Existing-home sales slipped in June as low supply kept homes selling at a near record pace but ultimately ended up muting overall activity, according to the National Association of Realtors (NAR). Only 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, decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June from 5.62 million in May. Despite last month’s decline, June’s sales pace is 0.7% above a year ago, but is the second lowest of 2017 (February, 5.47 million). The median existing-home price for all housing types in June was $263,800, up 6.5% from June 2016 ($247,600). Last month’s median sales price surpasses May as the new peak and is the 64rd straight month of year-over-year gains. Total housing inventory at the end of June declined 0.5% to 1.96 million existing homes available for sale, and is now 7.1% lower than a year ago (2.11 million) and has fallen year-over-year for 25 consecutive months. Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago. First-time buyers were 32% of sales in June, which is down from 33% both in May and 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%. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the third consecutive month, dipping to 3.90% in June from 4.01% in May. The average commitment rate for all of 2016 was 3.65%.
Properties typically stayed on the market for 28 days in June, which is up from 27 days in May but down from 34 days a year ago. Short sales were on the market the longest at a median of 102 days in June, while foreclosures sold in 57 days and non-distressed homes took 27 days. Fifty-four% of homes sold in June were on the market for less than a month. Inventory data from realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in June were Seattle-Tacoma-Bellevue, Wash., 23 days; Salt Lake City, Utah, 26 days; San Jose-Sunnyvale-Santa Clara, Calif., 27 days; San Francisco-Oakland-Hayward, Calif., 29 days; and Denver-Aurora-Lakewood, Colo., at 30 days. “Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said President William E. Brown. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.” All-cash sales were 18% of transactions in June, down from 22% both in May and a year ago, and the lowest since June 2009 (13%). Individual investors, who account for many cash sales, purchased 13% of homes in June, down from 16% in May and unchanged from a year ago. Fifty-six% of investors paid in cash in June.
Distressed sales – foreclosures and short sales – were 4% of sales in June, down from both May (5%) and a year ago (6%) and matching last September as the lowest share since NAR began tracking in October 2008. Three% of June sales were foreclosures and 1% were short sales. Single-family home sales dipped 2.0% to a seasonally adjusted annual rate of 4.88 million in June from 4.98 million in May, but are still 0.6% above the 4.85 million pace a year ago. The median existing single-family home price was $266,200 in June, up 6.6% from June 2016. Existing condominium and co-op sales were at a seasonally adjusted annual rate of 640,000 units in June (unchanged from May), and are 1.6% higher than a year ago. The median existing condo price was $245,900 in June, which is 6.5% above a year ago. June existing-home sales in the Northeast fell 2.6% to an annual rate of 760,000, but are still 1.3% above a year ago. The median price in the Northeast was $296,300, which is 4.1% above June 2016. In the Midwest, existing-home sales rose 3.1% to an annual rate of 1.32 million in June (unchanged from June 2016). The median price in the Midwest was $213,000, up 7.7% from a year ago. Existing-home sales in the South decreased 4.7% to an annual rate of 2.23 million (unchanged from a year ago). The median price in the South was $231,300, up 6.2% from a year ago. Existing-home sales in the West declined 0.8% to an annual rate of 1.21 million in June, but remain 2.5% above a year ago. The median price in the West was $378,100, up 7.4% from June 2016.
Average US gas prices rise first time in 11 weeks
The average price of a gallon of regular-grade gasoline rose about a penny nationally over the past two weeks, to $2.32. Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the slight increase comes after 11 weeks of decline. The current price is about 10 cents above where it was a year ago. Gas in Reno, Nevada, was the most expensive in the contiguous United States at an average of $2.99 a gallon. The cheapest was in Jackson, Mississippi, at $1.97 a gallon. The US average diesel price is $2.51, the same as it was two weeks ago.
