Based on information from realtor.com, NAR economists have formulated a country search index delineating which countries had the most home search contact on realtor.com in 2013.
The index is based on a count of actual house searches by potential buyers from specific countries (excluding Germany and Japan due to large numbers of U.S. citizens residing there temporarily) throughout the year as measured by traffic on www.realtor.com, NAR’s official property listing website. Realtor.com helps connect people with the content, tools and expertise they need to find their perfect home, including information on homes for sale; connections with REALTORS®; neighborhood, moving, and mortgage advice; and in terms of buying a home– how to “make it happen”.
REALTORS® generally expect prices to increase over the next 12 months at a modest pace with a median expected price increase at about 4 percent, according to the latest REALTORS® Confidence Index. Low inventory compared to demand is expected to continue to buttress prices, as well as the declining share of distressed sales in the market.
The states with the most upbeat expected price increases of 5 to 7 percent are California, Oregon, Nevada, Georgia, Florida, and Hawaii (red). In states with booming economies like Washington, North Dakota, Texas, Michigan, the DC-Metro Area, and NY, the expected price increase is about 3 to 5 percent (orange). In the rest of the states, the expected price growth is less than 3 percent (blue).
- Last week, NAR released a summary of existing home sales data showing that existing home sales declined again for the seventh time in eight months. March sales showed a decrease in sales of 0.2% from last month and 7.5% from a year ago.
- The national median existing-home price for all housing types was $198,500 in March, up 7.9% percent from March 2013.
- All regions showed growth in prices, but the West maintained the biggest gain at 12.6% from a year ago. The Northeast had the smallest price again at 3.2% from a year ago. Affordability is having an impact in the South and West regions.
- March’s inventory figures increased by 3.1% from a year ago and it will take 5.2 months to move the current level of inventory.
- With sales down this month, March marks the second straight month of decimal declines. Job creation will help compensate in markets where affordability is a challenge. Housing starts are at a historic low and a boost will help inventory and slow down rising home prices. See the full NAR Existing Home Sales press release here and data tables here.
- Find a full graphical summary of the data here.
- Check out this month’s EHS infographic here.
Buyer demand was on the upswing in March 2014 with the onset of the spring season, according to the latest REALTORS® Confidence Index. The REALTORS® Buyer Traffic Index notched up to 63, while the Seller Traffic Index stayed about at 42. Demand was softer compared to a year ago as buyers faced higher prices and the continued difficulty in getting a mortgage. An index of 50 indicates “moderate” traffic conditions .
 The index is constructed from a survey of REALTORS® reporting on whether they perceive traffic as “weak”, “moderate”, or “strong.”
Which U.S. cities are of greatest interest to Canadians searching for a house? NAR economists have created a City Search Index (CSI) ranking U.S. cities where Canadians looked for a property in 2013.
The index is based on a count of actual house searches by potential buyers throughout the year as measured by traffic on Realtor.com, NAR’s official property listing website. Realtor.com helps connect people with the content, tools and expertise they need to find their perfect home, including information on homes for sale; connections with REALTORS®; neighborhood, moving, and mortgage advice; and in terms of buying a home– how to “make it happen”.
Approximately 33 percent of respondents reported cash sales (35 percent in February), according to the latest REALTORS® Confidence Index report .
Move-up buyers, investors, buyers of second homes, and foreign clients are more likely to pay cash. About 14 percent of reported sales to first-time buyers were cash sales compared to about 60 to 75 percent for international buyers and buyers of property for investment or second home purposes.
 The RCI Survey asks about the most recent sale for the month.
- Contracts for new home sales tumbled 14.5% from February to March, to a seasonally adjusted annualized rate of 384,000. This decline is a sharp acceleration of the declining trend that began last month. New home sales are 13.3% lower than the same period a year ago. Mortgage rates have increased nearly 1.25% to 4.5% over that same time frame while home prices are roughly 12% stronger.
- Inventories rose 3.2% from February to March and are up nearly 25.3% relative to the same time last year. This increase brings the months supply of home sales up to 6 months, still in neutral territory.
- The median price for a new home under contract jumped 12.6% over the 12-month period ending in March to $290,000. The median existing home price was 31.7% lower at $198,200, more than three times the historical average spread of 10.8%, suggesting that existing homes are a bargain by historical standards. According to the BLS, a shortage of skilled labor and rising labor costs have contributed to the rising median price of new homes.
- It appears that new home sales have begun to feel the weight of the sharp increase in mortgage rates, home price gains, and the erosion of affordability over the last 12 months. The impact of weather on new production will ease through the summer, resulting in additional inventory coming on line in six to nine months. However, inventory remains tight and prices continue to rise. A moderate increase in inventory will help to steady prices to a historically stable growth path.
- This week NAR released existing home sales and median home price information that showed gains of 7.9 percent in prices in March 2014 compared to March 2013, notably slower than trends in early summer/fall 2013 when price growth topped double-digit pace.
- The Federal Housing Finance Agency (FHFA) also released their housing price index data which, like NAR data, showed continued gains in home prices with some deceleration.
- FHFA reported home price gains of 6.9 percent year over year in February. NAR data in the same period showed gains of 8.7 percent in home prices. S&P/Case-Shiller will release February data next week.
