WASHINGTON – July 13, 2016 – Despite lackluster economic growth and stark home-price appreciation in several parts of the country in recent months, roughly three-quarters of surveyed households still believe it’s a good time to buy a home – but there’s a considerable morale gap between homeowners and renters, according to the latest installment of the National Association of Realtors® (NAR) Housing Opportunities and Market Experience (HOME) survey.
The survey also found that roughly half of young adults with student debt are uncomfortable about taking on a mortgage.
In NAR’s second quarter HOME consumer survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations, including whether student debt is tempering their ability and appetite to take on mortgage debt.
NAR’s survey found that the share of homeowners and renters who believe it’s a good time to buy a home has held steady so far this year, with 80 percent of homeowners (82 percent in March) and 62 percent of renters (unchanged from last quarter) saying it’s a good time to buy. However, the share of renters who think so is down from 68 percent in December 2015, and those under 35 were the least confident.
Lawrence Yun, NAR chief economist, says the survey brings to focus the ongoing disparity in buyer confidence between current homeowners and renters.
“Existing-home prices surpassed their all-time peak this spring and have climbed on average over 5 percent nationally through the first five months of the year, and even faster in areas with severe supply shortages,” he says. “Most homeowners appear to realize that if they’re ready to sell, they’ll likely find a buyer rather quickly and be able to use the sizeable equity they’ve accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition and home prices growing faster than their incomes.
This HOME survey also found that student debt is causing many potential homebuyers to be uneasy about taking on additional debt: Roughly two-thirds of non-homeowners and half of respondents under 35 with student debt said they aren’t comfortable also having a mortgage. Furthermore, of those with student debt, non-homeowners and younger adults were less likely to believe they’d be able to qualify for a mortgage if they applied.
“It’s becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers,” adds Yun. “At a time of quickly rising rents, mortgage rates at all-time lows and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide.”
Attitudes about U.S. economy, personal finances outlook mostly unchanged
About half of all households surveyed believe the economy is improving (49 percent), which is mostly unchanged since the inaugural HOME survey in December 2015. Renters, respondents living in urban areas, and those in the West were the most optimistic.
When asked if they thought their personal financial situation would be better in six months, the latest survey reflected a little less optimism. The survey’s monthly Personal Financial Outlook Index of all households decreased slightly (to 57.7 in June) month-to-month (58.1 in March), but it’s unchanged from June 2015.On the other hand, nearly two-thirds of those living in rural areas don’t believe the economy is improving.
More believe it’s a good time to sell
With strong price growth prevalent in most of the country and homes selling at a quickened pace, more current homeowners (61 percent) believe it’s a good time to sell compared to the first quarter of this year (56 percent). Respondents in the West were again the most likely to think now is a good time to sell, but they’re also least likely to think it’s a good time to buy.
“More homeowners acknowledging this pent-up demand may perhaps mean we begin to see more supply come online in the near future,” adds Yun.
When asked about their outlook for home prices in their community in the next six months, almost all believe that prices will stay the same or rise (93 percent), which is consistent with last quarter (91 percent). Respondents from the West, those living in urban areas and renters are most likely to believe prices will go up in their communities.
© 2016 Florida Realtors®
Fannie Mae’s Home Purchase Sentiment Index zoomed to an all-time high in May as consumers get more upbeat about their paychecks and home selling. In May, the index reached a reading of 85.3, which follows an 18-month low reached in March.
Three of six components the index measures registered increases last month, led by a 7 percentage point increase in the number of consumers reporting significantly higher income than a year ago. Also, the number of consumers who expect home prices to increase over the next 12 months rose 5 percentage points. Consumers were also upbeat that mortgage rates would decrease over the next year as well.
That said, the index indicator on whether it’s a “good time to buy” dropped 1 percentage point to an all-time survey low in May.
“Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer homebuying season gains momentum, the effect may be muted by May’s discouraging jobs report.”
Here’s a closer look at additional findings from Fannie Mae’s latest index reading:
- 29 percent of Americans say now is a good time to buy a home, a drop of 1 percentage point from March and an all-time survey low for the second consecutive month.
- 52 percent of consumers believe now is a good time to sell a home – an all-time survey high.
- 42 percent of Americans believe that home prices will go up.
- 72 percent of Americans say they are not concerned with losing their job, a drop of 2 percentage points from March.
