Nationwide housing starts rose 3% in February from an upwardly revised January reading to a seasonally adjusted annual rate of 1.288 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Single-family production increased 6.5% to 872,000 units — its highest reading in nearly a decade — while multifamily starts fell 3.7% to 416,000 units. “This month’s gain in single-family starts is consistent with rising builder confidence in the housing market,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “We should see single-family production continue to grow throughout the year, tempered somewhat by supply-side constraints such as access to lots and labor.” “The growth in the single-family arena is very encouraging, but may be partly attributable to unusually warm weather conditions throughout most of the country,” said NAHB Chief Economist Robert Dietz. “The modest drop in multifamily starts is in line with our forecast, which calls for this sector to continue to stabilize in 2017.” Regionally in February, combined single- and multifamily housing production rose 35.7% in the West. Starts fell by 3.8% in the South, 4.6 in the Midwest and 9.8% in the Northeast. A drop in multifamily permits pulled overall permit issuance down 6.2% in February. Multifamily permits fell 21.6% to 381,000 units, while single-family permits rose 3.1% to 832,000 units — its highest level since September 2007. Regionally, overall permits rose 25.4% in the Midwest. Permits fell 10% in the West, 10.4% in the South and 22.3% in the Northeast.
Oil prices firm, heading for modest weekly rise
Oil prices firmed on Friday and looked set to finish the week with a modest gain after losing almost 10% last week on concerns that an OPEC production cut was failing to reduce a global supply overhang. Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $2.5 range as investors weighed the impact of the first oil cut from OPEC in eight years against rising US shale oil output and high inventories. Brent crude was up 27 cents at $52.01 a barrel by 1353 GMT. US light crude was up 24 cents at $48.99. “The market remains relatively calm today, with concerns about having to extend the production-cut deal being offset by a weaker dollar,” said Saxo Bank head of commodity strategy Ole Hansen. Oil found some support from dollar weakness after the US Federal Reserve indicated it would not accelerate plans for rises in interest rates. Saudi Energy Minister Khalid al-Falih said on Thursday the cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers could be extended beyond June if oil stockpiles stayed above a long-term average. Six of 10 analysts polled by Reuters said they believed OPEC would prolong its output reductions past the deal’s six-month duration.
CoreLogic – the state of house flipping in 2016 – Part I
In Part I of this series we will focus on the national-level analysis, and in Part II we will zoom in on metro areas. At the national level, the ratio of flips to sales stands at 4.9% in 2016, which is well below the peak value of 7.5% reached in 2005, as shown in Figure 1. As a matter of fact, this is the second lowest rate of flipping activity since 2012, as the lowest since 2012 occurred in 2015 with a flipping percentage of 4.8. It appears that flipping activity has slowed in the past two years since the start of the housing recovery, thanks to a five-year high in the rate of home-price appreciation and still-tight for-sale inventory. In 2016, the real median gross gain (in 2016 dollars) rose to $54,700 per property flipped, which is approaching the historical high of $56,411 (in 2016 dollars) seen in 2005 prior to the housing crash. On the other hand, the median percentage gross gain has declined since it peaked in 2013. We continue to believe the decline of the percentage gain might have something to do with the decline of the share of distressed sales, which leads to high acquisition cost. We see that the share of distressed sales has declined significantly and was just 7.7% in October 2016. The median percentage gross profit was about 20% between 1996 and 2008 and then increased to above 30-40% after 2008, which is largely due to the high acquisition cost on the investors’ part from 2000 to 2008.
