
Schools and universities have reopened for in-person learning.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index jumped a record 18.6% in June from a year ago after rising 16.8% in May.
Economists, however, believe that house price inflation has peaked, with homes becoming less affordable especially for first-time buyers.
"Some early data suggests that the buyer frenzy experienced this spring is tapering, though many buyers still remain in the market," said Selma Hepp, deputy chief economist at CoreLogic.
"Nevertheless, less competition and more for-sale homes suggest we may be seeing the peak of home price acceleration."
"Going forward, home price growth may ease off but stay in the double digits through year-end."
A third report from the Federal Housing Finance Agency (FHFA) showed its house price index rose a record 18.8% in the 12 months through June.
House prices surged 17.4% in the second quarter compared to the same period in 2020.
FHFA believes house prices peaked in June.
Reporting by Lucia Mutikani; Additional reporting by Evan Sully; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/business/us-con ... 021-08-31/
"Surging COVID-19 cases dampen U.S. consumer confidence, house prices post record gains"
By Lucia Mutikani
August 31, 2021
Summary
* Consumer confidence drops sharply in August
* House prices surge in June
WASHINGTON, Aug 31 (Reuters) - U.S. consumer confidence fell to a six-month low in August as worries about soaring COVID-19 infections and higher inflation dimmed the outlook for the economy.
The survey from the Conference Board on Tuesday showed consumers less inclined to buy a home and big-ticket items like motor vehicles and major household appliances over the next six months, supporting the view that consumer spending will cool in the third quarter after two straight quarters of robust growth.
Still, more consumers planned to go on vacation, indicating a rotation in spending from goods to services was underway as economic activity continues to normalize following the upheaval caused by the coronavirus pandemic.
Increased spending on services, which account for the bulk of economic activity, should keep a floor under consumer spending.
"The report does raise the warning flag that if the pandemic worsens, and given the continued unwillingness of many to get vaccinated that is a real possibility, we could see people stashing away funds just in case," said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.
"We could see growth moderate faster than expected."
The Conference Board's consumer confidence index dropped to a reading of 113.8 this month, the lowest since February, from 125.1 in July.
Economists polled by Reuters had forecast the index falling to 124.0.
The cutoff for the survey was Aug. 25, before the killing of 13 service members in Afghanistan and Hurricane Ida slammed Louisiana.
The measure, which places more emphasis on the labor market, held up well compared to other surveys.
The University of Michigan's survey of consumers showed sentiment tumbling to near decade lows in August because of rising prices for goods like food and gasoline, as well as the resurgence in COVID-19 cases that has been driven by the Delta variant of the coronavirus.
"While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead," said Lynn Franco, senior director of economic indicators at the Conference Board in Washington.
Consumers' inflation expectations over the next 12 months rose to 6.8% from 6.6% last month.
There are signs, however, that price pressures have peaked, with data last week showing the Federal Reserve's preferred inflation measure posting its smallest gain in five months in July.
Wall Street's main indexes hovered near record highs.
The dollar was steady against a basket of currencies.
U.S. Treasury prices were lower.
LABOR MARKET HOLDING UP
The Conference Board's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, slipped to a still-high reading of 42.8 this month from 44.1 in July, which was the highest since July 2000.
This measure closely correlates to the unemployment rate in the Labor Department's closely watched employment report.
"It continues to send a pretty favorable signal about labor market conditions," said Daniel Silver, an economist at JPMorgan in New York.
Nonfarm payrolls likely increased by 750,000 in August after rising 943,000 in July, according to a Reuters survey of economists.
The unemployment rate is forecast falling to 5.2% from 5.4% last month.
Though fewer households intended to buy long-lasting manufactured goods such as motor vehicles and household appliances like washing machines and clothes dryers this month, more expected to travel domestically, with many intending to fly to their destinations.
Households accumulated at least $2.5 trillion in excess savings during the pandemic, laying a strong foundation for consumer spending.
Gross domestic product growth estimates for the third quarter are around a 5% annualized rate.
The economy grew at a 6.6% pace in the second quarter.
The Conference Board survey also showed less enthusiasm among consumers for home purchases over the next six months amid higher house prices, which are sidelining some first-time buyers from the market.
Demand for housing soared early in the pandemic as Americans sought more spacious accommodations for home offices and home schooling, but supply severely lagged, fueling house price growth.
COVID-19 vaccinations have allowed some employers to recall workers to offices.
Schools and universities have reopened for in-person learning.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index jumped a record 18.6% in June from a year ago after rising 16.8% in May.
Economists, however, believe that house price inflation has peaked, with homes becoming less affordable especially for first-time buyers.
"Some early data suggests that the buyer frenzy experienced this spring is tapering, though many buyers still remain in the market," said Selma Hepp, deputy chief economist at CoreLogic.
"Nevertheless, less competition and more for-sale homes suggest we may be seeing the peak of home price acceleration."
