Sep 26, 2012 | Housing Analysis
Tuesday, the Federal Home Finance Agency’s Home Price Index (HPI) showed home values rising 0.2% on a seasonally-adjusted basis between June and July 2012, and moving +3.7% on an annual basis.
Home values have not dropped month-to-month since January of this year — a span of 6 months.
For today’s home buyers and sellers throughout Worcester County area , though, it’s important to recognize on what the HPI is actually reporting.
Or, stated differently, on what the HPI is not reporting. The Home Price Index is based on home price changes of some homes, of certain “types”, with specific mortgage financing only.
As such, it excludes a lot of home sales from its results which skews the final product. We don’t know if home values are really up 0.2% this month — we only know that’s true for the home that the HPI chooses to track.
As an example of how certain homes are excluded, because the HPI is published by the Federal Housing Finance Agency and because the FHFA gets its access to home price data from Fannie Mae and Freddie Mac, it’s upon data these two entities upon which the Home Price Index is built.
Home price data from the Federal Housing Administration (FHA), from local credit unions, and from all-cash sales, for example, are excluded from the HPI because the FHFA has no awareness that the transaction ever happened.
In 2006, this may not have been a big deal; the FHA insured just 4 percent of the housing market at the time. Today, however, the FHA is estimated to insure more than 20% of new home purchases. Furthermore, in August, more than 1 in 4 sales were made with cash.
None of these home sales were included in the HPI.
Furthermore, the Home Price Index excludes certain home types from its findings.
Home sales of condominiums, cooperatives, multi-unit homes and planned unit developments (PUD) are not used in the calculation of the HPI. In some cities, including Chicago and New York City, these property types represent a large percentage of the overall market. The HPI ignores them.
Like other home-value trackers, the Home Price Index can well highlight the housing market’s broader, national trends but for specific home price data about a specific home or a ZIP code, it’s better to talk with a real estate agent with local market knowledge.
Since peaking in April 2007, the Home Price Index is off 16.4 percent.
Sep 25, 2012 | Housing Analysis
The home resale market put forth another strong data set last week. Home sales prices are higher nationwide and sales volume has moved to a 2-year high.
According to the National Association of REALTORS®, 4.82 million “existing homes” sold on a seasonally-adjusted, annualized basis in August, representing a near 8 percent improvement from the month prior and a nine percent jump from August 2011.
An existing home is a home which has been previously occupied.
Home sales were unevenly split across price tiers, with more than half of all homes selling for less than $250,000. This suggests that the first-time home buyers and real estate investors continue to be active in today’s market as a foundation for growth is built.
According to the Existing Home Sales data :
- First-time buyers accounted for 31% of all home sales
- Real estate investors accounted for 18% of all home sales
- Other, repeat buyers accounted for 51% of all home sales
Also noteworthy is that “distressed homes” accounted for the smallest percentage of overall home sales since the real estate trade group starting tracking such data.
In August, homes in various stages of foreclosures accounted for 12% of all sales and sold at an average discount of 19 percent below market value. Short sale homes accounted for 10% of all sales and sold at an average discount of 13 percent below market value.
Of all the data in the August Existing Home Sales report, though, perhaps most relevant to today’s buyers is the shrinking national housing supply.
At August’s end, there were 2.47 million homes listed for sale nationwide, a three percent increase from the month prior. However, because the pool of available home buyers is increasing more rapidly than the number of homes for sale, housing supplies fell 0.3 months to 6.1 months.
This means that at the current pace of sales, the entire housing supply would be sold by March 2013.
For today’s home buyers, home affordability appears poised to worsen. Mortgage rates and home prices remain low today, but market conditions like these rarely last long. Talk to your real estate agent about what options you have ahead of you. 2012 is coming to a close.
By 2013, the housing recovery may be fully underway.
Sep 20, 2012 | Housing Analysis
The new construction housing market continues to make gains.
Wednesday, the U.S. Census Bureau reported Housing Starts for single-family homes up 5.5 percent in August to a seasonally-adjusted, annualized count of 535,000 units nationwide.
The report marks the fifth month of six that single-family starts increased, and marks the highest starts tally since April 2010 — the last month of that year’s federal homebuyer tax credit program.
A “housing start” is a new home on which construction has started and the steady growth in single-family starts suggests a stronger Worcester County area housing market into 2013.
