Existing-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors (NAR). All major regions except for the Midwest saw an increase in sales last month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1% to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7% above a year ago and is the third highest over the past year. The median existing-home price for all housing types in May was $252,800. This surpasses last June ($247,600) as the new peak median sales price, is up 5.8% from May 2016 ($238,900) and marks the 63rd straight month of year-over-year gains. Total housing inventory at the end of May rose 2.1% to 1.96 million existing homes available for sale, but is still 8.4% lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.7 months a year ago. Properties typically stayed on the market for 27 days in May, which is down from 29 days in April and 32 days a year ago; this is the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 94 days in May, while foreclosures sold in 48 days and non-distressed homes took 27 days. Fifty-five% of homes sold in May were on the market for less than a month (a new high). Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in May were Seattle-Tacoma-Bellevue, Wash., 20 days; San Francisco-Oakland-Hayward, Calif., 24 days; San Jose-Sunnyvale-Santa Clara, Calif., 25 days; and Salt Lake City, Utah and Ogden-Clearfield, Utah, both at 26 days.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased for the second consecutive month, dipping to 4.01% in May from 4.05% in April. The average commitment rate for all of 2016 was 3.65%. First-time buyers were 33% of sales in May, which is down from 34% in April but up from 30% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers — released in late 20164 — revealed that the annual share of first-time buyers was 35%. Earlier this month, NAR hosted the Sustainable Homeownership Conference at University of California’s Memorial Stadium in Berkeley. A white paper titled, “Hurdles to Homeownership: Understanding the Barriers,” (link is external) was released, which honed in on the five main reasons why first-time buyers are failing to make up a greater share of the market. “Of the barriers analyzed in the white paper, single-family housing shortages will be the biggest challenge for prospective first-time buyers this year,” said President William E. Brown. “Those hoping to buy an entry-level, single-family home continue to see minimal choices. The best advice for these home shoppers is to know what you can afford, lean on the guidance of a Realtor® and act fast once an ideal property within the budget is listed.” All-cash sales were 22% of transactions in May, up from 21% in April and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in May, up from 15% in April and 13% a year ago. Sixty-four% of investors paid in cash in May.
Distressed sales — foreclosures and short sales — were 5% of sales in May, unchanged from April and down from 6% a year ago. Four% of May sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 20% below market value in May (18% in April), while short sales were discounted 16% (12% in April). Single-family home sales increased 1.0% to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April, and are now 2.7% above the 4.85 million pace a year ago. The median existing single-family home price was $254,600 in May, up 6.0% from May 2016. Existing condominium and co-op sales climbed 1.6% to a seasonally adjusted annual rate of 640,000 units in May, and are 3.2% higher than a year ago. The median existing condo price was $238,700 in May, which is 4.8% above a year ago. May existing-home sales in the Northeast jumped 6.8% to an annual rate of 780,000, and are now 2.6% above a year ago. The median price in the Northeast was $281,300, which is 4.7% above May 2016. In the Midwest, existing-home sales fell 5.9% to an annual rate of 1.28 million in May, and are 0.8% below a year ago. The median price in the Midwest was $203,900, up 7.3% from a year ago. Existing-home sales in the South rose 2.2% to an annual rate of 2.34 million, and are now 4.5% above May 2016. The median price in the South was $221,900, up 5.3% from a year ago. Existing-home sales in the West increased 3.4% to an annual rate of 1.22 million in May, and are now 3.4% above a year ago. The median price in the West was $368,800, up 6.9% from May 2016.
Retailers’ efforts to lure shoppers to stores with experiences still missing the mark
– Eighty-six% of shoppers like “experience stores,” where they can test products in stores but buy on mobile or online, GPShopper finds in a survey of 1,200 adults.
– With a few exceptions, most American retailers today are “incredibly bad” at offering a good in-store experience, GlobalData Retail’s Neil Saunders tells CNBC.
– Warby Parker, Apple and Bonobos are a few examples of winners in the space, Saunders says.
Retailers are still coming up short on winning shoppers over with in-store experiences. More than one-third of shoppers said they “feel nothing” when asked about their initial reaction after shopping in stores, GPShopper found in its latest report, “Reality of Retail: Consumer Connection.” GPShopper’s study, which was conducted with research firm YouGov, asked roughly 1,200 US adults what innovations — both digital and physical — they want retailers to incorporate in stores. The survey found:
– 86% of shoppers like “experience stores,” where they can test products in stores but buy on mobile or online, similar to the Samsung store concept.
– 85% like the idea of product recommendations based on ratings, similar to what Amazon is doing with Amazon Books.
– 80% like buying items online and picking purchases up in stores, as Wal-Mart and Target have been promoting.
– 78% like stores that were first online and then developed physical storefronts, similar to Warby Parker.
“We believe in retail but also think [stores] need to evolve to meet the modern consumer,” said Maya Mikhailov, CMO and co-founder of GPShopper.”The modern consumer is connecting to retail digitally. … The most important device for them is the mobile phone.” Mikhailov added that traditionally brick-and-mortar retailers are now “stumped” about what to do with excess square footage amid the age of digital. And as evidenced by GPShopper’s latest survey, many retail companies have yet to hit a high note with consumers’ emotions. Following “feeling nothing,” many shoppers appear to be “anxious.”
