MARKETWATCH
"New-home sales tick up as housing shortfall tops 4 million"
By Andrea Riquier
Published: Sept 26, 2018 10:47 a.m. ET
The numbers:
New-home sales ran at a seasonally adjusted annual 629,000 rate in August, the Commerce Department said Wednesday.
What happened:
Sales of newly-constructed homes rose 3.5% compared to July, and edged past the MarketWatch consensus of a 625,000 pace.
And the pace of sales in August was 12.7% higher than a year ago.
But hefty revisions to prior months were all downward, a reminder that the housing recovery remains grudgingly slow.
The median selling price in August was $320,200, 1.9% higher than year-ago prices.
Big picture:
The government’s home-construction reports are based on small samples and are often revised heavily, making it hard to rely on any one month’s data.
For the year to date, sales were 6.9% higher than the same period last year.
That year-to-date comparison has declined steadily over the course of the year, a possible sign of flagging momentum.
Another sign may be rising inventories: at the current pace of sales, it would take 6.1 months to exhaust available supply, one of the highest ratios in recent years.
In a note out after the release, Amherst Pierpont Securities Chief Economist Stephen Stanley noted that there were 318,000 homes available for sale in August, the highest number since 2011.
What they’re saying:
Economists at Freddie Mac analyzed the pace of new housing construction and found that years of underbuilding has left the U.S. with a cumulative shortfall — that is, supply compared to historical averages — of 4.6 million housing units in the years since 2000.
That number is especially stark considering that builders constructed a surplus of homes in the bubble years of the last decade.
Investors have turned bearish on publicly-traded builders, even as the fundamentals remain tilted in their favor.
On a Tuesday call with analysts, KB Home CEO Jeffrey Mezger addressed that issue, and reiterated the company’s commitment to lower-priced homes, where most housing-watchers think the greatest need — and the greatest opportunity — sits.
“I keep getting back to the current inventory levels which are low."
"While the national numbers are four months, many of the markets we’re in today at still two months, month-and-a-half, and then when you get into the price points we play at, it’s even less."
"So there’s not a lot of inventory out there at the affordable price band and much of the headlines, I think, are tied to higher price points that are seeing some slowdown and we’re trying to stay ahead of that,” Mezger said.
“We think market conditions are very good and continue to see a great opportunity as we head into 2019.”
KB Home’s results from the most recent quarter beat Wall Street expectations.
Market reaction:
The iShares U.S. Home Construction ETF was down in morning trading.
Its shares have lost nearly 17% in the year to date.
https://www.marketwatch.com/story/new-h ... 2018-09-26
THE HOUSING MARKET
Re: THE HOUSING MARKET
MARKETWATCH
"Mortgage rates hit a seven-and-a-half-year high as the easy money era comes to a close"
By Andrea Riquier
Published: Sept 27, 2018 4:56 p.m. ET
Could we see a “5-handle” on the 30-year-fixed soon?
Higher mortgage rates wouldn’t hurt the housing market on their own - but they are not the only headwind.
Rates for home loans jumped along with yields in the broader bond market, taking financing costs to a recent high and raising fresh questions about the effect of another headwind on a housing market that’s already sputtering.
The 30-year fixed-rate mortgage averaged 4.72% in the September 27 week, up from 4.65%, mortgage liquidity provider Freddie Mac said Thursday.
That marked the fifth straight weekly gain for the benchmark product, and took it to its highest point since April, 2011.
Mortgage rates track the U.S. 10-year Treasury note, which powered higher over the past week as investors braced for the Federal Reserve to raise short-term interest rates for the third time this year.
The past week has brought a flurry of housing data, none of it rosy.
In August, sales of existing homes were flat, sales of new homes were higher but sales tallies in previous months were marked sharply down from initial estimates, and home-contract signings swooned.
Economists remain optimistic that fundamentals should re-assert themselves.
In a release out Thursday, Freddie’s chief economist, Sam Khater, said “consumer confidence is at an 18-year high, and job gains are holding steady."
"These two factors should keep demand up in coming months.”
And the chief economist for the National Association of Realtors, Lawrence Yun, pointed to signs that homeowners are more ready to put their properties on the market as prices keep moderating.
“As long as there is job growth, rising mortgage rates will hinder some buyers,” Yun said.
“But job creation means second or third incomes being added to households which gives consumers the financial confidence to go out and make a home purchase.”
But only time will tell if this soft patch re-energizes the market by evening the sharply unequal playing field a bit more in favor of buyers, or if more people decide to sit it out and rent for a while.
https://www.marketwatch.com/story/mortg ... ewer_click
"Mortgage rates hit a seven-and-a-half-year high as the easy money era comes to a close"
By Andrea Riquier
Published: Sept 27, 2018 4:56 p.m. ET
Could we see a “5-handle” on the 30-year-fixed soon?
Higher mortgage rates wouldn’t hurt the housing market on their own - but they are not the only headwind.
Rates for home loans jumped along with yields in the broader bond market, taking financing costs to a recent high and raising fresh questions about the effect of another headwind on a housing market that’s already sputtering.
