Pending Home Sales Surge To 10-Month High
By Reuters | Mar 29, 2017
Contracts to buy previously owned U.S. homes jumped to a 10-month high in February, pointing to robust demand for housing ahead of the spring selling season despite higher prices and mortgage rates.
The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, surged 5.5 percent to 112.3, the highest reading since April. It was also the second-best reading since May 2006.
Contract signing last month was likely boosted by unseasonably warm temperatures. The gains reversed January’s 2.8 percent drop. Pending home contracts become sales after a month or two, and last month’s surge implied a pickup in home resales after they tumbled 3.7 percent in February.
Economists had forecast pending home sales rising 2.4 percent last month. Pending home sales increased 2.6 percent from a year ago.
Demand for housing is being driven by the labor market, which is generating wage increases, as it nears full employment. Sales activity, however, remains constrained by tight inventories, which are driving up home prices.
Given labor market strength, economists expect only a modest impact from higher mortgage rates. The 30-year fixed mortgage rate is currently at 4.23 percent, below a more than 2-1/2-year high of 4.32 percent hit in December.
Contracts increased 3.4 percent in the Northeast and jumped 3.1 percent in the West. They surged 11.4 percent in the Midwest and rose 4.3 percent in the South.
Massachusetts Single-Family Homes and Condos Reach Highest January Sales Since 2006
Highest January Condo Median Sale Price On Record
By Banker and Tradesman
BOSTON, February 28, 2017 – There were 3,621 single-family homes sold in the bay state in January, compared to 3,433 in January 2016, a 5.5 percent increase. This marks the fourth highest January sales total on record and the highest number since 2005 when sales reached 3,637.
The median sale price of a single-family home in January reached $342,500, a 7.0 percent increase from $320,000 in January 2016. This marks the highest January median sale price in over a decade when prices reached $349,000 in 2006.
“The 7.0 percent gain in median sale price in January is the biggest percentage gain for any month since March 2014,” said Timothy Warren, CEO of The Warren Group. “The real estate market in Massachusetts continues its steady climb to surpass all previous peaks.”
The number of condominiums sold in January increased by 10.1 percent, with 1,469 sold compared with 1,334 sold in January 2016. Condo sales, much like single family homes have had a surprisingly strong January and this marks the highest January sales in 11 years.
The median sale price for condos in January reached $329,000, a 12.7 percent increase from $291,875 in January 2016. This marks the highest January condo median sale price on record. The second highest number was in 2014 when prices reached $300,000. The condo market is thriving and shows no sign of slowing down anytime soon.
US New Home Sales Rebound; Consumer Sentiment Ebbs
By Reuters | Feb 24, 2017
New U.S. single-family home sales rose less than expected in January, likely hurt by flooding in California, but continued to point to a strengthening housing market despite higher prices and mortgage rates.
Other data on Friday showed a dip in consumer sentiment this month, though it remained at a level consistent with a healthy pace of consumer spending.
The Commerce Department said new home sales increased 3.7 percent to a seasonally adjusted annual rate of 555,000 units last month. Economists had forecast single-family home sales, which account for about 9 percent of overall home sales, surging 6.3 percent to a 570,000-unit rate last month.
New home sales, which are derived from building permits, are volatile on a month-to-month basis and subject to large revisions. Sales were up 5.5 percent compared to January 2016.
Data this week showed sales of previously owned homes jumped 3.3 percent in January to a 10-year high. House prices increased 6.2 percent in December from a year ago.
In a separate report on Friday, the University of Michigan said its consumer sentiment index fell to a reading of 96.3 this month from 98.5 in January. The index had surged in the prior three months following Donald Trump’s victory in the Nov. 8 presidential election.
“Normally, the implication would be that consumers expected Trump’s election to have a positive economic impact,” the University of Michigan said. “That is not the case since the gain represents the result of an unprecedented partisan divergence, with Democrats expecting recession and Republicans expecting robust growth.”
The University of Michigan said February’s consumer sentiment reading suggested a 2.7 percent annualized growth pace in consumer spending this year.
Prices of U.S. government debt edged up after the data. U.S. stocks were trading lower as was the dollar .DXY against a basket of currencies. The PHLX housing index .HGX was down 0.5 percent.
Labor Market Boost
The housing market strength comes even as the 30-year fixed mortgage rate has risen above 4 percent, outpacing annual wage growth that has been stuck below 3 percent. The gains in housing are being driven by a strong labor market which is near full employment.
While the tightening labor market has not unleashed a stronger pace of wage growth, it has improved employment opportunities for young Americans, encouraging them to form their own households. But a shortage of properties available for sale remains an obstacle to a robust housing market.
Last month, new single-family homes sales soared 15.8 percent in the Northeast to their highest level since January 2008. They rose 14.8 percent in the Midwest and advanced 4.3 percent in the South. Sales in the West, which has been hit by unusually wet weather, fell 4.4 percent.
The inventory of new homes on the market increased 3.5 percent to 265,000 units last month. New housing stock remains less than half of what it was at its peak during the housing boom in 2006.
At January’s sales pace it would take 5.7 months to clear the supply of houses on the market, which was unchanged from December.
A six-month supply is viewed as a healthy balance between supply and demand. The median price for a new home increased 7.5 percent to $312,900 in January from a year ago.