CoreLogic – Housing Credit Index: first quarter 2017
– CoreLogic’s Housing Credit Index (HCI) found mortgage loans originated during Q1 2017 exhibit slightly higher credit risk compared with the previous year but remained similar to early 2000s.
– The average credit score for homebuyers increased 7 points between Q1 2016 and Q1 2017, rising from 734 to 741.
– The average loan-to-value ratio (LTV) for homebuyers in Q1 2017 slightly fell from Q1 2016, from 87.6% to 85.9%. However, the average debt-to-income ratio (DTI) for homebuyers in Q1 2017 was similar to Q1 2016, holding steady at 36%.
Loans originated in Q1 2017 have slightly higher credit risk than loans originated last year. However, the credit risk is about the same compared to early 2000s, according to the latest CoreLogic Housing Credit Index (HCI). Compared with loans made during 2001-2003, loans in Q1 2017 have a similar risk quality based on six important credit-risk attributes, including borrower credit score, LTV ratio, DTI ratio, documentation level, investor-owned status and condo/co-op share. Some of the credit-risk attributes of loans in Q1 2017, such as LTV and DTI, look more risky than the loans in 2001-2003. However, other credit-risk attributes such as documentation level and credit score look less risky. The slight increase in the overall HCI from the first quarter of 2016 to the first quarter of 2017 has been primarily caused by increased riskiness of home-purchase loan attributes and the larger share of home-purchase loans in the first quarter of 2017. Shift to a higher percentage of home-purchase loans increased overall credit-risk metrics, as home-purchase loans have higher risk attributes than refinance loans. Investor activity and condo/co-op lending had increased in Q1 2017 from Q1 2016, making the loans look more risky in Q1 2017, despite the lower-risk signals from the credit score, DTI and LTV attributes. In Q1 2017, the HCI for both home-purchase and refinance loans remained in the same range as early 2000s. The share of borrowers with a credit score of less than 640 and the low- and no-doc share were down significantly compared to the 2001-2003 benchmark period. In contrast, the share of new loans with an LTV of 95% or higher was slightly above the benchmark period, and the share of loans with a DTI at-or-above 43% was about 31% higher than the benchmark period. Similarly, the investor-owned share was 27% higher than the benchmark period, and the condo/co-op share was 34% higher the benchmark level.
Wal-Mart to vendors: get off Amazon’s cloud
The battle between the King Kong and Godzilla of retail has moved into the cloud. Wal-Mart Stores Inc. is telling some technology companies that if they want its business, they can’t run applications for the retailer on Amazon.com Inc.’s leading cloud-computing service, Amazon Web Services, several tech companies say. Amazon’s rise as the dominant player in renting on-demand, web-based computing power and storage has put some competitors, such as Netflix Inc., in the unlikely position of relying on a corporate rival as they move to the cloud. Wal-Mart, loathe to give any business to Amazon, said it keeps most of its data on its own servers and uses services from emerging AWS competitors, such as Microsoft Corp.’s Azure. Wal-Mart uses some tech vendors’ cloud apps that run on AWS, said Wal-Mart spokesman Dan Toporek. He declined to say which apps or how many, but acknowledged instances when Wal-Mart pushed for AWS alternatives. “It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform, ” he said, adding that it’s a “small number.” Snowflake Computing Inc., a data-warehousing service, was approached by a Wal-Mart client about handling its business from the retailer, Chief Executive Bob Muglia said. The catch: Snowflake had to run those services on Azure.”They influence their vendors, which has influence on us,” Mr. Muglia said of Wal-Mart. The San Mateo, Calif., company had been developing an Azure offering, and “Wal-Mart has expedited our work,” said Mr. Muglia, a former senior Microsoft executive. Snowflake won the business from Wal-Mart’s client. Other large retailers also have requested, as Wal-Mart did, that service providers move away from AWS, according to technology vendors that work with retailers.
Olick – mortgage applications hold steady as rates remain low
– Total mortgage application volume rose 0.6% on a seasonally adjusted basis from the previous week.
– Volume was nearly 14% lower compared with the same week a year ago, according to the Mortgage Bankers Association.
– Refinance volume for the week was 2% higher than the previous week.
After surging to the highest level since the presidential election, demand for home loans remained steadily elevated last week. Total mortgage application volume rose 0.6% on a seasonally adjusted basis from the previous week. Volume was nearly 14% lower compared with the same week one year ago, according to the Mortgage Bankers Association, when lower interest rates sparked a refinance boom. Low rates are giving refinances another slight boost. Refinance volume for the week was 2% higher than the previous week but still about 30% lower than a year ago. “Both the 10-year Treasury yield and the 30-year conventional mortgage fixed rate held steady last week keeping rates well below the recent highs,” said Lynn Fisher, MBA’s vice president of research and economics. “The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance and to assist those ready to purchase.” The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less remained unchanged at 4.13%, with points decreasing to 0.34 from 0.35, including the origination fee, for 80% loan-to-value ratio loans. Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, fell 1% for the week, seasonally adjusted, but are 9% higher than the same week one year ago. Lower mortgage rates usually help with affordability, but the tight supply of homes for sale has pushed prices far higher than expected this year. Buyers are turning more to adjustable-rate mortgages, which carry lower interest rates, but some would-be buyers are still being sidelined by the lack of affordable homes for sale. If a home is priced affordably today, it will fly off the shelf in record time with multiple offers.