The latest real estate and economic news to read while you finish the last of the leftovers from Thanksgiving…
I hope you had a wonderful Thanksgiving. More importantly, I hope you spent it with loved ones instead of fighting the crowds on Black Friday. I feel that too many people have forgotten what Thanksgiving is about.
I would rather spend time with my family than fight the Black Friday crowds…
Remember that the most important things in life are NOT things…
Mortgage Delinquencies and Foreclosures Decline
I am glad to share some good news from the MBA! They just reported that mortgage delinquencies continued to decline. The Mortgage Bankers Association Said:
- The delinquency rate for 1 to 4 unit residential properties decreased 5.85%
- The delinquency rate decreased for the 6th consecutive quarter
- This is the lowest level for mortgage delinquencies since 2007
- The delinquency rate decreased 19 basis points from the previous quarter
- The delinquency rate decreased 56 basis points from one year ago
- The percentage of loans 30 and 60 days late are back to normal levels
- The percentage of loans in the foreclosure process at the end of the 3rd quarter was 2.39%
- This is down 10 basis points from the 2nd quarter and 69 basis points lower than one year ago
- The foreclosure inventory rate is at the lowest level since 2007
While the number of foreclosures and delinquent mortgages have improved greatly since the peak back in 2010, we still have a long way to go. But fewer delinquent mortgages should mean fewer foreclosures. Fewer foreclosures should lead to a healthier housing market and economy.
Not to mention the terrible costs to people and families when they lose a home…
And it isn’t just the MBA reporting good news about foreclosures and delinquent mortgages. According to Black Knight’s October 2014 First Look at Mortgage Data:
- Foreclosure inventory down over 33% from last year
- Foreclosure inventory at lowest level since February 2008
- Foreclosure starts declined by more than 10% in October
- Foreclosure starts are down 31% YoY
- The delinquency rate (loans 30 or more days past due, but not in foreclosure) fell to 5.44% in October
- The delinquency rate is 4.14% lower than September
- The delinquency rate is 13.43% lower than October 2013
2 reputable sources reporting fewer mortgage delinquencies is great. But there is more good news from Freddie and Fannie!
Freddie Mac is reporting that the delinquency rate is falling:
- The Single-Family serious delinquency rate declined in October to 1.91% from 1.96% in September
- The Single-Family serious delinquency rate is down from 2.48% in October 2013
- This is the lowest level since December 2008
The “normal” serious delinquency rate for Freddie is under 1% but we still have a long way to go. At the current rate of improvement, the serious delinquency rate will not be below 1% until late 2016.
Fannie Mae also just reported decreasing mortgage delinquencies:
- The Single-Family Serious Delinquency rate declined in October to 1.92% from 1.96% in September
- The serious delinquency rate is down from 2.48% in October 2013
- This is the lowest level since October 2008
Despite this being a really great indicator of improvement, we still need to see serious improvement in the job market and incomes for the average American. Speaking of which…
The Bureau of Labor Statistics recently reported that the national unemployment rate for October hit a six year low. The US unemployment rate for October is down 1.4 percentage points from October 2013. This sounds great and if we look at the data from the South Carolina Department of Employment and Workforce for October 2014, we see:
Also worth mentioning is that the AGC of America just reported that:
- Construction firms added jobs in 37 states and the District of Columbia between October 2013 and October 2014
- Construction employment increased in 28 states and the District of Columbia between September and October
Ken Simonson, the association’s chief economist said these year-over-year and one-month changes show that construction is doing well in most of the country.
Construction employment was unchanged in South Carolina. I am sure this could be spun to be negative but at least it did NOT decrease.
Of course, we have to also consider the labor participation rate, median wages and so much more but these improvements are encouraging.
Consumer Confidence Falls
Sadly the Conference Board just said its index of consumer attitudes fell in November to its lowest level since June.
Lynn Franco, Director of Economic Indicators at The Conference Board, said:
Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook. Consumers were somewhat less positive about current business conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned. However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.
Not good for real estate if consumers are not feeling positive. And it isn’t just the Conference Board reporting lower confidence.
Gallup’s most recent US Economic Confidence Index decreased for the week ending Nov. 23. However, this is still one of the highest scores seen in 2014 and one of the most positive weekly averages since Gallup began tracking economic confidence daily in 2008.
Another indicator that came out recently is the REALTOR® Confidence Index for October. Some of the highlights:
- Confidence about Current Conditions for Single Family Sales are down compared to October 2013
- The 6 Month Outlook for October 2014 is lower than October 2013
- First-time home buyers are still less than a third of the market
- Home purchases for investment weaker than a year ago
- Distressed property sales continued to decline
- Properties are take longer to sell
None of this is very encouraging. So let’s move onto more encouraging news…
Home Prices Increase
RealtyTrac is reporting that median US home prices in October hit their highest point since 2008. The median price in October 2014 is 16% higher than October 2013.
Freddie Mac is also reporting that the US housing market is stabilizing. Nearly half of all the markets in Freddie’s MiMi are showing positive momentum. Compared to the same time last year, all 50 states plus DC, and 49 of the 50 metros were showing a positive three month trend. The MiMi for South Carolina is up 2.2% from last year but down 1.06% from last month and 4.98% from 3 months ago.
We also just heard from the FHFA on home prices. The FHFA said that US house prices rose 0.9% in the third quarter of 2014. This is the 13th consecutive quarterly price increases.
FHFA Principal Economist Andrew Leventis said:
Easing interest rates and modestly improving labor market conditions helped to drive up prices in the third quarter. The price increases were relatively small in most areas, however, and are consistent with the type of market deceleration that other housing market statistics have shown in recent periods.
Check out the chart from FHFA:
We also got the latest data on house prices from Case Shiller last week. Their 10-City Composite gained 4.8% YoY and their 20-City Composite gained 4.9% YoY.
While all of this is encouraging, I must caution everyone to remember that this is NOT the local information that buyers and seller need to make informed decisions. You can find out more about real estate market conditions in the Anderson area by checking out the Weekly Market Reports.
New Home Sales Increase
The Census Bureau and HUD are reporting that sales of new homes in October 2014 were up 0.7% from September. This is up 1.8% from the October 2013 level.
The median sales price of new houses sold in October 2014 was $305,000, while the average sales price was $401,100.
The seasonally adjusted estimate of new houses for sale at the end of October was 212,000. This represents a supply of 5.6 months at the current sales rate.
Check out the chart ( red line is not seasonally adjusted):
Pending Home Sales Decrease
NAR just reported that pending home sales in October 2014 declined 1.1% from September but are 2.2% higher than they were a year ago.
Lawrence Yun, NAR’s chief economist, said that contract signings have remained at a healthy pace now for six straight months. He also said that while demand is holding steady, the market would be “more robust if it weren’t for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents.” he said.
Existing Home Sales Increase
NAR also just released their Existing Home Sales Index for October 2014 and they are reporting that the highest level of home sales since September 2013. Home sales in October 2014 are 1.5% higher than September 2014 and 2.5% higher than October 2013.
NAR said that the US median existing home price increased 5.5% from October 2013. This is the 32nd consecutive month with year over year price gains in house prices.