The 30-year fixed-rate mortgage averaged 4.72% in the September 27 week, up from 4.65%, mortgage liquidity provider Freddie Mac said Thursday.
That marked the fifth straight weekly gain for the benchmark product, and took it to its highest point since April, 2011.
Mortgage rates track the U.S. 10-year Treasury note, which powered higher over the past week as investors braced for the Federal Reserve to raise short-term interest rates for the third time this year.
The past week has brought a flurry of housing data, none of it rosy.
In August, sales of existing homes were flat, sales of new homes were higher but sales tallies in previous months were marked sharply down from initial estimates, and home-contract signings swooned.
Economists remain optimistic that fundamentals should re-assert themselves.
In a release out Thursday, Freddie’s chief economist, Sam Khater, said “consumer confidence is at an 18-year high, and job gains are holding steady."
"These two factors should keep demand up in coming months.”
And the chief economist for the National Association of Realtors, Lawrence Yun, pointed to signs that homeowners are more ready to put their properties on the market as prices keep moderating.
“As long as there is job growth, rising mortgage rates will hinder some buyers,” Yun said.
“But job creation means second or third incomes being added to households which gives consumers the financial confidence to go out and make a home purchase.”
But only time will tell if this soft patch re-energizes the market by evening the sharply unequal playing field a bit more in favor of buyers, or if more people decide to sit it out and rent for a while.
https://www.marketwatch.com/story/mortg ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Pending home sales drop as summer selling season limps to a close"
By Andrea Riquier
Published: Sept 27, 2018 4:01 p.m. ET
The numbers:
U.S. pending home sales sank 1.8% in August, the National Association of Realtors said Thursday.
What happened:
NAR’s index, which tracks real-estate transactions in which a contract has been signed but the transaction hasn’t yet closed, was lower than its year-ago levels for the eighth month in a row in August, this time by 2.3%.
August marked the fourth straight monthly decline as well.
Economists had forecast an unchanged reading.
Big picture:
There still aren’t enough homes to buy, and what's left over is too pricey and picked-over to tempt most buyers.
Rising mortgage rates won’t lead to a “significant decline,” NAR said in a release, but with little momentum in the market, they won’t help, either.
In August, pending home sales in the Northeast dropped 1.3%, while in the South they were down 0.7%.
In the Midwest, sales inched back 0.5%, and in the West, the priciest region of the country, they slid 5.9%.
Pending sales lead actual closings by about six weeks, so the report out Thursday doesn’t bode well for future activity.
What they’re saying:
One report after another confirms that energy in the housing market is fizzling out.
Earlier this month, the Realtor industry group reported that sales of existing homes were unchanged in August compared to July, a welcome relief after multiple months of declines.
The pace of price gains also moderated, but remains well above levels that most buyers can manage.
NAR forecasts a sales decline for 2018, but remains optimistic that more inventory will help perk up sales next year.
https://www.marketwatch.com/story/pendi ... 2018-09-27
"Pending home sales drop as summer selling season limps to a close"
By Andrea Riquier
Published: Sept 27, 2018 4:01 p.m. ET
The numbers:
U.S. pending home sales sank 1.8% in August, the National Association of Realtors said Thursday.
What happened:
NAR’s index, which tracks real-estate transactions in which a contract has been signed but the transaction hasn’t yet closed, was lower than its year-ago levels for the eighth month in a row in August, this time by 2.3%.
August marked the fourth straight monthly decline as well.
Economists had forecast an unchanged reading.
Big picture:
There still aren’t enough homes to buy, and what's left over is too pricey and picked-over to tempt most buyers.
Rising mortgage rates won’t lead to a “significant decline,” NAR said in a release, but with little momentum in the market, they won’t help, either.
In August, pending home sales in the Northeast dropped 1.3%, while in the South they were down 0.7%.
In the Midwest, sales inched back 0.5%, and in the West, the priciest region of the country, they slid 5.9%.
Pending sales lead actual closings by about six weeks, so the report out Thursday doesn’t bode well for future activity.
What they’re saying:
One report after another confirms that energy in the housing market is fizzling out.
Earlier this month, the Realtor industry group reported that sales of existing homes were unchanged in August compared to July, a welcome relief after multiple months of declines.
The pace of price gains also moderated, but remains well above levels that most buyers can manage.
NAR forecasts a sales decline for 2018, but remains optimistic that more inventory will help perk up sales next year.
https://www.marketwatch.com/story/pendi ... 2018-09-27
Re: THE HOUSING MARKET
MARKETWATCH
"Bond-market bloodbath likely to hit mortgage rates soon — another test for the housing market"
By Andrea Riquier
Published: Oct 4, 2018 3:50 p.m. ET
Rates for home loans moved sideways in the most recent week, but the burgeoning bond market sell-off will likely hit mortgages in the coming weeks, setting up another test for a strained housing market.
The 30-year fixed-rate mortgage averaged 4.71% in the October 4 week, down one basis point from 4.72%, mortgage liquidity provider Freddie Mac said Thursday.
That snapped a five-week stretch of gains for the benchmark product, which had recently hit its highest point since April, 2011.
