While home sales trended lower nationally, the Pending Home Sales Index for the Northeast Region rose 1.3 percent in August and is now 5.9% above a year ago.
Lawrence Yun, Chief Economist for the National Association of Realtors said that a new NAR study revealed single family construction is not keeping pace with job creation and is lacking overall in 80% of measured metro areas.
Yun said, “Contract activity slackened through out the country in August except for in the Northeast,, where higher inventory totals are giving home shoppers greater options and better success signing a contract.
Following the August decline Yun expects existing home sales in 2016 to be around 5.36 million, a 2.1 percent increase from 2015 and the highest annual pace since 2006. The national median existing home price growth is forecast this year to rise by around 4 percent.
Penobscot County home sales year to date surged by 21% compared to last year with 3332 homes sold for a total value of $428 million which was a dollar increase of 32%.
Sean Becketti, chief economist, Freddie Mac said the 5-year Treasury-indexed adjustable-rate mortgage (ARM) averaged 2.80 percent this week with an average 0.4 point, down from last week when it averaged 2.81 percent. A year ago, the 5-year ARM averaged 2.88 percent.
The fall may be notorious for a slowdown in the housing market. But for home buyers that shouldn’t mean they should go into early hibernation. For home shoppers, the fall likely will be the best time to buy.
Lower home prices – October can offer the best month for home deals, according to research by RealtyTrac of more than 32 million home sales over the last 15 years. In October, home buyers paid 2.6 percent below the estimated market value at the time for their homes, the study shows. In other words, on a $300,000 home, they could save $7,800 by purchasing it in October.
Less competition – The home buyer rush from the spring and summer is over. Home shoppers this summer who were rushing to find a home before school started have already found one. Fall home buyers will have less competition. Many folks will drop out of the market until after the new year.
More leverage – Home sellers in the fall may be more pressed to sell. They are generally people who need to sell, which can make for better negotiations for the buyer. The longer a home lingers, the more negotiating power the buyer likely will have. Plus, some sellers may want to get settled in their new home before the holidays and have more incentive to make a deal sooner rather than later.
Year-end tax credits – Home buyers who close on a home by the end of the fiscal year may find a nice tax deduction awaiting them on April 15. They may be able to deduct closing costs, property tax, and mortgage interest to offset their taxable earnings.
DAILY REAL ESTATE NEWS
Economic growth is poised to accelerate to 2.6 percent in the second half of the year, a rebound from the lackluster growth of 1.0 percent in the first half of 2016, according to Fannie Mae’s September 2016 Economic and Housing Outlook.
Their Group’s full-year 2016 forecast remains at 1.8 percent, consistent with a prior forecast. Consumer and government spending are expected to drive growth despite a cool down in consumer activity so far in the third quarter. At the same time, inventory investment and net exports are likely to drag on growth and nonresidential and residential investment are expected to be neutral for the year.
“Consumers continue to carry the economy and the earnings slowdown in the August jobs report may be an aberration in the recently improving personal income growth trend,” says Fannie Mae Chief Economist Doug Duncan. “However, the declining trend in business productivity has negative implications for businesses’ profit outlook, as low productivity tends to boost labor costs, which could act as a headwind for hiring and investment. Corporate profits are down 4.9 percent from one year ago, extending their streak of annual declines.”
“A bright spot for housing market activity is the strengthening of new home sales, which is significantly outperforming activity in recent years,” says Duncan. “The share of new home sales that are under construction or not started has climbed to nearly 70 percent, improving the outlook for single-family home-building. Existing home sales under-performed 2015 for the first time in July, however year-to-date sales are still 2.6 percent higher than during the same period last year. Additionally, the share of for-rent multifamily building starts has trended up with recent trends in home-building activity favoring the rental market.”
Single-family home construction is currently lacking in 80 percent of metro areas despite steady job creation. The low activity is creating a shortage that is curtailing affordability according to new research from the National Association of Realtors.
