Housing on the rebound

Jun 23, 2014 16:14 UTC

Did someone say housing recovery? Existing home sales numbers for May were released this morning, handily beating economists’ expectations. Existing homes are now being sold at an annual rate 4.89 million units, up 4.9 percent month-over-month, Reuters reports. Forecasts had put the growth rate at only 2.2 percent. The number of properties on the market is also up, suggesting that the housing market is finally pulling out of its late 2013 slump.

We’re not quite out of the slump yet, however. Sales are still down 5 percent from May of 2013, particularly in the western part of the country:

existing-home-sales-may14

The big question now is whether this growth will continue. Just last week, the Mortgage Bankers Association cut its forecast for combined new and existing home sales this year to 5.28 million. It’s the first time since the recession that both MBA and Fannie Mae are predicting lower growth than in the previous year.

Charting global real-estate bubbles

Jordan Fraade
Jun 17, 2014 16:41 UTC

Wonder what house prices are doing around the world? Then take a look at the International Monetary Fund’s new Global Housing Watch project, which tracks global housing booms and busts. There are quite a few markets that are more inflated than ever. This chart from Matt O’Brien at Wonkblog ranks national housing markets by how much current price-to-rent ratios — that is, how much it costs to buy vs rent a similar property — deviate from the historical average.

The US is thoroughly average right now. Go us.

O’Brien explains why Canada, New Zealand, and Norway are looking so bubbly right now:

These countries’ central banks were able to fight the Great Recession on their own, which kept unemployment from rising too much and, consequently, housing prices from falling much either. But, especially in geographically-constrained places like New Zealand and Norway, there are only so many places you can build—so it’s easy for demand to outstrip supply. Especially when, as James Surowieki points out, rich Chinese (and Russians and Arabs, etc.) are eager to buy up foreign properties as either vacation spots or insurance against unrest back home.”

With the top three countries in this chart sporting ratios that are anywhere from 68 to 88 percent higher than the historical average, it might be time to reconsider whether you really need that pied-a-terre in Vancouver.

Case-Shiller Index shows modest growth in home prices

Mar 26, 2014 15:00 UTC

The housing recovery continues, albeit modestly. The S&P/Case-Shiller composite index of house prices in 20 metro areas rose 0.8% in January (seasonally adjusted), according to a report released yesterday. Economists had predicted an 0.7% rise. On an year-to-year basis, home prices are 13.2% higher than they were in January 2013.

It’s not all good news, though. Unadjusted prices actually fell by 0.1% from December to January, according to ReutersBill McBride sees signs of a slowdown in housing prices coming:

I’ve been hearing reports of a slowdown in house price increases (more than the usual seasonal slowdown), and perhaps this slowdown in price increases is finally showing up in the Case-Shiller index. This makes sense since inventory is starting to increase.

According to Trulia chief economist Jed Kolko, asking price increases have slowed down recently, and Kolko expects that price slowdown will “hit Feb sales prices and get reported in April index releases”.

It might take a few months, but I also expect to see smaller year-over-year price increases going forward.

Here’s McBride’s chart on nominal house prices over the last 40 years, using several different indices: 

The US housing market’s disappointing end to 2013

Jan 27, 2014 16:46 UTC

Who wants to buy a new house when the weather is terrible? According to new data released last week, new home sales were down by 7% in December — partially due to bad weather. However, resales of existing homes were up by 1%, according to the National Association of Realtors. Total sales for 2013 were the strongest they have been since 2006, according to Reuters. Here’s an overall view of the housing market: 

The dip in new home sales was likely affected by frigid temperatures in the Northeast, according to Reuters. Here’s what just new home sales looks like: 

“For the year as a whole, it’s a good recovery,” National Association of Realtors’ economist Lawrence Yun told Reuters. “We lost some momentum toward the end of 2013.” Reuters has more details on the new home sales this morning:

The second straight month of declines in sales was likely payback after October’s outsized 14.9 percent increase and may have reflected some drag from cold weather that blanketed most parts of the country last month.

Sales in the Northeast, which was hard hit by frigid temperatures, tumbled 36.4 percent to their slowest pace since June 2012. Home sales are traditionally weak during the winter, and last month’s cold snap could have exaggerated the magnitude of the slowdown.

New home sales were up 4.5 percent, compared with December 2012. For all of 2013, a total of 428,000 single family homes were sold. That was the most since 2008 and represented a 16.4 percent increase from the 2012.

 

from Blogs Dashboard:

Existing home sales down in October, but still up over last year

Nov 20, 2013 16:56 UTC

Here's a look at today's existing home sales data from the National Association of Realtors:

Reuters reports that "an inventory shortage and high property prices... have dampened buying power". The median sale price was up 12.8 % over last year to $199,500, Reuters adds.

Calculated Risk's Bill McBride looks at the year-over-year change in housing inventory which, he writes, bottomed out in early 2013. Since then, it has been steadily increasing over last year's levels, he says. Housing inventory is seasonal and tends to peak in the summer, which makes the year-over-year numbers useful.

 

Bubbles and the global housing market

Nov 1, 2013 17:38 UTC

“Fast-rising property markets are haunting the global economy again, five years after the U.S. subprime mortgage bubble burst and triggered the worst financial crisis since the 1930s,” Reuters reports. Still, ”the warning signals are flashing amber, not red, and several countries have acted to cool overheating markets,” Alan Wheatley and Tim Reid report.

The US housing market has been held back by tight mortgage standards, an unemployment rate of 7.2% and stagnant wages. In Canada, however, home price-to-income ratios are at the highest levels in 10 years, and many European countries have higher than average price-to-income ratios.

 

Prices compared to both rents and incomes are much higher in France, Spain, and the UK than in the US and Germany.

In China, prices are “40 percent more affordable on average than in 2000″ according to Reuters, but it’s a different story in big cities like Shanghai and Beijing. From the Reuters story:

Prices nationwide rose on average by 9.1 percent in the year to September but surged 16 percent in Beijing and 17 percent in Shanghai.

“There are overheating signs in Tier 1 cities. The central government should take some measures, at least including stricter implementation of existing measures,” said Wang Juelin, a former senior housing ministry researcher.

Demand by Chinese buyers has helped boost Hong Kong prices by 120 percent since 2008.

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