The 15-year fixed-rate mortgage averaged 4.15%, also down one basis point.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.01%, up from 3.97%.
Those rates don’t include fees associated with obtaining mortgage loans.
Mortgage rates track the 10-year U.S. Treasury note but with a lag.
In the days covered by Freddie’s survey, bonds were whipsawed by geo-political events.
The announcement of a trade deal between the U.S., Canada and Mexico buoyed stocks and diminished interest in bonds on Monday.
But by Tuesday, concerns about Italy’s fiscal problems rattled markets, sending investors back into the perceived safety of bonds.
Bond yields move in the opposite direction of prices.
For now, there’s little fresh housing data, a reprieve after a dismal stretch of reports on new-home sales, existing-home sales and new construction.
But the specter of higher rates is distorting the mortgage market in unexpected ways.
On Wednesday, the Mortgage Bankers Association noted that the average interest rate on 5/1 adjustable rate mortgages had hit its highest ever, although the group has only been tracking ARMs since 2011.
(“5/1” means that the mortgage carries a set interest rate for the first five years of its life, and then re-sets every one year.)
Adjustable-rate mortgages, unlike fixed-rate ones, follow the path of short-term interest rates, which are currently being nudged upward by the Federal Reserve.
Some analysts think the compressed yield curve — the spread between rates demanded for longer-dated bonds versus shorter ones — is what’s making ARMs so unattractive.
In the early 2000s, ARMs were a popular strategy for getting home buyers into properties they couldn’t have otherwise afforded.
But they’ve always been a smart hedging tool for buyers or re-financers in specific situations: those who know they’ll only be in the home a short period, or are likely to pay off their mortgage quickly, for example.
With such a small difference between the rate on the ultra-secure 30-year fixed-rate and ARMs, there’s been little reason for homeowners to take a chance on future interest rates.
(It’s worth noting that the share of all mortgage applications that were ARMs in the most recent week ticked up a bit, possibly because the effective rate — the actual rate when points and fees are factored in — declined.)
https://www.marketwatch.com/story/mortg ... ewer_click
"Bond-market bloodbath likely to hit mortgage rates soon — another test for the housing market"
By Andrea Riquier
Published: Oct 4, 2018 3:50 p.m. ET
Rates for home loans moved sideways in the most recent week, but the burgeoning bond market sell-off will likely hit mortgages in the coming weeks, setting up another test for a strained housing market.
The 30-year fixed-rate mortgage averaged 4.71% in the October 4 week, down one basis point from 4.72%, mortgage liquidity provider Freddie Mac said Thursday.
That snapped a five-week stretch of gains for the benchmark product, which had recently hit its highest point since April, 2011.
The 15-year fixed-rate mortgage averaged 4.15%, also down one basis point.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.01%, up from 3.97%.
Those rates don’t include fees associated with obtaining mortgage loans.
Mortgage rates track the 10-year U.S. Treasury note but with a lag.
In the days covered by Freddie’s survey, bonds were whipsawed by geo-political events.
The announcement of a trade deal between the U.S., Canada and Mexico buoyed stocks and diminished interest in bonds on Monday.
But by Tuesday, concerns about Italy’s fiscal problems rattled markets, sending investors back into the perceived safety of bonds.
Bond yields move in the opposite direction of prices.
For now, there’s little fresh housing data, a reprieve after a dismal stretch of reports on new-home sales, existing-home sales and new construction.
But the specter of higher rates is distorting the mortgage market in unexpected ways.
On Wednesday, the Mortgage Bankers Association noted that the average interest rate on 5/1 adjustable rate mortgages had hit its highest ever, although the group has only been tracking ARMs since 2011.
(“5/1” means that the mortgage carries a set interest rate for the first five years of its life, and then re-sets every one year.)
Adjustable-rate mortgages, unlike fixed-rate ones, follow the path of short-term interest rates, which are currently being nudged upward by the Federal Reserve.
Some analysts think the compressed yield curve — the spread between rates demanded for longer-dated bonds versus shorter ones — is what’s making ARMs so unattractive.
In the early 2000s, ARMs were a popular strategy for getting home buyers into properties they couldn’t have otherwise afforded.
But they’ve always been a smart hedging tool for buyers or re-financers in specific situations: those who know they’ll only be in the home a short period, or are likely to pay off their mortgage quickly, for example.
With such a small difference between the rate on the ultra-secure 30-year fixed-rate and ARMs, there’s been little reason for homeowners to take a chance on future interest rates.
(It’s worth noting that the share of all mortgage applications that were ARMs in the most recent week ticked up a bit, possibly because the effective rate — the actual rate when points and fees are factored in — declined.)
https://www.marketwatch.com/story/mortg ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Home builder confidence ticks up as buyer demand overcomes headwinds — for now"
By Andrea Riquier
Published: Oct 16, 2018 3:48 p.m. ET
The numbers:
The National Association of Home Builders’ monthly confidence index rose 1 point to 68 in October.
The tracker of sentiment among residential construction firms beat the Econoday consensus forecast of a flat reading.