"Going forward, home price growth may ease off but stay in the double digits through year-end."
A third report from the Federal Housing Finance Agency (FHFA) showed its house price index rose a record 18.8% in the 12 months through June.
House prices surged 17.4% in the second quarter compared to the same period in 2020.
FHFA believes house prices peaked in June.
Reporting by Lucia Mutikani; Additional reporting by Evan Sully; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/business/us-con ... 021-08-31/
Re: THE HOUSING MARKET
FORTUNE
"A shock is headed for the housing market"
Lance Lambert
5 SEPTEMBER 2021
At the height of the pandemic, more than 7.2 million homeowners were in the mortgage forbearance program, which allows some borrowers to pause their payments.
The economy has since posted one of the fastest recoveries in history.
Now, just 1.7 million borrowers are enrolled in the forbearance program.
But soon it’ll be zero.
The Biden-Harris administration has made it clear it has no plans for another extension of the mortgage forbearance program, which is set to lapse on Sept. 30.
Borrowers won’t all get removed at once, instead they’ll be phased out over a period of several months.
Nonetheless, as Fortune has previously reported, this is a major shake-up headed for the housing market.
In a nation of more than 80 million homeowners, 1.7 million might not sound like a lot — until you consider there are just over 600,000 homes for sale right now on realtor.com.
In fact, this year housing inventory hit a 40-year low.
So, if even a small percentage of these 1.7 million struggling borrowers opt to sell — rather than returning to their monthly payments — it could cause a shock in the housing market.
Back in July, Fortune reached out to researchers at Home.LLC, a startup that provides down payment assistance to homebuyers in return for a share of profits, to forecast how the end of forbearance would impact the market.
They found the end of the program is likely to see U.S. inventory — homes for sale — rise by 11% later this year.
While that’ll hardly shift the housing market from a seller’s market to a buyer’s market, it would soften the market a bit.
Even before mortgage forbearance ends, the market is already starting to cool.
After seeing housing inventory plummet over 50% between April 2020 to April 2021, it’s moving up again.
Inventory levels ticked up 8.8% in June, and another 10.4% in July.
Over the past year, median home prices are up 17.2%, according to real estate research firm CoreLogic.
In the coming 12 months, CoreLogic foresees that slowing down a bit, to just a 3.2% appreciation.
But don’t expect the end of forbearance to sink the market.
A housing market crash is very unlikely: In the short term, a wave of demographics and years of under-building will ensure, industry insiders tell Fortune, that demand outmatches supply.
A foreclosure meltdown is also unlikely.
The strong housing market means most of these struggling homeowners have positive home equity.
So if these homeowners decide to walk away, they can simply sell.
That is very different from what happened during the Great Recession: Millions of underwater borrowers, with mortgage balances greater than their home’s value — were forced to sell.
But we could still see a lot more inventory in the coming months.
This story was originally featured on Fortune.com
https://www.msn.com/en-us/money/realest ... d=msedgntp
"A shock is headed for the housing market"
Lance Lambert
5 SEPTEMBER 2021
At the height of the pandemic, more than 7.2 million homeowners were in the mortgage forbearance program, which allows some borrowers to pause their payments.
The economy has since posted one of the fastest recoveries in history.
Now, just 1.7 million borrowers are enrolled in the forbearance program.
But soon it’ll be zero.
The Biden-Harris administration has made it clear it has no plans for another extension of the mortgage forbearance program, which is set to lapse on Sept. 30.
Borrowers won’t all get removed at once, instead they’ll be phased out over a period of several months.
Nonetheless, as Fortune has previously reported, this is a major shake-up headed for the housing market.
In a nation of more than 80 million homeowners, 1.7 million might not sound like a lot — until you consider there are just over 600,000 homes for sale right now on realtor.com.
In fact, this year housing inventory hit a 40-year low.
So, if even a small percentage of these 1.7 million struggling borrowers opt to sell — rather than returning to their monthly payments — it could cause a shock in the housing market.
Back in July, Fortune reached out to researchers at Home.LLC, a startup that provides down payment assistance to homebuyers in return for a share of profits, to forecast how the end of forbearance would impact the market.
They found the end of the program is likely to see U.S. inventory — homes for sale — rise by 11% later this year.
While that’ll hardly shift the housing market from a seller’s market to a buyer’s market, it would soften the market a bit.
Even before mortgage forbearance ends, the market is already starting to cool.
After seeing housing inventory plummet over 50% between April 2020 to April 2021, it’s moving up again.
Inventory levels ticked up 8.8% in June, and another 10.4% in July.
Over the past year, median home prices are up 17.2%, according to real estate research firm CoreLogic.
In the coming 12 months, CoreLogic foresees that slowing down a bit, to just a 3.2% appreciation.
But don’t expect the end of forbearance to sink the market.
A housing market crash is very unlikely: In the short term, a wave of demographics and years of under-building will ensure, industry insiders tell Fortune, that demand outmatches supply.