- 18 percent of Americans say their household income is significantly higher than it was a year ago, up 7 percentage points from March and at an all-time survey high.
Source: Fannie Mae
NEW YORK – June 6, 2016 – Clear Capital’s Home Data Index (HDI) Market Report releases recent and granular data each month. The HDI Market Report provides insights into housing price trends and other leading indices for the real estate market at the national and local levels.
Florida’s markets continue to recover from the devastating lows of the housing market crash, and an increase in baby boomers provides key insight into the market’s future, according to Clear Capital.
- Regionally, the West continues to dominate quarterly growth as it hovers around a 1.1 percent quarter-over-quarter price increase, though that’s a downtick of 0.1 percent from last month. Growth rates in the South remain unchanged at 0.7 percent quarter-to-quarter growth, while Northeast and Midwest regional growth continues to lag behind the rest of the nation at 0.1 percent.
- Nationally, quarterly market performance remains fixed at 0.6 percent with no change month-to-month.
- The Seattle and Tampa MSAs tied for the top spot on the Highest Performing Major Metro Markets for June, each reporting a quarter-to-quarter price increase of 2.0 percent.
- Tampa isn’t the only Sunshine State metro area to make the high-performers list. It also includes Orlando (1.7 percent quarterly price growth), Jacksonville (1.7 percent quarterly price growth), and Miami (1.4 percent quarterly price growth).
The most recent quarterly growth figures for the Floridian markets fit into a longer-term pattern of growth and recovery for the state, according to Clear Capital, and each major MSA has “experienced incredible gains since the market lows of 2011, recovering at least 30 percent or more of the individual market value.”
Jacksonville and Orlando home prices have increased 33 percent and 44 percent respectively; Tampa and Miami home prices have skyrocketed by almost 56 percent and 57 percent, respectively.
The baby boomer influence
Clear Capital compared Census Bureau data on baby boomer moves to the price increase from its index, calling the growth in both an “interesting phenomenon that may be contributing to the stellar price growth in the region.”
The most recent data from the U.S. Census Bureau indicates that this segment of the market – homeowners aged 55 to 74 – has increased more than 2.5X the overall population of homeowners in each of the top four Florida markets since 2011. In Miami and Jacksonville, the increase in homeowners of this generation is more than 500 percent greater than the overall increase in the total population of homeowners.
“It’s evident that the baby boomer demand for housing in the (price growth metro areas) is a significant contributing factor in the market’s overall success,” the report concludes. “In Orlando, the trend is quite similar as the ratio of baby boomer homeownership growth to overall homeownership growth is over 400 percent.”
“Florida has traditionally been regarded as prime real estate by those retirees who may be looking to migrate from colder areas of the nation such as the Northeast to a warmer and sunnier alternative for their golden years,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.
“As the top Floridian housing markets continue to grow and return impressive price gains – Tampa is currently reporting 12.2 percent annual price growth – it’s no surprise that this generation continues to invest in real estate in the region,” he adds. “The baby boomer share of homeowners is clearly on the rise here, and as more and more of this generation nears retirement age, Florida markets may be in for a boost in performance if tradition continues and retirees demand homes in the region.”
© 2016 Florida Realtors®
WASHINGTON – May 26, 2016 – Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade, according to the National Association of Realtors® (NAR).
All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.
The Pending Home Sales Index – a forward-looking indicator based on contract signings for homes that have not yet sold – hiked 5.1 percent higher to 116.3 in April from an upwardly revised 110.7 in March. Year-to-year, it’s 4.6 percent above April 2015 (111.2).
After last month’s gain, the index has now increased year-over-year for 20 consecutive months. Vast gains in the South and West propelled April’s pending sales in April to its highest level since February 2006 (117.4), says Lawrence Yun, NAR chief economist.
“The ability to sign a contract on a home is slightly exceeding expectations this spring, even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,” Yun says. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”
Mortgage rates have remained below 4 percent in 16 of the past 17 months, but Yun says it remains to be seen how long they will stay this low. Along with rent growth, rising gas prices – and the fading effects of last year’s cheap oil on consumer prices – could edge up inflation and push rates higher. For now, Yun foresees mortgage rates continuing to hover around 4 percent in coming months, but inflation could potentially surprise the market and cause rates to increase suddenly.
“Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search,” adds. Yun.