Any reading over 50 signals improvement.
What happened:
The two sub-gauges that measure sales conditions each rose one point.
Current sales conditions was at 74 in October, and expectations for sales over the next six months was 75.
The gauge of buyer traffic surged four points to 53.
Big picture:
The litany of builder complaints — scarce labor, expensive lots — hasn’t been helped by tariffs on lumber and other building materials.
Those costs moderated slightly from the levels they hit over the summer, NAHB said in a release, but remain a challenge, especially as construction firms try to meet demand for homes priced for entry-level buyers.
What they’re saying:
“Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment,” the industry group said.
So far this year, the index has averaged 69, one point higher than 68 in 2017.
Still, it now looks like the 74 reading notched back in December may have been the high point, if housing activity buckles under the weight of higher mortgage rates and home prices, as many analysts are expecting.
Market reaction:
Builder stocks have been hammered this year by concerns about higher input prices, waning demand, and a big run-up in valuations last year.
Shares of KB Home are down 35% for the year to date, while a broader basket of stocks in the iShares U.S. Home Construction ETF is down 27%.
https://www.marketwatch.com/story/home- ... 2018-10-16
"Home builder confidence ticks up as buyer demand overcomes headwinds — for now"
By Andrea Riquier
Published: Oct 16, 2018 3:48 p.m. ET
The numbers:
The National Association of Home Builders’ monthly confidence index rose 1 point to 68 in October.
The tracker of sentiment among residential construction firms beat the Econoday consensus forecast of a flat reading.
Any reading over 50 signals improvement.
What happened:
The two sub-gauges that measure sales conditions each rose one point.
Current sales conditions was at 74 in October, and expectations for sales over the next six months was 75.
The gauge of buyer traffic surged four points to 53.
Big picture:
The litany of builder complaints — scarce labor, expensive lots — hasn’t been helped by tariffs on lumber and other building materials.
Those costs moderated slightly from the levels they hit over the summer, NAHB said in a release, but remain a challenge, especially as construction firms try to meet demand for homes priced for entry-level buyers.
What they’re saying:
“Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment,” the industry group said.
So far this year, the index has averaged 69, one point higher than 68 in 2017.
Still, it now looks like the 74 reading notched back in December may have been the high point, if housing activity buckles under the weight of higher mortgage rates and home prices, as many analysts are expecting.
Market reaction:
Builder stocks have been hammered this year by concerns about higher input prices, waning demand, and a big run-up in valuations last year.
Shares of KB Home are down 35% for the year to date, while a broader basket of stocks in the iShares U.S. Home Construction ETF is down 27%.
https://www.marketwatch.com/story/home- ... 2018-10-16
Re: THE HOUSING MARKET
MARKETWATCH
"Housing starts lurch lower in another weak month for residential construction"
By Andrea Riquier
Published: Oct 17, 2018 3:50 p.m. ET
The numbers:
Housing starts fell 5.3% to a seasonally adjusted annual 1.201 million rate in September, the Commerce Department said Wednesday.
Permits were at a 1.241 million annual pace.
That nearly matched the MarketWatch consensus of a 1.208 million pace of starts.
What happened:
Builders broke ground on fewer homes in September, and applied for fewer permits to start future projects, another signal that residential construction faces daunting headwinds that will limit the supply of new housing stock.
Though lower on the month, starts were 3.7% higher than a year ago, while permits were 0.6% lower for the month and 1% lower than a year ago.
Big picture:
While the government’s new-home data is notoriously choppy and prone to sizable revisions, most of the details of this month’s report on starts show signs of waning momentum.
Starts are 6.4% higher for the year to date than in the same period in 2017, but some of the details of the report are worrying.
Analysts watch the pace of single-family starts closely, because nearly all single-family houses are built for purchase, rather than rent.
If builders are breaking ground on more houses, it’s a vote of confidence in the economy and buyers’ ability to finance their purchases.
In September, those starts were 0.9% lower than in August, though nearly 5% higher than a year ago.
Builder sentiment, a measure analysts use to gauge likely activity levels, has made little headway this year.
While the industry group that releases that index, the National Association of Home Builders, said that surging input prices had moderated since the summer, another group on Tuesday released a report saying construction materials prices were up 7.4% on the year in September.
“Contractors are paying more for the materials they use and workers they employ but aren’t able to pass most of those new costs on to their clients,” said Ken Simonson, chief economist for the group, the Associated General Contractors of America.
Contractors increased their asking prices of customers by just 3.5% over the same period, the group estimates.
What they’re saying:
“Although the number of permits is still higher than starts, pointing to more activity in coming months, the overall trend in housing has clearly slowed/plateaued/leveled off,” said Jennifer Lee, senior economist for BMO Capital Markets.
“In other words, expect less support from residential construction for the broader economy.”
The uptick in builder sentiment in October didn’t impress Ian Shepherdson, chief economist for Pantheon Macroeconomics.
“We are inclined to see this as a blip against a declining trend, triggered by higher mortgage rates,” Shepherdson wrote on Tuesday.