The NAR’s study reviewed new home construction to determine the markets with the greatest shortage of single-family housing starts. The findings reveal that single-family construction is underperforming in most of the U.S.
Lawrence Yun, NAR chief economist, says, “Inadequate single-family home construction since the Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,”
NAR analyzed employment growth in relation to single-family housing starts in the three-year period from 2012 through 2015. Historically, the average ratio for the annual change in total jobs to permits is 1.6 for single-family homes. The research found that 80 percent of measured markets had a ratio above 1.6, which indicates inadequate new construction in most of the country.
The top 10 metro areas with the biggest need for more single-family housing starts are New York, Dallas, San Francisco, Miami, Chicago, Atlanta, Seattle, San Jose, Denver, and San Diego. Their healthy job markets continue to attract an influx of potential homeowners, only fueling the need for more housing.
Single-family housing starts are seen as adequate to local job growth in Pensacola, Florida; Huntsville, Alabama; Columbia, South Carolina; and Virginia Beach, Virginia.
Buoyed by a steadily improving labor market and strong demand for multifamily housing, commercial real estate activity should remain on an upward trajectory, with a growing share of it is expected to be in smaller markets, according to the National Association of Realtors quarterly commercial real estate forecast.
National office vacancy rates are forecast to fall 1.5 percent to 10.4 percent over the coming year as employment gains boost demand for office space. The vacancy rate for industrial space is expected to decline 0.7 percent to 8.7 percent, and retail availability to decrease 1.0 percent to 10.5 percent. Only vacancies in the multifamily sector are expected to edge higher over the next year, from 5.9 percent to 6.1 percent, as new apartment construction comes to the market.
Lawrence Yun, NAR chief economist, says the commercial real estate sector is on firm ground in spite of the numerous global and domestic headwinds that continue to keep U.S. economic growth in a headlock. “Ongoing overseas weakness and the slowdown in business investment despite historically low interest rates held second quarter growth at a tepid and disappointing pace,” he said. “Only steady job creation, solid consumer spending and residential construction – albeit not enough of it – kept the economy afloat during the first half of the year.”
Adds Yun, “Strengthening local job markets has fueled sustained demand for commercial space and has pushed vacancy rates down in all commercial sectors. A growing concern from Realtors®, who mostly have clients that rely on financing to secure deals, is that underwriting standards have stiffened in light of increased regulatory scrutiny.
Nationally, total existing home sales, fell in July, 3.2 percent to 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months, sales are now below (1.6 percent) a year ago (5.48 million).
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last four months. “Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” he said. “Realtors® are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
According to Freddie Mac, the for a 30-year, conventional, fixed-rate mortgage dropped from 3.57 percent in June to 3.44 percent in July. Mortgage rates have now fallen five straight months and in July were the lowest since January 2013 (3.41 percent).
The median existing-home price for all housing types in July was up 5.3 percent from July 2015 . July’s price increase marks the 53rd consecutive month of year-over-year gains.
Maine’s July home sales were down slightly with 4110 ‘solds’ with a median sale price of $191,000 with a total ‘sold volume’ of $956 million.
“Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand,” adds Yun. “As a result, sales in all regions are now flat or below a year ago.”
Existing-home sales lost momentum in July and decreased year-over- year for the first time since November 2015, according to the National Association of Realtors®.
Total existing home sales, which are completed transactions fell 3.2 percent to an annual rate of 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months sales are now below a year ago.
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last four months. “Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country,” he said. “Realtors® are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
The median existing-home price for all housing types in July was $244,100, up 5.3 percent from July 2015 ($231,800). July’s price increase marks the 53 rd consecutive month of year- over-year gains.
The share of first-time buyers was 32 percent in July, up from 28 percent a year ago. First- time buyers represented 30 percent of sales in all of 2015.
According to Freddie Mac, the average interest rate for a 30-year, conventional, fixed-rate mortgage dropped from 3.57 percent in June to 3.44 percent in July.