Single Family Housing Starts At 2007 Levels

[David Goldsmith]

https://calculatedrisk.substack.com...id=105481989&isFreemail=true&utm_medium=email

Lawler: AMH Net Seller of Existing Single-Family Homes, “Investor” Home Purchases Plunged​

CalculatedRisk by Bill McBride

7 hr ago
15



Some interesting data from housing economist Tom Lawler:

AMH Net Seller of Existing Single-Family Homes Last Quarter​

AMH (American Homes 4 Rent), which rents single-family homes and which owned almost 59,000 single-family homes at the end of last year, reported that it was a net seller of existing single-family homes last quarter. The company acquired 489 homes last quarter, but 415 of those homes were “deliveries” from its own build-to-rent program, and “most” of the remaining 74 homes were acquired under its National Builder Program. The company sold 457 homes last quarter, well above the average quarterly sales of 161 in the previous four quarters. The company also increased its inventory of single-family homes held for sale to 1,115 in December from 1,057 in September and 659 in December 2021, and company officials suggested that additional home sales were likely this quarter.
In its earnings press release and during its conference call, the company said that its single-family acquisitions program was currently “on hold.” Here is an excerpt from the press release.
“The Company’s acquisition programs currently remain on hold given capital market uncertainty and potentially improving future investment opportunities. Until market conditions change, the Company’s current 2023 outlook does not contemplate any material acquisition activity.”
And here is an excerpt from the earnings conference call.
“Currently, our traditional and national builder channels are largely on pause. As today, it remains difficult to acquire properties in an accretive and responsible manner with expected return to today's pricing still too low to clear our required return thresholds.”
Company officials suggested that current “cap rates” were about 50 bp lower than what the company found “attractive.”
AMH still expects that its SF rental portfolio will increase somewhat this year, with all of the expected growth coming from its “development pipeline” (build-to rent). AMH expects to add about 2,300 homes (1,850 wholly-owned and 450 in joint ventures) via its build-to-rent program. As of 12/31/2022 the company’s owned or optioned lots totaled 14,507, up from 13,134 a year earlier and 7,071 at the end of 2020.
In the fourth quarter of last year Invitation Homes, which owns over 83,000 single-family properties, acquired (wholly owned or via JVs) 166 SF properties, 81 of which were from “build-to-rent” builders, while it sold 199 homes. As such, the company was also a net seller of existing SF homes.
In terms of rent trends, here is a table showing Are’s rent growth for rent renewals and re-leases, as well as the YOY % growth in average rents for “same-store” properties.

Redfin: “Investor” Home Purchases Plunged Last Quarter​

Based on property records in 40 large metro areas, Redifn reported that “investor” residential purchases in these areas totaled 48,445 homes last quarter, down 27.0% from the previous quarter and down 45.8% from the comparable quarter of 2021. Investor purchases of single-family homes were down 49.8% YOY.



Here is Redfin’s definition of “investor”:

“We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use.”

 

[David Goldsmith]

Housing Market Momentum Stalls as Critical Spring Season Approaches

Rising interest rates are again squeezing affordability and driving mortgage applications to their lowest levels in decades.

www.wsj.com

Housing Market Momentum Stalls as Critical Spring Season Approaches​

Rising interest rates squeeze affordability, drive mortgage applications to lowest levels in decades​

A continued slowdown in housing sales this spring could ripple through real estate-related industries, including sales of furniture and appliances.PHOTO: ANGELA OWENS/THE WALL STREET JOURNAL
By Nicole Friedman
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March 6, 2023 5:30 am ET

Rising mortgage rates are cooling the U.S. housing market, sapping recent buyer interest heading into the crucial spring selling season.
Economists, home builders and real-estate agents saw evidence of a thaw in early 2023, when rates declined from over 7% in November to 6.09% in early February. That was enough to lure back some buyers who had adjusted to higher borrowing costs.

​

 

[David Goldsmith]

NAR: Existing-Home Sales Decreased to 4.44 million SAAR in March; Median Prices Declined 0.9% YoY

From the NAR: Existing-Home Sales Slid 2.4% in March Existing-home sales edged lower in March, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while sales in the Northeast remained steady. All regions posted...