“Mortgage applications did nudge higher over the summer, so some uptick in sales in the next couple of months is a reasonable bet, but a sustained upward trend is too much to hope for, in our view, given the 30-basis point jump in mortgage rates since early September."
"Housing market activity has peaked for this cycle.”
Market reaction:
U.S. stock futures were pointing to a negative start for the Dow Jones Industrial Average at the Friday open.
Concerns about growth have dragged home-builder stocks down for the year.
https://www.marketwatch.com/story/housi ... 2018-10-17
"Housing starts lurch lower in another weak month for residential construction"
By Andrea Riquier
Published: Oct 17, 2018 3:50 p.m. ET
The numbers:
Housing starts fell 5.3% to a seasonally adjusted annual 1.201 million rate in September, the Commerce Department said Wednesday.
Permits were at a 1.241 million annual pace.
That nearly matched the MarketWatch consensus of a 1.208 million pace of starts.
What happened:
Builders broke ground on fewer homes in September, and applied for fewer permits to start future projects, another signal that residential construction faces daunting headwinds that will limit the supply of new housing stock.
Though lower on the month, starts were 3.7% higher than a year ago, while permits were 0.6% lower for the month and 1% lower than a year ago.
Big picture:
While the government’s new-home data is notoriously choppy and prone to sizable revisions, most of the details of this month’s report on starts show signs of waning momentum.
Starts are 6.4% higher for the year to date than in the same period in 2017, but some of the details of the report are worrying.
Analysts watch the pace of single-family starts closely, because nearly all single-family houses are built for purchase, rather than rent.
If builders are breaking ground on more houses, it’s a vote of confidence in the economy and buyers’ ability to finance their purchases.
In September, those starts were 0.9% lower than in August, though nearly 5% higher than a year ago.
Builder sentiment, a measure analysts use to gauge likely activity levels, has made little headway this year.
While the industry group that releases that index, the National Association of Home Builders, said that surging input prices had moderated since the summer, another group on Tuesday released a report saying construction materials prices were up 7.4% on the year in September.
“Contractors are paying more for the materials they use and workers they employ but aren’t able to pass most of those new costs on to their clients,” said Ken Simonson, chief economist for the group, the Associated General Contractors of America.
Contractors increased their asking prices of customers by just 3.5% over the same period, the group estimates.
What they’re saying:
“Although the number of permits is still higher than starts, pointing to more activity in coming months, the overall trend in housing has clearly slowed/plateaued/leveled off,” said Jennifer Lee, senior economist for BMO Capital Markets.
“In other words, expect less support from residential construction for the broader economy.”
The uptick in builder sentiment in October didn’t impress Ian Shepherdson, chief economist for Pantheon Macroeconomics.
“We are inclined to see this as a blip against a declining trend, triggered by higher mortgage rates,” Shepherdson wrote on Tuesday.
“Mortgage applications did nudge higher over the summer, so some uptick in sales in the next couple of months is a reasonable bet, but a sustained upward trend is too much to hope for, in our view, given the 30-basis point jump in mortgage rates since early September."
"Housing market activity has peaked for this cycle.”
Market reaction:
U.S. stock futures were pointing to a negative start for the Dow Jones Industrial Average at the Friday open.
Concerns about growth have dragged home-builder stocks down for the year.
https://www.marketwatch.com/story/housi ... 2018-10-17
Re: THE HOUSING MARKET
MARKETWATCH
"Opinion: The U.S. housing recovery is built on quicksand"
By Keith Jurow
Published: Oct 17, 2018 3:32 p.m. ET
Home price gains since 2013 have been much less impressive than you think.
While reports show that home prices have recovered nationwide, the increase has been uneven and not as strong as you have been led to believe.
Consider RealtyTrac’s latest report on 148 major U.S. metropolitan areas.
The average gain on the sale of property was 30%.
Not bad, except the average holding period was just over eight years.
That comes to an annual price increase of 3.75%.
High-yield corporate bonds would have earned you considerably more.
Taken together, the average gain for all metros is deceptive.
While the average price gain in booming Silicon Valley was a remarkable 116%, it was a pitiful 2% in El Paso, Texas, 10% in Cleveland, and 15% in Chicago.
Even the price rise in the New York City metro area was just 25%.
At the same time, I am greatly troubled by the consistently weak volume of home sales.
During the insane bubble years, sales volume rocketed along with prices.
In the hottest metros, desperate buyers dove into the market in record numbers.
https://www.marketwatch.com/story/the-u ... ewer_click
"Opinion: The U.S. housing recovery is built on quicksand"
By Keith Jurow
Published: Oct 17, 2018 3:32 p.m. ET
Home price gains since 2013 have been much less impressive than you think.
While reports show that home prices have recovered nationwide, the increase has been uneven and not as strong as you have been led to believe.
Consider RealtyTrac’s latest report on 148 major U.S. metropolitan areas.
The average gain on the sale of property was 30%.
Not bad, except the average holding period was just over eight years.
That comes to an annual price increase of 3.75%.
High-yield corporate bonds would have earned you considerably more.
Taken together, the average gain for all metros is deceptive.