Mnuchin says US is seeking to avoid trade wars
Treasury Secretary Steven said Thursday the administration doesn’t want to start any trade wars. Rather, Mr. Mnuchin said Washington is trying to rebalance unfair trade relationships that are harming growth in the world’s largest economic engine. Fixing those inequalities, such as when countries like China manipulate their exchange rates to gain a competitive trade advantage, actually will spur global growth, he said. But the Treasury secretary, who will be making his first appearance on the global stage Friday at a gathering of the world’s finance chiefs from the Group of 20 industrialized and emerging economies, is facing a tough sell. Besides fears of unilateral sanctions sparking retaliation, Mr. Trump’s policies are set to strengthen the dollar, a key sore point for the administration. Failure to solve this currency conundrum could ratchet up global trade tensions. “Our focus is creating economic growth that is good for the United States and for the rest of the world,” Mr. Mnuchin said after a meeting with German Finance Minister Wolfgang Schäuble. “It is not our desire to get into trade wars, it is our desire to deal with where there is imbalance in certain trade relations,” he said. Trump administration threats to level unilateral currency sanctions, vows to rewrite international trade deals and jabs at the World Trade Organization have spooked G-20 nations. Ahead of the G-20 meeting in the resort town of Baden-Baden, Germany, the International Monetary Fund warned that the US, China and other large economies risk derailing the global economy if leaders fail to fight a growing protectionist tide. But the Treasury secretary dismissed those concerns, saying the US is one of the most open markets in the world. “The president is interested in making sure that our agreements are reciprocal,” he said. “He wants free and fair trade.”
NAR – economic, financial optimism surges; renters lukewarm about buying
Multiple years of uninterrupted job gains and hope that the best is yet to come in 2017 are igniting consumer confidence across the country, and especially in rural and middle America, according to new consumer survey findings from the National Association of Realtors (NAR). The survey additionally found a growing disparity among renters who think it’s a good time to buy and homeowners who think it’s a good time to sell. In NAR’s ongoing quarterly Housing Opportunities and Market Experience (HOME) survey, respondents were asked about their confidence in the US economy and various questions about their housing expectations. In the first three months of 2017, the share of households believing the economy is improving soared to its highest share in the survey’s five-quarter history (62%), and is up from 54% last quarter and 48% in March 2016. In an extraordinary reversal from previous quarters, NAR Chief Economist Lawrence Yun says the surge in positive sentiment about the economy is primarily from respondents living in the Midwest (67%; 51% last quarter) and rural areas (63%; 43% last quarter). Last March, only 49% of Midwesterners and 35% of those living in rural areas thought the economy was improving. “Confidence levels generally rise after a presidential election as the nation hopes for the best. Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now,” he said. “Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home. These positive developments would be especially good news for prospective homebuyers in the more affordable Midwest region.”
Higher confidence in the economy is also translating to better feelings about households’ financial situation. The HOME survey’s monthly Personal Financial Outlook Index showing respondents’ confidence that their financial situation will be better in six months, jumped to its highest reading in the survey, climbing to 62.6 in March from 59.8 in December 2016. A year ago, the index was 58.1. On the cusp of the busy spring season, most households believe now is a good time to buy a home. However, confidence continues to trickle backwards among renters. Fifty-six% of renters said now is a good time to buy, which is down both from last quarter (57%) and a year ago (62%). Eighty% of homeowners (78% in December 2016; 82% in March 2016) think now is a good time to make a home purchase. Younger households, renters and those living in the costlier West region – where prices continue to spike – are the least optimistic. “Inventory conditions are even worse than a year ago and home prices and mortgage rates are on an uphill climb,” added Yun. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will unfortunately slow or delay some prospective buyers’ pursuit of purchasing a home.”
One promising trend that could alleviate supply shortages is the notable bump in the share of respondents this quarter who believe now is a good time to sell a home. Sixty-nine% of homeowners think now is a good time to sell, which is up from last quarter (62%) and a year ago (56%). Continuing the trend over the past year, those in the West continue to be the most likely to think now is a good time to sell (77%), while also being the least likely to think it’s a good time to buy (61%). NAR President William E. Brown says homeowners looking to trade up or move down this spring could find themselves in a tricky spot without careful planning and a reliable expert on their side. “Demand far outpaces supply in many parts of the country right now, which means homeowners will likely sell their home much quicker than the time it takes to buy another,” he said. “Before listing, it’s best to have a carefully crafted plan in place. In addition to assisting in the hunt for a new home, a Realtor® is an invaluable negotiating partner in the common situation where a buyer’s new home purchase is contingent upon selling their property currently up for sale.”