Following the housing market’s best first quarter of existing-sales since 2007 (5.66 million) and a decent increase (1.7 percent) in April, Yun expects sales this year to climb above earlier estimates and be around 5.41 million – a 3.0 percent boost from 2015. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to between 4 and 5 percent.
Pending sales in the Northeast climbed 1.2 percent to 98.2 in April, and are now 10.1 percent above a year ago. In the Midwest, the index declined slightly (0.6 percent) to 112.9 in April, but it’s still 2.0 percent above April 2015.
Pending home sales in the South jumped 6.8 percent to an index of 133.9 in April – 5.1 percent higher than last April. The index in the West soared 11.4 percent in April to 106.2, and it’s now 2.8 percent above a year ago.
© 2016 Florida Realtors®
WASHINGTON – March 28, 2016 – Pending home sales rose solidly in February to its highest level in seven months, according to the National Association of Realtors® (NAR). Led by a sizeable increase in the Midwest, all major regions except for the Northeast saw an increase in February contract activity.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 3.5 percent to 109.1 in February from a downwardly revised 105.4 in January and it’s 0.7 percent higher year-to-year. The index has now increased year-over-year for 18 consecutive months, though last month’s annual gain was the smallest.
“After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year and a modest, seasonal uptick in inventory,” says Lawrence Yun, NAR chief economist.
“Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what’s being scooped up by a growing pool of buyers,” Yun adds. “Without adequate supply, sales will likely plateau.”
According to Yun, last month’s noticeable slump in existing-home sales had one silver lining: Price appreciation lessened to 4.4 percent, which is still above wage growth but more favorable than the 8.1 percent annual increase in January.
“Any further moderation in prices would be a welcome development this spring, particularly in the West, where it appears a segment of would-be buyers are becoming wary of high asking prices and stiff competition,” adds Yun.
Existing-homes sales this year are forecast to be around 5.38 million, an increase of 2.4 percent from 2015. The national median existing-home price for all 2016 is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.3 percent and prices rose 6.8 percent.
The PHSI in the Northeast declined 0.2 percent to 94.0 in February, but it’s still 12.6 percent above a year ago. In the Midwest, the index shot up 11.4 percent to 112.6 in February, and it’s now 2.5 percent above February 2015.
Pending home sales in the South increased 2.1 percent to an index of 122.4 in February but it’s 0.4 percent lower than last February. The index in the West climbed 0.7 percent in February to 96.4, but it’s now 6.2 percent below a year ago.
© 2016 Florida Realtors®
WASHINGTON (January 28, 2016) — Pending home sales were mostly unchanged in December, but inched forward slightly, fueled by a large increase in the Northeast that outpaced declines in the other three major regions, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, crawled 0.1 percent to 106.8 in December from a downwardly revised 106.7 in November and is now 4.2 percent above December 2014 (102.5). The index has increased year-over-year for 16 consecutive months.
Lawrence Yun, NAR chief economist, says contract activity closed out the year on stable footing but lost some momentum, except for in the Northeast. “Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month,” he said. “Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon.”
According to Yun, although healthy labor market conditions will persuade more households to buy, it’s possible overall demand could be somewhat curtailed in coming months. The stock market’s sizeable losses since the start of the year and the effect slowing manufacturing activity is having in some areas — especially in the energy sector — could cause some to hold off on buying.
“The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined,” says Yun. “Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent.”
Existing-homes sales this year are forecast to be around 5.34 million, an increase of 1.5 percent from 2015. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.5 percent and prices rose 6.8 percent.
Rents — which have far outpaced wages in recent years — are expected to slightly slow to 3.3 percent growth in 2016 from 3.6 percent a year ago. Multifamily housing starts are expected to reach 420,000 units this year, the highest level since 1987.
The PHSI in the Northeast increased 6.1 percent to 97.8 in December, and is now 15.3 percent above a year ago. In the Midwest the index decreased 1.1 percent to 103.6 in December, but is still 3.6 percent above December 2014.
Pending home sales in the South declined 0.5 percent to an index of 119.3 in December but are 1.0 percent higher than last December. The index in the West decreased 2.1 percent in December to 97.5, but remains 3.4 percent above a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: Fourth quarter of 2015 metropolitan area home prices will be released February 10, Existing-Home Sales for January will be reported February 23, and the next Pending Home Sales Index will be February 29; release times are 10:00 a.m. ET.