While the average price gain in booming Silicon Valley was a remarkable 116%, it was a pitiful 2% in El Paso, Texas, 10% in Cleveland, and 15% in Chicago.
Even the price rise in the New York City metro area was just 25%.
At the same time, I am greatly troubled by the consistently weak volume of home sales.
During the insane bubble years, sales volume rocketed along with prices.
In the hottest metros, desperate buyers dove into the market in record numbers.
https://www.marketwatch.com/story/the-u ... ewer_click
Re: THE HOUSING MARKET
MARKETWATCH
"Existing-home sales slump to a near 3-year low as buyers back out"
By Andrea Riquier
Published: Oct 19, 2018 4:49 p.m. ET
The numbers:
Existing-home sales ran at a seasonally adjusted annual rate of 5.15 million in September, the National Association of Realtors said Friday.
That was a 3.4% decline for the month, and the lowest pace of sales since November 2015.
What happened:
Sales of previously-owned homes stabilized in August after declining for four straight months, so September’s lurch lower was surprising to some.
Sales were 4.1% lower than year-ago levels.
September’s selling pace missed the MarketWatch consensus forecast of a 5.27 million rate.
The median sales price in September was $258,100, which was 4.2% higher than a year earlier.
Home prices are still growing faster than wages, but the pace of price increases is decelerating steadily.
That’s likely because inventory is ticking up gradually.
At the current pace of sales, it would take 4.4 months to exhaust available supply, up from 4.3 months last month.
And it’s taking properties longer to get snatched up: homes stayed on the market for 32 days in September, up from 29 days in August.
Big picture:
The Realtors blamed another stagnant month in the housing market on rising mortgage rates, higher prices and the supply stranglehold.
But it’s also likely that many would-be buyers are dropping out of a market that’s become too competitive, expensive and unsatisfying, especially as conditions in the rental market ease up.
The national median rent declined compared to a year ago in September, Zillow said Thursday.
That was the first yearly decline since 2012, and reflects a glut of supply, with more to come.
What they’re saying:
“Recent sluggishness seems increasingly driven by softer demand from would-be home buyers in the face of two emerging trends: falling rents and rising mortgage interest rates,” said Zillow Senior Economist Aaron Terrazas.
“It all adds up to a situation in which supply-side factors are becoming less critical in driving home sales as they give way to softening demand."
"There’s still a lot of energy left in the housing market, but the rapid rise of the past few years has clearly begun to level off.”
NAR Chief Economist Lawrence Yun now forecasts that existing-home sales will be 1.6% lower in 2018 than last year.
Economists at mortgage financier Fannie Mae are even more bearish: they’re projecting a 2% decline.
Market reaction:
The Dow Jones Industrial Average was little-changed after the release of the report, and has gained about 2.7% for the year to date.
https://www.marketwatch.com/story/exist ... 2018-10-19
"Existing-home sales slump to a near 3-year low as buyers back out"
By Andrea Riquier
Published: Oct 19, 2018 4:49 p.m. ET
The numbers:
Existing-home sales ran at a seasonally adjusted annual rate of 5.15 million in September, the National Association of Realtors said Friday.
That was a 3.4% decline for the month, and the lowest pace of sales since November 2015.
What happened:
Sales of previously-owned homes stabilized in August after declining for four straight months, so September’s lurch lower was surprising to some.
Sales were 4.1% lower than year-ago levels.
September’s selling pace missed the MarketWatch consensus forecast of a 5.27 million rate.
The median sales price in September was $258,100, which was 4.2% higher than a year earlier.
Home prices are still growing faster than wages, but the pace of price increases is decelerating steadily.
That’s likely because inventory is ticking up gradually.
At the current pace of sales, it would take 4.4 months to exhaust available supply, up from 4.3 months last month.
And it’s taking properties longer to get snatched up: homes stayed on the market for 32 days in September, up from 29 days in August.
Big picture:
The Realtors blamed another stagnant month in the housing market on rising mortgage rates, higher prices and the supply stranglehold.
But it’s also likely that many would-be buyers are dropping out of a market that’s become too competitive, expensive and unsatisfying, especially as conditions in the rental market ease up.
The national median rent declined compared to a year ago in September, Zillow said Thursday.
That was the first yearly decline since 2012, and reflects a glut of supply, with more to come.
What they’re saying:
“Recent sluggishness seems increasingly driven by softer demand from would-be home buyers in the face of two emerging trends: falling rents and rising mortgage interest rates,” said Zillow Senior Economist Aaron Terrazas.
“It all adds up to a situation in which supply-side factors are becoming less critical in driving home sales as they give way to softening demand."
"There’s still a lot of energy left in the housing market, but the rapid rise of the past few years has clearly begun to level off.”
NAR Chief Economist Lawrence Yun now forecasts that existing-home sales will be 1.6% lower in 2018 than last year.
Economists at mortgage financier Fannie Mae are even more bearish: they’re projecting a 2% decline.