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NAR: Existing-Home Sales Decreased to 4.44 million SAAR in March; Median Prices Declined 0.9% YoY​

CalculatedRisk by Bill McBride
Apr 20, 2023
2
1



From the NAR: Existing-Home Sales Slid 2.4% in March

Existing-home sales edged lower in March, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while sales in the Northeast remained steady. All regions posted year-over-year decreases.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March. Year-over-year, sales waned 22.0% (down from 5.69 million in March 2022).
...
Total housing inventory registered at the end of March was 980,000 units, up 1.0% from February and 5.4% from one year ago (930,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from February but up from 2.0 months in March 2022.
emphasis added

The sales rate was below the consensus forecast.


This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in March (4.44 million SAAR) were down 2.4% from the previous month and were 22.0% below the March 2022 sales rate.

Sales Year-over-Year and Not Seasonally Adjusted (NSA)​

The second graph shows existing home sales by month for 2022 and 2023.



Sales declined 22.0% year-over-year compared to February 2022. This was the nineteenth consecutive month with sales down year-over-year.

The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black and light Purple are the maximum sales per month during the bubble (2005) and the minimum sales during the bust (2008 - 2011). The most recent five years are shown (2019 through 2023).



Sales NSA in March (360,000) were 21.1% below sales in March 2022 (456,000). On an NSA basis, sales were the lowest for March since 2014, and sales were only 18.4% above the record low for March in 2009.

This decrease in sales, NSA, was similar to change in the markets I track each month.

Housing Inventory Increased Slightly in March​

The fourth graph shows nationwide inventory for existing homes.



According to the NAR, inventory increased to 0.98 million in March from 0.97 million in February.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.



Inventory was up 5.4% year-over-year (blue) in March compared to March 2022. This includes some pending sales - and doesn’t match some other measures - and it seems likely that active inventory was up year-over-year much more in March than the NAR is reporting.

Months of supply (red) was unchanged at 2.6 months in March from 2.6 months in February.

Median House Prices Declined Year-over-Year​

On prices, the NAR reported:

The median existing-home price for all housing types in March was $375,700, a decline of 0.9% from March 2022 ($379,300). Price climbed slightly in three regions but dropped in the West.

Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).



The YoY change in the median price peaked at 25.2% in May 2021 and prices are now down 0.9% YoY. Median house prices increased 3.3% from February to March and have declined 9.2% from the peak in June 2022 (NSA).

It is likely the Case-Shiller index will be down soon year-over-year.

Note that closed sales in March were mostly for contracts signed in January and February. Mortgage rates, according to the Freddie Mac PMMS, were around 6.3% in January and February, and that provided a boost to closed sales in February and March compared to closed sales in December and January.

April sales will be for contracts signed in February and March, and mortgage rates averaged 6.5% in March and that might impact closed sales in April.

 

[David Goldsmith]

Housing Market Update: Home Prices Drop 3%, But Monthly Housing Payments Hit Record High As Mortgage Rates Tick Up

High housing costs and a limited supply of homes for sale contributed to the biggest year-over-year decline in pending sales in three months. But while few people are buying, many are house hunting.

www.redfin.com

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Housing Market Update: Home Prices Drop 3%, But Monthly Housing Payments Hit Record High As Mortgage Rates Tick Up​