CoreLogic – US housing policy outlook: July 2017
Recently, we released our first quarter CoreLogic National Fraud Risk Index and, as we expected, the index hit a new high of 132. This was up from 122 in the fourth quarter and 113 a year ago. Keep in mind, the index is relatively new… it was started in 2010, after the high risk levels that contributed to the mortgage crisis. So today’s heightened number doesn’t necessarily mean that we’re seeing a lot more fraud. What it does show, however, is that conditions are present for fraud to grow. The shift from a refi to a more traditional purchase market is a big driver of the change in the index. That’s because you have more moving parts and players in a purchase transaction and more opportunities for financial gain…and for fraud. Housing affordability is another factor. Rising home prices and bidding wars mean that buyers have to stretch in order to qualify for a loan. We’re seeing the early signs of this in the percentages of applicants that are reporting income that is high relative for their area. Also, the higher debt-to-income ratios that we’re seeing suggest that applicants are at the maximums that they qualify for. These conditions historically have supported fraud for housing schemes. Speaking of fraud schemes, we’re hearing about a new one and the return of an old one. The new scheme involves reverse occupancy or investment income misrepresentation. Here’s the way it works: the applicant says that he or she intends to buy a property as an investment and rent it out. The future rental income is used to qualify the borrower. But the borrower doesn’t rent it and moves in instead. This scheme is gaining traction in New York and other large metro areas, like Los Angeles. The old scheme, which appears to be making a comeback, is aimed at out-of-state investors, usually from high-cost states. Home flippers pitch low-cost, rust-belt properties—often priced under $100,000. The flippers try to get investors to buy sight unseen and promise to manage the properties for them. Of course they dangle the prospect of very high returns. All too often the prices and returns are inflated.
Wall St flat as tech earnings awaited
US stock indexes opened little changed on Monday, ahead of Google parent Alphabet’s earnings report and a two-day Federal Reserve meeting, which kicks off on Tuesday. Analysts have raised their expectations for S&P 500 earnings to 9.6%, compared with an 8% rise projected at the start of the month, according to Thomson Reuters I/B/E/S.”With indices trading at record highs and central banks favoring a less accommodative stance, earnings will become increasingly important in maintaining or expanding on these levels,” said Craig Erlam, senior market analyst at online forex broker Oanda. Alphabet reports results after market close, while Amazon and Facebook are due to report results later this week. Tech continues to be the best performing S&P sector this year, despite investors worrying about stretched valuations. At 9:35 a.m. ET (1335 GMT), the Dow Jones Industrial Average was down 13.28 points, or 0.06%, at 21,566.79, the S&P 500 was down 1.69 points, or 0.06%, at 2,470.85. The Nasdaq Composite was up 1.45 points, or 0.02%, at 6,389.20. Eight of the 11 major S&P 500 sectors were lower, with the materials index’s 0.18% fall leading the decliners. The market will also keep an eye on political developments in Washington, with rising doubts about President Donald Trump’s ability to legislate his pro-growth policies after the failure of the healthcare bill.
The International Monetary Fund shaved its forecasts for US growth to 2.1% for both 2017 and 2018 from its earlier estimates of 2.3% and 2.5%, respectively, citing lack of details on the Trump administration’s stimulus measures.The Fed is not expected to tighten its monetary policy when it meets on Tuesday, but the market is awaiting its statement for clues on future interest rate hikes. Shares of Halliburton were up 0.2% after the oilfield services provider swung to a quarterly profit. Egg producer Cal-Maine Foods fell 8.6% after its quarterly results fell below expectations. Hasbro was down 6.7% after the toymaker posted the smallest sales beat in one and a half years. WebMD Health jumped 19.7% after KKR & Co agreed to buy the US online health publisher in a deal valued at about $2.8 billion. KKR was off 0.7%. Declining issues outnumbered advancers on the NYSE by 1,366 to 1,128. On the Nasdaq, 1,165 issues rose and 1,068 fell.
Forest fires and building prices
Canadian lumber prices continue to rise, this time because of forest fires. The US Commerce department proposed a tariff on Canadian softwood lumber this spring to right what it said was a trade imbalance. An additional tariff proposed in June could mean up to 30% in duties on lumber, affecting the ability of US homebuilders to increse their inventory in this tight housing market. Now, prices are set to rise again after devastating forest fires forced three large lumber producers in British Columbia to shut down in July. From a Wall Street Journal article on Sunday: “Lumber futures at the Chicago Mercantile Exchange, an indicator of price expectations for the months ahead, rose above $400 per 1,000 board feet in mid-July. That was near a 12-year high reached in April before the Trump administration accused Canada of unfairly subsidizing its forestry industry and started slapping tariffs as high as 30% on some timber imports to the US Canadian officials deny the allegations.” The lumber shortage has already affected US hombuilders, with a fifth reporting a shortage of framing lumber in May, the article said. And confidence among homebuilders fell to an eight-month low in July amid concerns over rising lumber costs.