Market reaction:
The Dow Jones Industrial Average was little-changed after the release of the report, and has gained about 2.7% for the year to date.
https://www.marketwatch.com/story/exist ... 2018-10-19
Re: THE HOUSING MARKET
MARKETWATCH
"New-home sales plunge to a near two-year low as housing picture deteriorates"
By Andrea Riquier
Published: Oct 24, 2018 10:52 a.m. ET
The numbers:
New-home sales ran at a seasonally adjusted annual rate of 553,000 in September, the Commerce Department said Wednesday.
Sales of newly-constructed homes swooned to the lowest since December 2016.
September’s selling pace of 553,000 was 5.5% lower than in August, and 13.2% lower than a year ago.
What happened:
Sales badly missed the MarketWatch consensus forecast of a 620,000 pace, and revisions to prior months were all downward.
The median selling price in September was $320,000, 3.5% lower than a year ago.
At the current pace of sales, it would take 7.1 months to exhaust available supply, a 6-year high.
Big picture:
The government’s reports on residential construction are based on small samples and often revised heavily, making it unwise to rely on data from any single month for the big picture.
But the story so far in 2018 has been one of continuing deterioration.
For the year to date, sales are just 3.5% higher than in the same period last year, a measurement that's been falling steadily throughout the year.
For years, the housing story has been about strong demand, and limited supply.
That dynamic may be starting to shift, however, as unrelenting price gains, higher mortgage rates, and scant choices may be nudging would-be homebuyers out of the market.
Inventory in the market for previously-owned homes has been inching up and sales declining.
What they’re saying:
Analysts reacted to the Commerce Department release on Wednesday with surprise.
But the BTIG/HomeSphere September survey, conducted by a team of analysts led by Carl Reichardt, Jr., and released about a week before the government report, found that conditions for respondents “deteriorated markedly” this month.
About one-third of survey respondents — small and mid-sized builders across the country — said sales were worse than they had expected.
Some 22% said sales rates were lower than in September 2017, more than the 15% who reported lower sales than year-ago levels in August.
“The September drop likely is due in part to Hurricane Michael, which the consensus seems to have ignored, even though it clearly hit the existing home sales numbers reported last week” said Ian Shepherdson, chief economist for Pantheon Macro.
“We expect a clear rebound in October and then a spike in November, following August’s brief jump in mortgage applications."
"But the bigger picture is one of a market under pressure from rising rates and the beginnings of a cyclical tightening in lending standards.”
Market reaction:
Stocks began dropping soon after the new-home sales release, with the Dow Jones Industrial Average down by over 100 points.
Home builder shares also turned lower, with shares of the iShares U.S. Home Construction ETF in negative territory.
https://www.marketwatch.com/story/new-h ... 2018-10-24
"New-home sales plunge to a near two-year low as housing picture deteriorates"
By Andrea Riquier
Published: Oct 24, 2018 10:52 a.m. ET
The numbers:
New-home sales ran at a seasonally adjusted annual rate of 553,000 in September, the Commerce Department said Wednesday.
Sales of newly-constructed homes swooned to the lowest since December 2016.
September’s selling pace of 553,000 was 5.5% lower than in August, and 13.2% lower than a year ago.
What happened:
Sales badly missed the MarketWatch consensus forecast of a 620,000 pace, and revisions to prior months were all downward.
The median selling price in September was $320,000, 3.5% lower than a year ago.
At the current pace of sales, it would take 7.1 months to exhaust available supply, a 6-year high.
Big picture:
The government’s reports on residential construction are based on small samples and often revised heavily, making it unwise to rely on data from any single month for the big picture.
But the story so far in 2018 has been one of continuing deterioration.
For the year to date, sales are just 3.5% higher than in the same period last year, a measurement that's been falling steadily throughout the year.
For years, the housing story has been about strong demand, and limited supply.
That dynamic may be starting to shift, however, as unrelenting price gains, higher mortgage rates, and scant choices may be nudging would-be homebuyers out of the market.
Inventory in the market for previously-owned homes has been inching up and sales declining.
What they’re saying:
Analysts reacted to the Commerce Department release on Wednesday with surprise.
But the BTIG/HomeSphere September survey, conducted by a team of analysts led by Carl Reichardt, Jr., and released about a week before the government report, found that conditions for respondents “deteriorated markedly” this month.
About one-third of survey respondents — small and mid-sized builders across the country — said sales were worse than they had expected.
Some 22% said sales rates were lower than in September 2017, more than the 15% who reported lower sales than year-ago levels in August.
“The September drop likely is due in part to Hurricane Michael, which the consensus seems to have ignored, even though it clearly hit the existing home sales numbers reported last week” said Ian Shepherdson, chief economist for Pantheon Macro.
“We expect a clear rebound in October and then a spike in November, following August’s brief jump in mortgage applications."
"But the bigger picture is one of a market under pressure from rising rates and the beginnings of a cyclical tightening in lending standards.”
Market reaction:
Stocks began dropping soon after the new-home sales release, with the Dow Jones Industrial Average down by over 100 points.
