In October, the latest month for which data is available, existing-home sales rose by 2.0% to their fastest pace since earlier this summer. A continued short supply of homes led to lower sales year-on-year for last October, however. Additionally, pending home sales rose a robust 3.5% in October, following three months of diminishing activity. Pending sales also fell behind in a year-on-year comparison, however.
The market conditions caused by having a limited supply of homes for sale are prevalent in all relevant economic and behavioral metrics, particularly in October's foot traffic, which rose by 28.8 points last month and is up over 33.9 points year-on-year. Dr. Lawrence Yun, the National Association of REALTORS®' resident economist, views foot traffic as an indicator of future sales between two and three months into the future.
While the labor market has become rather tight over the last couple of years and wage growth has increased accordingly, the market for home-sales is likely to remain taught (with continued price increases) for some time into the future. As the Federal Reserve acts to increase interest rates, the costs of borrowing for home-buyers will increase as well, outpacing any rise in wages causing downward pressure on housing prices. This, according to market data and forecast for the next three quarters, is likely to be met with increased new-home construction. Notably, labor productivity in construction has remained constant since about 1960, dramatically lagging behind other economic sectors of labor. As these trends continue, the market seems amenable to a long-term spate of new-home construction, exactly what our economic data seems to indicate for 2018Q2.
As the North Carolina Homeowners Alliance closes out the 2017 year, we are keeping our eyes on National Tax Reform and the National Flood Insurance Program-- should these developments materialize, we will reach out to you with a call for action!
The National Association of REALTORS released its quarterly Metropolitan Median Area Prices and Housing Affordability Index; the report showed that the majority of the 146 metropolitan statistical areas (MSAs) surveyed have a sever lack of housing stock, driving prices higher.
In North Carolina, 7 cities are classified as MSAs by the Office of Management and Budget, their quarterly Median Home Price changes were:
- Durham-Chapel Hill Area- 7.3% increase
- Fayetteville- 0.4% decrease
- Raleigh- 6.9% increase
- Wilmington- 6.9% increase
- Greensboro-High Point Area- 5.7% increase
- Winston-Salem- 3.6% increase
- Charlotte- 8% increase
While increasing home prices have largely been considered good news, housing affordability has decreased across the country as the supply for home sales has become too small to meet demand. National Association of REALTORS' Economist, Dr. Yun, forecasts a 9.4% jump in construction of single-family homes next year, which should help meet demand and slow price increase; this 9.4% jump will only produce 950,000 new homes, far below the 1.2 million average for the last 50 years, however.
As the federal government begins to take on Tax-Reform, we urge to you to review our positions and take action on our consumer protection website-- many of the exemptions that benefit homeowners (like the Mortgage-Interest Deduction) are on the chopping block and need your help. You'll hear more about this from us soon!
Be sure to check out this month's housing minute!
August, the latest month for which data is available, saw a 1.7% decrease in existing-home sales nationwide, pulled down by extreme weather events in the southern states; this is the 4th month in the last five where home sales have decreased. A national map of home sales over the last year can be viewed here.
- The national labor market continued tightening in the month of August, boosting nominal wages.
- The average commitment rate for a 30-year fixed-rate mortgage fell to 3.88%, its lowest rate since November of 2016.
- Total housing inventory has declined 6.5% since last August, the continuation of a 27 month streak of falling inventory.
- Existing-home sales in the South decreased 5.7 percent to an annual rate of 2.15 million in August, and are now 0.9 percent lower than a year ago. The median price in the South was $220,400, up 5.4 percent from a year ago.
To watch a complete review of market conditions by the National Association of REALTORS' resident Economist, Dr. Yun, click here.Read more