April 20, 2023 by Dana Anderson








Despite high housing costs and a limited supply of homes for sale, many people are out house hunting.
The typical U.S. homebuyer’s monthly housing payment hit an all-time high of $2,538 as average weekly mortgage rates rose to 6.39% after five consecutive weeks of declines. The new high comes in spite of the median home-sale price dropping 2.6% from a year earlier during the four weeks ending April 16, the biggest decline in over a decade.
Elevated housing costs are one reason would-be homebuyers are backing off: Pending home sales are down 19% from a year ago, the biggest drop in nearly three months, and mortgage-purchase applications declined 10% over the last week. Buyers are also limited by the shortage of homes for sale, with new listings down 21% as homeowners stay put to hang onto comparatively low mortgage rates.
But while fewer people are buying homes, many are searching. Redfin’s Homebuyer Demand Index–a measure of requests to tour homes, make an offer or start a home search–rose 3% from a week earlier and 12% from a month earlier during the week ending April 16. The demand index was down 7% from a year ago, but that’s the smallest decline in eleven months.
“Homebuyers are window shopping and many are entering the store, but few of them are making it to the cash register yet,” said Redfin Deputy Chief Economist Taylor Marr. “There’s not much on the shelves to choose from, and high mortgage rates and still-high prices are making homes too expensive for many buyers. Some buyers are discouraged by mortgage rates rising this week, which is partly due to stronger-than-expected bank earnings making it more likely the Fed will hike interest rates next month.”
The market looks different in different parts of the country. Los Angeles Redfin agent Costanza Genoese Zerbi said that while few homeowners are moving, locked in by low rates, first-time buyers are on the hunt . There’s enough demand and such limited supply that all her recent listings received multiple offers.
“I listed a three-bedroom home that needed work in a desirable part of Long Beach. It was listed at $1.3 million, got 17 offers and sold for $1.5 million,” she said. “My advice for today’s buyers is to look for a home you love, not an investment. Mortgage rates are high and prices are still high, so you may not earn equity as quickly as you would have if you’d purchased a home two years ago. But if you’re buying your dream home in a place you want to live, it’s worth it.”
In Washington, D.C., some homeowners are taking advantage of limited supply and the uptick in competition. “Many sellers are sitting on a ton of equity. Maybe they bought their home 10 years ago and it’s gone up in value by hundreds of thousands of dollars,” said local Redfin agent Marshall Carey. “Even with high rates, it’s a good time to move up because they have so much money in the bank to get a nicer home in a better location.”

Home Prices Falling in More Than Half of the U.S.​

The median U.S. home-sale price fell for the eighth straight four-week period after more than a decade of increases.
Home-sale prices dropped in 30 of the 50 most populous U.S. metros, with the biggest drop in Austin, TX (-15.1% YoY). It’s followed by Oakland, CA (-11.5%), Sacramento, CA (-9.5%), San Francisco (-9.2%) and Seattle (-9.1%).
On the other end of the spectrum, sale prices increased most in Fort Lauderdale, FL, where they rose 9.1% year over year. Next come Cincinnati (9%), Miami (8.5%), West Palm Beach, FL (8%) and Milwaukee (7.2%).

Leading indicators of homebuying activity:​

• • For the week ending April 20, average 30-year fixed mortgage rates increased to 6.39%, the first increase after five straight weeks of declines. The daily average was 6.67% on April 20.
  • Mortgage-purchase applications during the week ending April 14 declined 10% from a week earlier, seasonally adjusted. Purchase applications were down 36% from a year earlier.
  • The seasonally adjusted Redfin Homebuyer Demand Index–a measure of request for home tours and other homebuying services from Redfin agents–hit its highest level in nearly a year during the week ending April 16. It was down 7% from a year earlier.
  • Google searches for “homes for sale” were up about 43% from the trough they hit in November during the week ending April 15, but down about 17% from a year earlier.
  • Touring activity as of April 18 was up about 31% from the start of the year, compared with a 5% increase at the same time last year, according to home tour technology company ShowingTime.

Key housing market takeaways for 400+ U.S. metro areas:​

Unless otherwise noted, the data in this report covers the four-week period ending April 16. Redfin’s weekly housing market data goes back through 2015.

