Builder confidence in the market for newly-built single-family homes increased five points to a level of 74 in December on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) after a downwardly revised November reading. This was the highest report since July 1999, over 18 years ago. “Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “The HMI measure of home buyer traffic rose eight points, showing that demand for housing is on the rise,” said NAHB Chief Economist Robert Dietz. “With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. All three HMI components registered gains in December. The component measuring buyer traffic jumped eight points to 58, the index gauging current sales conditions rose four points to 81 and the index charting sales expectations in the next six months increased three points to 79. Looking at the three-month moving averages for regional HMI scores, the Midwest climbed six points to 69, the South rose three points to 72, the West increased two points to 79 and Northeast inched up a single point to 54.
Wall Street poised for record on tax bill hopes
Wall Street’s main indexes hit new highs on Monday as the long-awaited tax overhaul plan looked set for legislation and buoyed by a flurry of year-end corporate dealmaking that has topped $11 billion so far. More US Republicans Senators on Sunday threw their weight behind the tax bill they expect Congress to pass this week. A Senate vote is set for Tuesday and President Donald Trump is expected to sign the bill into law by the end of the week.US stocks have enjoyed a near year-long rally, of late powered by increasing expectations of the promised tax overhaul, which aims to lower corporate taxes to 21% from 35%, coming to fruition. The benchmark S&P 500 has gained 19.5% so far in 2017, set for its best year since 2013, as investors bet that lower taxes could boost corporate profits and trigger share buybacks and higher dividend payouts. “The market is going to continue its rally based on the belief that we’re going to see the Congress pass tax reform,” said Robert Pavlik, Chief Investment Strategist at SlateStone Wealth in New York. “People are a bit weary about how long the rally will last, but earnings continue to grow, (the) tax package should help and the economy is doing well,” Pavlik said. “I‘m very positive about the overall market. Lower corporate taxes could also trigger cash repatriation, which market analysts say could be used for merger and acquisitions. On Monday, investors were treated to a flood of deals.
CoreLogic – home price winners and losers
Since the US began recovering from the home-price bust in 2006, economists have used the peak-to-current change in prices as a measure of recovery in markets. However, the peak-to-current change hyper-focuses on economic losses for those who bought at the peak. What about consumers who bought homes while prices were at the bottom of the cycle? If someone was lucky enough to buy as a market hit bottom and began to recover, they have seen large home-price gains. Our view of home price changes shows the peak-to-trough and peak-to-current changes in the CoreLogic Home Price Index (HPI) for the US, the four states with the largest peak-to-current declines, and the four states with the largest peak-to-current gains. In the states where the HPI has passed the pre-crisis peak, the peak used to calculate the numbers in Figure 1 is the pre-crisis peak. The US HPI peaked in 2006, and returned to the 2006 peak in September 2017. Nevada has the largest peak-to-current decline of any state, and had the largest peak-to-trough decrease at 60%. On the other end, North Dakota had a shallow peak-to-trough decline, and has risen 47% above the prior peak seen in 2008. A different view of the HPI illustrates the depths of the most notable state-level price declines and the subsequent upward trajectory in those states, including the peak-to-trough and trough-to-current HPI changes for the US and the seven states that had larger peak-to-trough declines than the US For the nation, from the 2006 peak to the 2011 trough, the loss was 33%, but from the 2011 trough to September 2017 the gain was 50%. The most extreme drop in the HPI was in Nevada, but prices in that state have gained 89% since hitting bottom in 2012. For reference, we can compare the gains in the HPI to gains in the stock market. The S&P 500 fell 51% from peak to trough, but has gained 229% from the trough through September 2017. The large price gains since the home-price bottom translate into large amounts of home equity gained by homeowners, improving their balance sheets. As shown in the CoreLogic Homeowner Equity Report, in the 12 months ending in September 2017, the average homeowner gained nearly $15,000 in equity. Only seven states had equity gains over the past year, but California and Nevada stand out with the largest gains at $37,000 and $23,000, respectively.
Average US gas price drops 3 cents to $2.51 for regular
The average price of a gallon of regular-grade gasoline dropped 3 cents nationally over the past two weeks to $2.51. Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that further declines are likely because US gas supplies are flush. The current gas price is 25 cents above where it was a year ago. Gas in San Francisco was the highest in the contiguous United States at an average of $3.22 a gallon. The lowest was in Jackson, Mississippi, at $2.14 a gallon. The US average diesel price is $2.88, holding steady from two weeks ago.