Discussing pending home sales, why selling now has advantages, jobless claims, zoning and home prices, the Conference Board Consumer Confidence Index, the Richmond Fed reports on manufacturing and service sector, Facebook sued for discrimination, serious mortgage delinquencies, UofM consumer confidence report and more
Pending Home Sales Increase
The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 3.1 percent to 107.5 in February from a downwardly revised 104.3 in January. Even with last month’s increase in activity, the index is 4.1 percent below a year ago.
While the MoM increase is great, the YoY decrease is bad. This is the first increase in 3 months but we are still seeing the impact of limited inventory in many areas hurting home sales.
Lawrence Yun, NAR chief economist said:
The expanding economy and healthy job market are generating sizeable homebuyer demand, but the miniscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.
But since this is a national and not local report, I suggest that you consult with a local Realtor to determine what is happening in your area.
Why Selling Now Has Its Advantages
Today, the supply of homes for sale is lower than the demand from buyers. Until the number of properties for sale increases to exceed home buyer demand, prices will keep increasing.
The most recent REALTORS Confidence Index helps to explain the relationship between Seller Traffic (supply) and Buyer Traffic (demand). This map was produced using data from the answers about buyer traffic in the area:
The darker the blue, the higher the demand. As you can see, home buyer demand is strong in most of the country!
On the other hand, supply is pretty limited as indicated by the low seller traffic reported in the same survey. Check out this map showing seller demand by state:
After looking at the map, it is easy to understand why home prices are increasing in most areas of the US. This means we are firmly in a seller’s market in many areas of the country!
In the Anderson SC area, homes in some price ranges/areas are in very high demand today! If you are thinking about putting your Anderson SC home on the market, you can contact me for a confidential consultation.
Jobless Claims at 45 Year Low
In the week ending March 24, the advance figure for seasonally adjusted initial claims was 215,000, a decrease of 12,000 from the previous week’s revised level. This is the lowest level for initial claims since January 27, 1973 when it was 214,000. The previous week’s level was revised down by 2,000 from 229,000 to 227,000. The 4-week moving average was 224,500, a decrease of 500 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 223,750 to 225,000.
Incredible and good news for the economy.
The Effect of Zoning on Housing Prices
Zoning regulations provide benefits, but they also restrict housing supply and hence raise prices. This paper quantifies their importance by comparing prices to the marginal costs of supply at different points in time. For detached houses, marginal costs comprise the dwelling structure and the land that other home owners need to forego. Relative to our estimates of these costs, we find that, as of 2016, zoning raised detached house prices 73 per cent above marginal costs in Sydney, 69 per cent in Melbourne, 42 per cent in Brisbane and 54 per cent in Perth. Zoning has also raised the price of apartments well above the marginal cost of supply, especially in Sydney. We emphasise that this is not the amount that housing prices would fall in the absence of zoning. The effect of zoning has increased dramatically over the past two decades, likely due to existing restrictions binding more tightly as demand has risen.
OK so this is a study from Down Under but it still shows that regulations are not always good. Still, tis is very interesting and food for thought.
We often see zoning regulations as an effect of a NIMBY ( not in my backyard ) attitude. Not all zoning regulations are bad just like not all regulations are bad.
It is finding that fine line between too much and too little that we as Realtors and concerned home owners must be concerned about.
The Conference Board Consumer Confidence Index Declined
From The Conference Board:
The Conference Board Consumer Confidence Index® decreased in March, following an increase in February. The Index now stands at 127.7, down from 130.0 in February. The Present Situation Index decreased from 161.2 to 159.9, while the Expectations Index declined from 109.2 last month to 106.2 this month.
Lynn Franco, Director of Economic Indicators at The Conference Board, said:
Consumer confidence declined moderately in March after reaching an 18-year high in February. Consumers’ assessment of current conditions declined slightly, with business conditions the primary reason for the moderation. Consumers’ short-term expectations also declined, including their outlook for the stock market, but overall expectations remain quite favorable. Despite the modest retreat in confidence, index levels remain historically high and suggest further strong growth in the months ahead.
Not good but we did hit an 18 year high in February. Kind of hard to repeat that kind of performance.