A foreclosure meltdown is also unlikely.
The strong housing market means most of these struggling homeowners have positive home equity.
So if these homeowners decide to walk away, they can simply sell.
That is very different from what happened during the Great Recession: Millions of underwater borrowers, with mortgage balances greater than their home’s value — were forced to sell.
But we could still see a lot more inventory in the coming months.
This story was originally featured on Fortune.com
https://www.msn.com/en-us/money/realest ... d=msedgntp
Re: THE HOUSING MARKET
CNBC
"Homebuilder sentiment improves for first time in three months after a big drop in lumber prices"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED MON, SEP 20 2021
KEY POINTS
* Homebuilder sentiment improved for the first time in three months as lumber prices eased and buyer demand grew.
* Sentiment rose 1 point to 76, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
* Current sales conditions climbed 1 point to 82. Buyer traffic increased 2 points to 61, and sales expectations in the next six months held steady at 81.
Homebuilders in the single-family construction market are feeling better, as lumber prices are way down from sky-high levels and buyer demand is growing.
Builder sentiment rose 1point in September to 76, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
It was the first increase in three months.
Sentiment stood at 83 in September of last year and then set a record high of 90 last November.
It then dropped off dramatically when lumber prices spiked and supply chain issues hampered construction.
“The September data show stability as some building material cost challenges ease, particularly for softwood lumber."
"However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers,” said NAHB Chairman Chuck Fowke.
Lumber reached more than $1,600 per thousand board feet this spring, but the more recent price has been around $400.
Of the index’s three components, current sales conditions rose 1 point to 82.
Buyer traffic increased 2 points to 61 and sales expectations in the next six months held steady at 81.
“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” said NAHB Chief Economist Robert Dietz.
“While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”
The biggest hurdle for builders in the coming months will be affordability, as they are forced to raise prices in order to keep up with construction costs.
Buyers are still getting help from low mortgage rates, but should rates begin to rise, the squeeze on their wallets will intensify.
Mortgage giant Fannie Mae just lowered its expectations for fourth-quarter new home sales from 846,000 units to 789,000 units (annualized), citing supply problems as well as high home prices.
“Affordability remains a challenge, even with mortgage rates near historic lows; if the pace of income growth doesn’t keep up with inflation and interest rates rise more than expected, we’d expect housing activity to slow from our current projections,” said Doug Duncan, Fannie Mae’s chief economist.
Regionally, on a three-month moving average, builder sentiment in the Northeast fell 2 points to 72.
In the South it dropped 2 points to 80 and also fell 2 points in the West to 83.
The Midwest was unchanged at 68.
https://thelivyjrfiles.com/viewtopic.ph ... 956#p40956
"Homebuilder sentiment improves for first time in three months after a big drop in lumber prices"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED MON, SEP 20 2021
KEY POINTS
* Homebuilder sentiment improved for the first time in three months as lumber prices eased and buyer demand grew.
* Sentiment rose 1 point to 76, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
* Current sales conditions climbed 1 point to 82. Buyer traffic increased 2 points to 61, and sales expectations in the next six months held steady at 81.
Homebuilders in the single-family construction market are feeling better, as lumber prices are way down from sky-high levels and buyer demand is growing.
Builder sentiment rose 1point in September to 76, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
It was the first increase in three months.
Sentiment stood at 83 in September of last year and then set a record high of 90 last November.
It then dropped off dramatically when lumber prices spiked and supply chain issues hampered construction.
“The September data show stability as some building material cost challenges ease, particularly for softwood lumber."
"However, delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers,” said NAHB Chairman Chuck Fowke.
Lumber reached more than $1,600 per thousand board feet this spring, but the more recent price has been around $400.
Of the index’s three components, current sales conditions rose 1 point to 82.
Buyer traffic increased 2 points to 61 and sales expectations in the next six months held steady at 81.
“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” said NAHB Chief Economist Robert Dietz.
“While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”
The biggest hurdle for builders in the coming months will be affordability, as they are forced to raise prices in order to keep up with construction costs.
Buyers are still getting help from low mortgage rates, but should rates begin to rise, the squeeze on their wallets will intensify.
Mortgage giant Fannie Mae just lowered its expectations for fourth-quarter new home sales from 846,000 units to 789,000 units (annualized), citing supply problems as well as high home prices.
“Affordability remains a challenge, even with mortgage rates near historic lows; if the pace of income growth doesn’t keep up with inflation and interest rates rise more than expected, we’d expect housing activity to slow from our current projections,” said Doug Duncan, Fannie Mae’s chief economist.
Regionally, on a three-month moving average, builder sentiment in the Northeast fell 2 points to 72.
In the South it dropped 2 points to 80 and also fell 2 points in the West to 83.
The Midwest was unchanged at 68.
https://thelivyjrfiles.com/viewtopic.ph ... 956#p40956