Data based on homes listed and/or sold during the period:​

• The median home sale price was $366,200, down 2.6% from a year earlier. That’s the biggest decline in more than 10 years, according to Redfin’s monthly dataset, which goes back through 2012.
• The median asking price of newly listed homes was $393,021, up 0.4% year over year.
• The monthly mortgage payment on the median-asking-price home was $2,538 at a 6.39% mortgage rate, the current weekly average. That’s an all-time high and up 12% ($265) from a year ago.
• Pending home sales were down 19% year over year, the biggest decline in nearly three months.
• Pending home sales fell in all 50 of the most populous U.S. metros. They declined most in Oakland (-42.3% YoY), Las Vegas (-42.2%), Portland, OR (-41%), Seattle (-41%) and San Jose (-40.4%).
• New listings of homes for sale fell 21.3% year over year.
• New listings declined in all 50 of the most populous U.S. metros. They dropped most in Oakland (-42.2% YoY), Seattle (-39.8%), Sacramento (-39.3%), San Diego (-39.2%) and Riverside, CA (-36.5%).
• Active listings (the number of homes listed for sale at any point during the period) were up 9.2% from a year earlier, the smallest increase in six months. This metric posted an unseasonal decline.
• Months of supply—a measure of the balance between supply and demand, calculated by the number of months it would take for the current inventory to sell at the current sales pace—was 2.8 months, up from 1.9 months a year earlier. Four to five months of supply is considered balanced, with a lower number indicating seller’s market conditions.
• 47% of homes that went under contract had an accepted offer within the first two weeks on the market, the highest level since June, but down from 53% a year earlier.
• Homes that sold were on the market for a median of 35 days, the shortest span since November. That’s up from 21 days a year earlier and the record low of 18 days set last May.
• 29% of homes sold above their final list price, the highest share in five months but down from 52% a year earlier.
• On average, 5% of homes for sale each week had a price drop, up from 2.4% a year earlier.
• The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 99%, the highest level in nearly six months but down from 102.2% a year earlier.

Refer to our metrics definition page for explanations of all the metrics used in this report.

 

[David Goldsmith]

DataDigest: The pandemic housing frenzy never went away in these markets

In some pockets of America, the pandemic-spurred housing craze never left. Open house lines are out the door, buyers pay tens of thousands over ask, and it likely won't change anytime soon.

www.housingwire.com

Housing MarketNewsletterReal Estate
DataDigest: The pandemic housing frenzy never went away in these markets

In New Jersey, open house lines are out the door and prices continue to climb
May 10, 2023, 9:10 am By James Kleimann

You may have heard the good news: In recent weeks, several mortgage and real estate brokerage execs have exclaimed that we may have already reached the bottom of the market. For prospective home buyers and sellers, that could mean a gradual decline in mortgage rates, which would unlock inventory and—dare I say—sales activity.

But there are still ultra-competitive markets in America where those conditions will simply be offset by rising prices.

You may have seen a picture making the rounds on Housing Twitter and LinkedIn recently. It shows about 50 people waiting in line at an open house in Mount Laurel, New Jersey. The house ended up having five offers and sold for $50,000 over ask.

In much of suburban New Jersey, where new construction is rarer than cheap Bruce Springsteen tickets, the pandemic-era conditions never left. There’s still plenty of money and demand emanating from New York City and Philadelphia and very little inventory. I mean very little inventory.
New-Jersey-market-report

In New Jersey, the median list price last week of a single family home checked in at $565,000, according to Altos Research data. In May 2020, it was $425,000. Single family inventory last week fell to 8,556; three years ago it was 21,874.
New-Jersey-inventory

This has serious consequences for real estate agents and loan officers alike, since it’s usually a zero sum game. You land the client and get a commission, or you don’t and you get bupkis.

“I sent pre-approvals two-to-three times a day, and then there are 30-plus offers on the homes and I virtually never get contracts,” one veteran loan officer told HW in late March. “One home recently had over 60 offers! Incredibly frustrating, and I know and have spoken with multiple $100 million-per-year originators/friends who are writing nothing here as well.”

If mortgage rates were to fall into the 5% range and stay there for a period, I think we’d see some supply shake loose in New Jersey. But for markets like suburban New Jersey, the demand will still vastly exceed the supply for years to come. There’s simply no easy or fast way to overcome two decades of underbuilding, NIMBYism and poor housing policies. It’s great for existing homeowners whose properties become more valuable due to scarcity. But it’s bad for everyone else, agents and loan officers included.

According to Altos data, the housing fever is even higher in Rhode Island, Massachusetts and Connecticut. In Connecticut, single-family inventory has dropped 80% in the past six years while prices have increased by 44%, according to data from the Federal Reserve Bank of St. Louis. And this is just the Northeast – try finding a home in Los Angeles for under $1 million.