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NAR – existing-home sales fade in december; 2017 sales up 1.1%

Existing-home sales subsided in most of the country in December, but 2017 as a whole edged up 1.1% and ended up being the best year for sales in 11 years, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1% in 2017 to a 5.51 million sales pace and surpassed 2016 (5.45 million) as the highest since 2006 (6.48 million). In December, existing-home sales slipped 3.6% to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November. After last month’s decline, sales are still 1.1% above a year ago. The median existing-home price for all housing types in December was $246,800, up 5.8% from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains. Total housing inventory at the end of December dropped 11.4% to 1.48 million existing homes available for sale, and is now 10.3% lower than a year ago (1.65 million) and has fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999. First-time buyers were 32% of sales in December, which is up from 29% in November and unchanged from a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34%. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage inched higher for the third straight month to 3.95% in December from 3.92% in November. The average commitment rate for all of 2017 was 3.99%.

Properties typically stayed on the market for 40 days in December, which is unchanged from November and down from a year ago (52 days). Forty-four% of homes sold in December were on the market for less than a month. Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in December were San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Vallejo-Fairfield, Calif.; Colorado Springs, Colo.; and Stockton-Lodi, Calif. NAR President Elizabeth Mendenhall says improving the new tax law is a top priority for Realtors in 2018. “Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time,” she said. “As the housing market adjusts to the new law, Realtors® will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.” All-cash sales were 20% of transactions in December, which is down from 22% in November and 21% a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in December, up from 14% both last month and a year ago. For the year, all-cash sales averaged 21% of sales (23% in 2016), and investor sales were at 15% (14% in 2016).

Distressed sales – foreclosures and short sales – were 5% of sales in December, up from 4% in November but down from 7% a year ago. Four% of December sales were foreclosures and 1% were short sales. Single-family home sales declined 2.6% to a seasonally adjusted annual rate of 4.96 million in December from 5.09 million in November, but are still 1.0% above the 4.91 million pace a year ago. The median existing single-family home price was $248,100 in December, up 5.8% from December 2016. Existing condominium and co-op sales fell 11.6% to a seasonally adjusted annual rate of 610,000 units in December, but are still 1.7% above a year ago. The median existing condo price was $236,500 in December, which is 6.4% above a year ago. December existing-home sales in the Northeast fell 7.5% to an annual rate of 740,000, and are now 2.6% below a year ago. The median price in the Northeast was $261,400, which is 3.0% above December 2016. In the Midwest, existing-home sales dipped 6.3% to an annual rate of 1.33 million in December, but are still 1.5% above a year ago. The median price in the Midwest was $191,400, up 7.8% from a year ago. Existing-home sales in the South decreased 1.7% to an annual rate of 2.30 million in December, but are still 3.1% higher than a year ago. The median price in the South was $221,200, up 5.8% from a year ago. Existing-home sales in the West declined 1.6% to an annual rate of 1.20 million in December, and are now 0.8% below a year ago. The median price in the West was $367,400, up 7.3% from December 2016.

Trump declares America open for business under his tenure

President Trump says there has never been a better time to hire in America during his speech at the World Economic Forum in Davos, Switzerland.

Declaring that America is open for business under his leadership, President Donald Trump told a gathering of political and business elites on Friday that the economic growth taking place in the US due to his “America first” agenda also benefits the rest of the world. Trump told the World Economic Forum in Davos, an incongruous location for a nationalist president, that American prosperity has created countless jobs around the world, but stressed that his priority would always remain on protecting the interests of within his nation’s own borders. “As president of the United States, I will always put American first just as the leaders of other countries should put their countries first,” said Trump. But the president tried to strike a balance, tempering his nationalist agenda with reassurances to the globalist and cooperation-minded audience that his protectionist vision “does not mean America alone.” “When the United States grows, so does the world,” Trump said. “American prosperity has created countless jobs around the globe and the drive for excellence, creativity and innovation in the United States has led to important discoveries that help people everywhere live more prosperous and healthier lives.” As Forum chairman Klaus Schwab introduced Trump, he drew some hisses when he said that the president could be subject to “misconceptions and biased interpretations.” When Trump took the stage, he received modest applause but some people kept their hands at their sides. The crowd was largely subdued as the president spoke but there were boos when Trump took a swipe at the media.

