QUOTE OF THE WEEK... "Change before you have to."--Jack Welch, retired American business executive and author
INFO THAT HITS US WHERE WE LIVE... GE's former CEO is basically saying it pays to anticipate the changing needs of your business, and that's always a good idea in real estate. Those who are dealing well with change have no doubt benefited from October's 0.7% rise in New Home Sales, now at a 458,000 annual rate. This figure was a little lower than expected, but these sales are still up 1.8% over a year ago and are tied with last May as the highest level since mid-2008. New home sales are certainly below where they should be now in the recovery, but there has been a slight shift by buyers to multi-family homes (urban condos), not counted in the report.
The National Association of Realtors (NAR) reported a tiny decline in their Pending Home Sales index for October. But this measure of contracts on existing homes is 2.2% ahead of where it was a year ago, above year-over-year levels for the second month in a row. The NAR's chief economist commented, "Despite October's modest decline, contract signings have remained at a healthy pace now for six straight months." That may be because monthly median price growth is averaging 5.8% this year, versus 11.5% in 2013. The NAR economist sees this as, "...a healthier pace that has kept affordability in check...while giving more previously stuck homeowners...the ability to sell."
QUOTE OF THE WEEK... "Nothing can substitute for just plain hard work. I had to put in the time to get back. And it was a grind." --Andre Agassi, American retired professional tennis player and former World No. 1
INFO THAT HITS US WHERE WE LIVE... Realtors are clearly working hard, grinding out a 0.3% rise in Pending Home Sales in September, according to the National Association of Realtors (NAR). This measure of existing homes under contract but not yet closed is now 1% higher than a year ago, above year-over-year levels for the first time in 11 months. The NAR's chief economist commented, "...the current spectacularly low mortgage rates should help more buyers reach the market." He also observed "...supply for existing homes was up in September 6% from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year."
That slower rate of home price gains was confirmed by the latest S&P/Case-Shiller home price indexes. The 20-City Composite was up 5.6% year-over-year, but down from the 6.7% gain it posted in July. The National Index registered a 5.1% annual increase in August, down from 5.6% in July. But an economist at a major financial analytics firm said that in spite of the slowing rate of home price gains, every metro area covered in the current release recorded price growth compared with its year-ago level. That growth ranged from 0.8% to 10.5%. It makes sense that home price appreciation is slowing, since inventory has grown to 5.2 months, from 4.8 months a year ago.
QUOTE OF THE WEEK... "You have to trust in something – your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life." --Steve Jobs, co-founder of Apple, Inc.
INFO THAT HITS US WHERE WE LIVE... All of us working in the housing market have long trusted that real estate was destined to recover, and signs of that continue to abound. September saw Existing Home Sales head up 2.4%, to a very healthy 5.17 million unit annual rate. They've gained now in five of the last six months and are at their highest annual pace of the year. Sales are still off a bit compared to a year ago, but other data is up. The median price is up 5.6% and average prices are up 3.7% versus last year. This should bring more homes onto the market to help inventories, which are still up 6% from a year ago. Sales in which the buyer uses a mortgage are up 11.5% versus last year.
New Home Sales were also up in September, but only by 0.2%. Some media reported this as a "stall-out" in sales gains. But 0.2% more sales are in fact a greater number of sales, so nothing has "stalled out." More importantly, new home sales are now up 17.0% from a year ago and are at their highest level in more than six years. By the way, buyers have shifted slightly to multi-family homes (condos), which are not counted in the new home sales data. The FHFA index of prices for homes financed with conforming mortgages gained 0.5% in August, up 4.8% from a year ago. Prices are increasing, though at a gentler pace, which is not a bad thing.
QUOTE OF THE WEEK... "Don't spend time beating on a wall hoping to transform it into a door." --Coco Chanel, French fashion designer
INFO THAT HITS US WHERE WE LIVE... It seems like more than a few observers are beating on the housing market trying to transform it into a disaster that it isn't. For example, some jumped all over the 1% drop in the Pending Home Sales index for August. But this measure of contract signings is still above 100, considered an average level of activity, for the fourth month in a row. It's also at the second highest level since last August. The National Association of Realtors chief economist sees contract signings holding steady, with fewer investors and distressed sales causing the dip. He said, "...the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home."
Naysayers also jumped on the S&P/Case-Shiller Home Price Index reporting a slowdown in the rate of price increases for July. But the fact is, the 10-City and 20-City Composites did increase 0.6% for the month and 6.7% for the year. The chief economist of an online real estate listing site reported that home prices nationally are actually 3% undervalued in Q3.The Mortgage Bankers Association reported purchase applications flat for the week ending September 26, but their chief economist added, "Although total purchase application volume was little changed, conventional purchase applications were at the highest level since July."
QUOTE OF THE WEEK... "Normalcy is not interesting." --Lindsay Lohan, American actress, model, producer, and recording artist
INFO THAT HITS US WHERE WE LIVE... If the troubled performer were earning her living in real estate, she might think differently about normalcy. For a few years now, the housing market has been anything but normal, so any return to stability is interesting indeed. With a major real estate information provider reporting home price gains moderating in June, their chief economist observed, "This reversion to normality that we are finally experiencing is expected to continue across the country and should further alleviate concern over diminishing affordability and the risk of another asset bubble."
Recovery continues nonetheless, as June's more modest price gains still represented 28 months of consecutive year-over year increases in home prices nationally. More evidence of the return to a normal housing market came when a national online real estate site reported that their listings blasted ahead 8.65% from May to June. Their chief economist feels "All the data points support favorable sales over the next couple of months." He pointed out that talk anticipating mortgage rates will rise next year make now a relatively appealing time to buy, while an improving economy puts more money in buyers' hands.