All four U.S. regions showed single-family housing start growth on both a monthly basis and on an annual one :
- Northeast Region : 4.5% monthly growth; 31.4% annual growth
- Midwest Region : 15.6% monthly growth; 74.5% annual growth
- South Region : 3.2% monthly growth; 17.2% annual growth
- Midwest Region : 4.6% monthly growth; 23.9% annual growth
The data is just the latest in a series of signals that today’s Worcester County area new construction housing market has put its worst days behind it.
The nation’s home builders appear to agree, as well.
Earlier this week, the National Association of Homebuilders released its Housing Market Index, a monthly metric which measures homebuilder confidence in the new construction market.
The homebuilder trade association put the HMI at 40 — a 6-year high. Builders expect a strong finish to 2012 and for momentum to carry into 2013 and beyond.
The new construction market — like most of housing — has been fueled by a combination of the lowest mortgage rates in history, ample access to low- and no-downpayment mortgages, and an ever-shrinking supply of new homes for sale.
In July there were just 142,000 new homes for sale nationwide, down 14% from the year prior. As supply shrinks, all things equal, new home prices rise.
If you’ve been considering new construction, therefore, talk to builders sooner rather than later. As demand for homes heats up, prices are likely to rise.
Sep 19, 2012 | Housing Analysis
Home builder confidence continues to make new highs.
As reported by the National Association of Home Builders, the Housing Market Index, a measure of builder confidence, rose to a reading of 40 in September — its highest mark since June 2006.
The index is now higher through five straight months and 11 of the last 12.
For home buyers in Worcester County area , the survey may be signaling higher new home prices ahead; when builders are more confident in housing, they’re may be less likely to make concessions in price, and to “sweeten” deals with free upgrades and/or subsidized mortgage rates.
The Housing Market Index is published monthly, based on responses to a 3-question survey that the NAHB sends to its members. The questions cover three distinct parts of a builder’s business, each requiring a simple, one-word answer.
Builders are asked to respond with “Good”, “Fair” or “Poor”; or, “High”, “Average”, “Low” to the following three comments :
- Rate market conditions for the sale of new homes today
- Rate market conditions for the sale of new homes 6 months from today
- Rate the foot traffic of prospective new home buyers
All three survey components showed an increase from August with buyer foot traffic rating at its highest point in more than 6 years. This is especially noteworthy because as the number of prospective buyers increases, so does competition for homes for sale.
There are currently just 142,000 new homes for sale nationwide, the stock of which will “sell out” in 4.6 months at the current pace of sales.
Not since October 2011 has the national home supply been above six months, the consensus dividing line between bull and bear market. Today’s new construction market favors builders and builders know it.
If you’re planning to buy new construction in Massachusetts later this year or into early-2013, consider moving up your time frame. Homes may be for sale, but they won’t likely be as inexpensive as they are today.
Sep 18, 2012 | Housing Analysis
The national market for foreclosed homes remains strong.
According to foreclosure data firm RealtyTrac, foreclosure activity increased 1 percent in August as compared to the month prior, climbing to just above 193,500 units nationwide.
1 in every 681 U.S. households received some form of foreclosure filing last month where a “foreclosure filing” is any one of the following foreclosure-related events : A default notice on a home; a scheduled auction for a home; or, a bank repossession of a home.
Default notices climbed in August which indicates that more U.S. homeowners are falling behind on payments.
However, for the 22nd consecutive month, the number of bank repossessions fell. This suggests that lenders are reaching alternative outcomes to foreclosure more frequently, and with more success, reducing the number of homes for sale nationwide.
Fewer homes for sale is one reason why U.S. home prices have been rising.
Like everything in real estate, though, foreclosures are a local event. In August, just six states accounted for more than half of the country’s bank repossessions. Those six states — California, Florida, Georgia, Illinois, Michigan and Arizona — account for less than 31% of the U.S. population. (more…)
Sep 12, 2012 | Housing Analysis
The number of U.S. housing markets showing “measurable and sustained growth” has increased by 19 this month, according to the National Association of Homebuilders’ Improving Market Index.
The Improving Market Index is a monthly report meant to identify U.S. markets in which economic growth is occurring broadly — not just in terms of home prices.
The IMI’s conclusions are based on three separately-collected data series, each from a different division of the U.S. government and each tied to specific local economic conditions.
In this way, the Improving Market Index gives a better idea of which markets will outperform averages in the months and years ahead. (more…)