New home sales rise 8.3% overall in 2017

Sales of newly built, single-family homes fell 9.3% in December to a seasonally adjusted annual rate of 625,000 units, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. Despite this monthly decline, new home sales rose 8.3% overall in 2017 to 608,000 units. “The number of consumers planning to buy a new home in the near future is trending upward,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Inventory remains low, but its growth in 2017 is an encouraging sign. Our members are also telling us that market conditions continue to improve.” “Some moderation in sales was expected this month after a strong November reading,” said NAHB Senior Economist Michael Neal. “With ongoing job creation and rising home equity, we should see housing demand continue to grow in the months ahead.” The inventory of new home sales for sale was 295,000 in December, which is a 5.7-month supply at the current sales pace. The median sales price of new houses sold was $335,400. Regionally, new home sales decreased 2.4% in the Northeast, 9.5% in the West, 9.8% in the South and 10% in the Midwest.

US durable goods orders rose 2.9% in Dec, vs 0.8% increase expected

The Commerce Department says that orders for long-lasting manufactured goods rose 2.9% in December, the fastest pace since June and another sign of strength for American industry. Orders were lifted by a 15.9% surge in demand for civilian aircraft and aviation parts, which can bounce around from month to month. Excluding the volatile transportation sector, orders increased 0.6% in December. Overall orders for durable goods, which are meant to last at least three years, have risen in four the last five months. Still, a category that measures business investment — orders for nondefense capital goods excluding aircraft — dipped 0.3% in December. American manufacturers are benefiting from a pickup in global economic growth and a weaker dollar, which makes US goods less expensive in foreign markets.

CoreLogic – wildfires and hurricane-related floods were most destructive natural hazards in 2017

CoreLogic released its annual Natural Hazard Risk Summary and Analysis which shows relatively average activity for most US natural hazards with the exception of wildfires in California and flooding as a result of Hurricanes Harvey and Irma. The annual report reviews hazard activity in the US including events for flooding, earthquake, wildfire, wind, hail, tornado and hurricanes, as well as several international events including Hurricane Maria in Puerto Rico, a Magnitude 7.1 earthquake in Mexico and Cyclone Debbie in Australia. Highlights from the analysis include:

Flood

–  Flooding from Hurricanes Harvey and Irma resulted in an estimated $69 billion to $105 billion in residential and commercial damage.

–  Flood damage in Texas from Hurricane Harvey is estimated at $40 billion to $59 billion, of which $25 billion to $37 billion is residential damage and $15 billion to $22 billion is commercial damage

–  Approximately 75% of the flood damage to residential properties from Hurricane Harvey was uninsured

–  Flood damage in Florida, Alabama, Georgia, North Carolina and South Carolina from Hurricane Irma is estimated at $29 billion to $46 billion, of which $25 billion to $38 billion is residential damage and $4 billion to $8 billion is commercial damage

–  Approximately 80% of the flood damage to residential properties from Hurricane Irma was uninsured

–  California and the Midwest also experienced significant rainfall that resulted in flooding. According to the National Centers for Environmental Information (NCEI), total property loss from the California winter floods is estimated at $1.5 billion and total property loss from the Midwest (between Oklahoma and Ohio) April/May flooding is estimated at $1.7 billion.

Atlantic Hurricanes

–  Hurricane activity in the Atlantic was higher than average in 2017 with 17 named storms, 10 hurricanes and six major hurricanes, which are identified as Category 3 or greater.

–  Hurricane Harvey, a Category 4 storm that made landfall in Texas, caused an estimated $1 billion to $2 billion in insured wind and storm surge loss to both residential and commercial properties, and Hurricane Irma, a Category 4 storm that made landfall in South Florida, caused an estimated $14 billion to $19 billion in insured wind and storm surge loss to both residential and commercial properties.

Wind

–  Due in large part to the strong winds brought by Hurricanes Harvey and Irma, the land area impacted by severe winds (>80 mph) was more than four times greater than in 2016.

–  Port Aransas, Texas recorded the highest wind speed of the year at 131 mph during Hurricane Harvey

–  Western Nebraska recorded the strongest wind gust associated with severe thunderstorms of the year at 115 mph on June 26

–  At 37%, more than one-third of the continental US experienced wind events of 60 mph or higher in 2017.

