Discussing existing home sales for November, inventory and home sales, several positive reports on the economy plus more!
Existing Home Sales Increase to Highest Level in Over 10 Years
Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, according to the National Association of Realtors.
Total existing-home sales jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million).
The median existing-home price3 for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains.
Think about this news and the increase in building permits and housing starts that I wrote about yesterday. You can see real estate is doing very well.
Anyone thinking about selling their home should find this news very encouraging BUT must realize that more competition is on the way. The incredible number of existing homes sold in November shows you that NOW is a great time to sell a home.
Despite the stories about tight inventory, you can see that home sales are booming. This should encourage anyone thinking about buying a home.
If you are thinking about buying a home, remember that many experts are once again saying that mortgage rates will increase in the coming year. I know we have heard this countless times in the past but with the Fed finally starting to increase their benchmark rate, it could be true this time.
And homes prices are also projected by many experts to continue increasing. They may not be rising as fast as they once were but they are still increasing.
Increasing home prices and mortgage rates should motivate potential home buyers. We could see a very robust housing market in 2018!
Tightening Supply Squeezes Market Potential
Strong first-time homebuyer demand continues with the help of low mortgage rates. But, tight supply continues to be the biggest constraint on housing market growth. Existing homeowners are increasingly prisoners in their own homes, preventing additional existing-home supply from entering the market. Homebuilders are also struggling to add more new home inventory, so both sources of housing supply face challenges. The housing supply shortage hindering the market today is likely to remain in 2018.
Is inventory really an issue since Existing Home Sales increased in such a dramatic way?
Consider this quote from Logan Mohtashami:
Could it be that demographics, household formation, selling equity and affordability have a greater effect on existing home sales than monthly inventory? Not only yes, but **** yes!
I would agree. When people want to buy a home or need to buy a home, they will.
US Economy in a Snapshot
Highlights from NY Fed’s latest December 2017 Economy in a Snapshot:
After rising robustly in September, real consumer spending growth slowed down markedly in October. Durable goods expenditures fell slightly and services expenditures increased minimally.
Business equipment spending has been strong this year, with capital spending indicators pointing to solid and accelerating growth in the near term.
Housing indicators point to continued gradual improvement in this sector. Multi-family starts surged in October, and tight market conditions continued to promote a gradual rise in single-family starts.
Payroll growth was robust in November. The unemployment rate and the labor force participation rate were unchanged, while the employment-to-population ratio declined slightly. Growth of labor compensation remained subdued.
While core PCE inflation continues to run below the FOMC’s longer-run objective, the October price data indicate that core inflation appears to be firming modestly.
The decrease in consumer spending growth and wages is bad but otherwise a decent month. You have to wonder if the Fed really believes that inflation is “firming modestly” or they are preparing for another downturn in the economy?
Economy Expected to End 2017 on a Cheerful Note
The 2017 economic growth forecast increased one-tenth from the prior forecast to 2.5 percent due to the government’s upgraded third quarter GDP growth estimate and an expected solid fourth quarter finish.
Fannie expects single family housing starts to increase 7.9% YoY and home sales to increase 2.5% YoY. While this is national and not local, we have to like the prediction of more growth in housing.
Fannie is waiting to decide exactly what the effect of the tax reform will be on the economy. It really is hard to say what it will happen…
Is the Rent “Too Damn High”? Or Are Incomes Too Low?
An alternative indicator of whether housing costs may harm a family’s economic well-being is to assess whether their income remaining after paying rent is sufficient to purchase other necessities.
Low-income renters in the U.S. face acute problems balancing the cost of housing and paying for other necessary expenses. Among families in the bottom 20 percent of income, the median renter pays more than half of its monthly income on rent, and has less than $500 per month remaining after rent.
The problem of affordable housing really needs to be addressed. But is it a problem of the rent being too high or wages being too low?
Rising rents and stagnant incomes have created a very serious problem for many Americans. The question is if we can expect our elected officials and policy makers to do anything about it?
Chemical Activity Barometer Increases Again
Excellent news from the American Chemistry Council that their leading economic indicator, the Chemical Activity Barometer is up 3.7% YoY. They say the latest reading indicates healthy business growth through the third quarter of 2018.
Another very encouraging tidbit! It’s almost like Santa came early!
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