And as they said, index levels remain at historically high levels. Whether or not this leads to more economic growth and home sales remains to be seen.
Fifth District Manufacturing Firms Reported Sluggish Growth
From Richmond Fed:
Fifth District manufacturing expanded at a slower pace in March, according to the most recent survey results from the Federal Reserve Bank of Richmond. The composite index dropped from a particularly strong reading of 28 in February to 15 in March as each of the three components (shipments, new orders, and employment) fell. However, for each of these variables, a larger share of firms predicted growth in six months than had in February. Firms reported weaker growth in capital expenditures in March but saw an uptick in growth of business services expenditures.
The survey’s employment measures suggested slower growth in March. While the availability of skills index increased in March, it remained in negative territory indicating that skills shortages persisted. Firms anticipate stronger growth in all employment measures in the coming months.
District manufacturers saw higher growth in prices paid in March, but growth in prices received slowed slightly. However, firms expected to see accelerating price increases for both prices paid and received in the next six months.
Not exactly good…
Fifth District Service Sector Firms Reported Moderate Growth
From Richmond Fed:
Results from the Richmond Fed’s latest survey suggest that the District’s service sector expanded moderately in March. Most indicators decreased but remained fairly strong, as the revenues index fell from 27 in February to 25 in March.
Service sector employment growth appeared to slow in March, while wage gains spread further. Notably, the availability of skills index dropped back into negative territory, indicating that a greater share of firms experienced difficulty finding employees this month. Firms expect to continue to struggle with hiring in the coming months.
District service sector firms saw softer price growth in March for both prices paid and received, but prices received continued to rise at a slower rate than prices paid. While firms anticipate higher growth in both metrics in the next six months, they expect growth in prices paid to continue to outpace growth in prices received.
A little better that the Richmond Fed’s manufacturing report. Let’s hope both of these reports are better next time…
Facebook Sued for Discrimination in Housing Advertisements
Today, the National Fair Housing Alliance (“NFHA”) and three of its member organizations filed a lawsuit against Facebook, Inc. in federal court in New York City, alleging that Facebook’s advertising platform enables landlords and real estate brokers to exclude families with children, women, and other protected classes of people from receiving housing ads. With almost 2 billion users, Facebook customizes the audience for its millions of advertisers based on its vast trove of personalized user data. After being warned repeatedly about its discriminatory advertising practices, Facebook continues to use this data to deny people access to rental housing and real estate sales ads because of their sex and family status.
The lawsuit alleges that Facebook has created pre-populated lists that make it possible for its housing advertisers to “exclude” (in Facebook terminology) home seekers from viewing or receiving rental or sales ads because of protected characteristics, including family status and sex. Plaintiffs conducted investigations in each of their respective housing markets that confirmed Facebook’s discriminatory practices.
Facebook is getting plenty of bad press lately but this lawsuit does not surprise me based on Facebook’s history.
Fannie and Freddie Report on Serious Mortgage Delinquencies
Our single-family seriously delinquent rate decreased from 107 basis points in January to 106 basis points in February.
The Conventional Single-Family Serious Delinquency Rate decreased 1 basis point to 1.22% in February.
Not huge decreases but still great news.
Something Is Wrong With This Picture
From Deutsche Bank Research via The Big Picture:
You have to wonder how much longer this can continue? We need growth for every income percentile if we are going to see a healthy economy and avoid social unrest.
UofM Consumer Confidence Survey Hits 14 Year High
Consumer sentiment at month’s end was marginally below the mid-month reading due to uncertainty about the impact of the proposed trade tariffs. The Sentiment Index, however, still reached the highest level since 2004, and the Current Conditions Index set a new all-time peak.
Now here is the really juicy part: Most of this increase is due to the sentiment of households with incomes in the bottom third. Sentiment among households with incomes in the top third decreased.
They say that the decrease among the top third is from concern about government policies such as the tariffs. Most experts are critical of the tariffs and history does show that tariffs may not help as much as they hurt.
Consumers are expecting interest rates to increase in the foreseeable future. Speaking of interest rates, I will talk about this week’s report on mortgage rates tomorrow.
Well that is all I have time for today!