Home builder shares also turned lower, with shares of the iShares U.S. Home Construction ETF in negative territory.
https://www.marketwatch.com/story/new-h ... 2018-10-24
Re: THE HOUSING MARKET
MARKETWATCH
"Pending home sales snap back in September after 4-month losing streak"
By Andrea Riquier
Published: Oct 25, 2018 4:35 p.m. ET
The numbers:
U.S. pending home sales edged up 0.5% to a reading of 104.6 in September from 104.1 in August, the National Association of Realtors said Thursday.
The consensus forecast among economists surveyed by Econoday was for no change.
What happened:
NAR’s index, which tracks real estate contract signings, snapped a four-month losing streak.
But it was lower than year-ago levels for the ninth month in a row, this time by 1.0%.
Contract signings usually precede closings by about 45 days, so the pending home sales release is considered a leading indicator for the existing-home sales report.
In September, the West was the big winner, with contract signings up 4.5% compared to August, while in the Midwest they rose 1.2%.
In the Northeast, pending sales fell 0.4%, and in the South they declined 1.4%.
The South is the only region in which pending sales are higher than a year ago.
Big picture:
The housing market is out of steam.
Many economists believe we’re at the end of the current housing cycle.
Even if that’s so, economists say it doesn’t mean a recession will follow, even though a downturn in the housing sector is usually the canary in the coal mine for the rest of the economy.
And it’s possible — though unlikely — that we’re seeing a replay of what happened in 2013, after then-Fed President Ben Bernanke sparked a “taper tantrum” by reminding investors that at some point the central bank would start to reverse its crisis-era policies.
Mortgage rates surged, and the nascent housing recovery was thrown off-track.
What they’re saying:
After a raft of dismal housing data in September, economists turned even more downbeat, even though it’s possible much of the sales activity during the month was skewed by the hurricanes that hit during the month.
“Rising real mortgage rates and zero Y/Y growth in real average hourly earnings is not what builds strong housing markets,” wrote Steven Blitz, chief U.S. economist for TS Lombard, after the release of the new-home sales data Thursday.
“While we are upbeat about wages in the coming year, as wage growth is a lagging indicator, 10-year Treasury yields (the price basis for mortgages) are not dropping off anytime soon,” Blitz added.
“With a large budget deficit to fund and the Fed far from shifting to an easing trajectory, the only direction for the real cost of money is up.”
Market reaction:
In fact, the yield on the 10-year note has tumbled in recent weeks as nervous investors have sold stocks and sought safe-haven assets.
Bond yields and prices move in opposite directions.
But a rising deficit, thanks to steep tax cuts, means the government will likely have to issue more new debt than investors will be willing to buy at current yields.
https://www.marketwatch.com/story/pendi ... 2018-10-25
"Pending home sales snap back in September after 4-month losing streak"
By Andrea Riquier
Published: Oct 25, 2018 4:35 p.m. ET
The numbers:
U.S. pending home sales edged up 0.5% to a reading of 104.6 in September from 104.1 in August, the National Association of Realtors said Thursday.
The consensus forecast among economists surveyed by Econoday was for no change.
What happened:
NAR’s index, which tracks real estate contract signings, snapped a four-month losing streak.
But it was lower than year-ago levels for the ninth month in a row, this time by 1.0%.
Contract signings usually precede closings by about 45 days, so the pending home sales release is considered a leading indicator for the existing-home sales report.
In September, the West was the big winner, with contract signings up 4.5% compared to August, while in the Midwest they rose 1.2%.
In the Northeast, pending sales fell 0.4%, and in the South they declined 1.4%.
The South is the only region in which pending sales are higher than a year ago.
Big picture:
The housing market is out of steam.
Many economists believe we’re at the end of the current housing cycle.
Even if that’s so, economists say it doesn’t mean a recession will follow, even though a downturn in the housing sector is usually the canary in the coal mine for the rest of the economy.
And it’s possible — though unlikely — that we’re seeing a replay of what happened in 2013, after then-Fed President Ben Bernanke sparked a “taper tantrum” by reminding investors that at some point the central bank would start to reverse its crisis-era policies.
Mortgage rates surged, and the nascent housing recovery was thrown off-track.
What they’re saying:
After a raft of dismal housing data in September, economists turned even more downbeat, even though it’s possible much of the sales activity during the month was skewed by the hurricanes that hit during the month.
“Rising real mortgage rates and zero Y/Y growth in real average hourly earnings is not what builds strong housing markets,” wrote Steven Blitz, chief U.S. economist for TS Lombard, after the release of the new-home sales data Thursday.
“While we are upbeat about wages in the coming year, as wage growth is a lagging indicator, 10-year Treasury yields (the price basis for mortgages) are not dropping off anytime soon,” Blitz added.
“With a large budget deficit to fund and the Fed far from shifting to an easing trajectory, the only direction for the real cost of money is up.”
Market reaction:
In fact, the yield on the 10-year note has tumbled in recent weeks as nervous investors have sold stocks and sought safe-haven assets.
Bond yields and prices move in opposite directions.
But a rising deficit, thanks to steep tax cuts, means the government will likely have to issue more new debt than investors will be willing to buy at current yields.
https://www.marketwatch.com/story/pendi ... 2018-10-25