Wildfire

–  The total number of acres burned (9,791,062, acres) in 2017 is the third highest in US history, preceded by 2015 (10,125,149 acres) and 2006 (9,873,745 acres).

–  The 10 most destructive wildfires in 2017, in terms of structures destroyed, were in California and include:

–  The Tubbs Fire in northern California which burned 36,807 acres and 5,643 structures

–  Until the Tubbs Fire, the two worst wildfires in California history – Tunnel in 1991 and Cedar in 2003 – destroyed 5,720 structures combined

–  The Nuns Fire in northern California which burned 54,382 acres and 1,355 structures

–  The Thomas Fire in southern California which burned 281,893 acres and 1,063 structures

–  The Atlas Fire in northern California which burned 51,624 acres and 781 structures

–  The Redwood Valley Fire in southern California which burned 36,523 acres and 544 structures

–  The Cascade Fire in northern California which burned 9,989 acres and 398 structures

–  The Lilac Fire in southern California which burned 4,100 acres and 157 structures

–  The Detwiler Fire in Mariposa County, California which burned 81,826 acres and 131 structures

–  The Creek Fire in southern California which burned 15,619 acres and 123 structures

–  The Helena Fire in Trinity County, California which burned 21,846 acres and 123 structures

Earthquake

–  As of December 1, there were 818 identified earthquakes of magnitude 3.0 or greater across the country.

–  In 2016, approximately 60% of the total number of earthquakes occurred in Oklahoma compared with only 28% in 2017

The most notable earthquake events in 2017 include:

–  A Magnitude 5.8 earthquake near Lincoln, Montana on July 6

–  A Magnitude 5.3 earthquake near Soda Springs, Idaho on September 2

–  A Magnitude 4.1 earthquake in Delaware on November 30

Hail

–  Hail activity for 2017 was near average with 168,905 square miles, or 5.5%, of the continental US impacted by severe hail, defined as 1” or greater.

–  Denver, Colorado experienced the worst of this natural hazard with estimated losses of $1.4 billion from approximately 150,000 auto insurance claims and approximately 50,000 homeowner insurance claims.

Tornadoes

–  The number of tornadoes in 2017 was above average with 1,522 recorded tornadoes, making it the third most active year since 2005.

–  With 81 confirmed tornadoes between Mississippi and Georgia, the month of January experienced the most tornado activity in 2017.

Wage growth, tax-bonuses spark shopping in retail stocks

US fund managers are betting that rising wages and the effects of the Republican-led corporate tax cut will prove a lifeline to middle-market retailers who have struggled to remain relevant in the age of Amazon. Wells Fargo, CM Advisors and Plumb Funds are among those asset management firms that are increasing their positions in companies that focus on shoppers who earn near the average family income of $74,000 annually. These include children’s apparel company Carter’s Inc, department store Big Lots Inc, men’s apparel company Tailored Brands Inc and discount retailer Wal-Mart Stores. With unemployment at 17-year lows, companies are having a hard time filling low to middle-income jobs. As a result, wages for those workers are expected to rise more than 3% this year, the largest increase in the category since April 2009, according to data from the Federal Reserve Bank of Atlanta. Given the expected rise in wages and one-time bonuses resulting from the Republican-led tax cut signed into law on Dec. 22, fund managers are betting that workers will spend more, thus helping drive up share prices of retailers. “As capital comes back to the US, labor demand will be stronger and we will see for the first time in a long time wage growth creeping into the US market,” boosting discretionary income and spending, said Jim Brilliant, portfolio manager of the CM Advisors Fixed Income Fund.

The push toward the middle of the pack retailers is a reversal from the early stages of the bull market that began in 2009, when fund managers packed into the shares of luxury companies such as Tiffany & Co and downmarket retailers such as Dollar General as a play on rising income inequality. Shares of high-end fashion company Tapestry Inc – then trading under the name Coach Inc – rose more than 45% in 2010, more than double the 20% return in middle-market stores like Target. Now, fund managers say they are targeting middle-income shoppers as jobless claims currently at 45-year lows and increased corporate spending push companies to increase wages. As a result, they see more dollars flowing to retailers, some of which suffered declines of 25% in their share prices in 2017 on fears that Amazon.com Inc would move into additional business lines and drain business away from them.

Posted by: pharbuck on January 26, 2018
Posted in: Uncategorized