- NAR reports the median price of all homes that have sold while FHFA reports the results of a weighted repeat-sales index. Because home sales among higher priced properties have been growing more than among lower price tiers, the NAR median price had risen by more than the weighted repeat sales index—which computes price change based on repeat sales of the same property. In spite of this methodological difference, NAR price data tends to be a reliable early indicator of price trends seen in repeat sales indexes.
- FHFA sources data primarily from Fannie and Freddie mortgages, transactions using prime conventional financing, and misses out on cash transactions as well as jumbo, subprime, and government backed transactions such as those using VA or FHA financing.
- As NAR and FHFA both show deceleration in prices, expect Case Shiller data to follow suit but given Case Shiller’s higher trajectory, it may still show another month or two of double-digit gains before slipping into high single digit increases.
Confidence about current market conditions improved in March 2014 compared to February 2014, reflecting in part the seasonal uptick in spring, according to the latest REALTORS® Confidence Index report.
Confidence about the outlook for the next six months slightly improved compared to February, but it is still lower compared to the same period a year ago. REALTORS® mentioned concerns about the low levels of inventory, difficult credit conditions, consumer confidence, and uncertainties about rising costs of flood insurance.
- Initial claims for unemployment insurance filed in the week ended April 12 increased slightly from last week’s level to 304,000. The increase of 2,000 claims can be considered as weekly volatility in the data. In fact, the 4-week moving average –a less volatile measure – dipped to 312,000 the lowest since 2007. Claims have been trending down and have normalized to levels prior to the Great Recession.
- The largest decreases in claims for the week ending April 5 were in California (-13,892), Iowa (-1,266), Kentucky (-699), Tennessee (-582), and Idaho (-383). The largest increases were in Michigan (+4,285), Pennsylvania (+2,335), New Jersey (+1,630), Florida (+1,624), and Georgia (+1,453). Pennsylvania and New Jersey attributed some of the layoffs to construction.
- Notwithstanding the positive trend related to fewer layoffs, job creation needs to accelerate. Today, only 58% of adult population is working compared to 62% to 64% prior to the recession.
- What this Means for REALTORS®: Fewer claims filed means fewer workers lost their jobs during the week and indicates greater job stability.
 Claims filed under the regular state programs, seasonally adjusted
 Since October 7, 2007 when the 4-week moving average was at 302,000.
The real estate industry has a significant role in the U.S. economy. Historically, real estate and related industries accounted for roughly 18% of GDP. While the economy slumped following the decline of the housing market, record low mortgage rates in 2012 and 2013 touched off a resurgence of home sales growth. As a result, prices have improved, boosting buyer confidence and spending on housing and related goods and services.
At the state level, Hawaii’s economy is by far the most dependent on housing related industries for its state product. In 2012, rental and leasing along with other real estate services and construction contributed 23.1% of Hawaii’s gross state product (data for 2013 has not been released yet). This figure does not include expenditures on furniture and related manufactured goods that often accompany a home purchase. Several of the sand states, including Florida, Arizona, and California, hardest hit by the housing slump and recession were among the top ten most housing-dependent economies. Steady sales and modest price growth held roughly stable the contribution of real estate to these state economies in 2012, but this data does not reflect the strong price growth witnessed in 2013. The 2013 housing recovery in these areas should have a strong impact on local employment as well as state and local finances. Price growth in Maryland, New Jersey and Connecticut has been more muted in 2013 due in part to the local judicial processes which constrained market clearing.
How is housing’s contribution measured? Each home sale results in additional expenditures for remodeling, appliances, services, and furnishings. In addition, as the supply of homes for sales declines, home builders respond by adding new inventory. The employees of building companies and material suppliers in turn spend their incomes thereby expanding the economy, a process referred to as an economic multiplier. Furthermore, rising home values have a strong wealth effect where consumers will spend more of their income if they feel confident that rising home prices are expanding their personal wealth. Strong price growth in the District of Columbia boosted the contribution of real estate to the local economy by nearly $19,000 per sale in 2012.
Housing plays an important role in the economy, which was blunted following the recent housing market decline. Low mortgage rates in 2012 and 2013 boosted buyer confidence and sales which in turn helped to expand the economic impact of housing at the state level. In the years ahead, record low inventories will require new construction to satisfy consumer demand. Access to credit has been limited for some smaller builders, a trend that shows signs of improvement. On the consumer front, access to credit remains tight, but employment and incomes have grown modestly, a pattern that bodes well for home sales and housing related expenditures in the future.
[To view the latest State-by-State Economic Impact of Real Estate Activity report, visit: http://www.realtor.org/reports/state-by-state-economic-impact-of-real-estate-activity]
- Housing starts rose by 3 percent in March. More single-family homes are being constructed while multifamily units contracted modestly.
- The latest pace of 946,000 units on an annualized basis, however, is still well short of what is needed to relieve the housing shortage. Another good 50 to 60 percent increase is needed to measurably bring additional new inventory onto the market.
- Whatever is built is being sold easily, due to inventory shortage. The number of new homes for sale is essentially at a 50-year low.
- Past housing recessions have been followed by a strong snap-back in housing starts. That is not the case in the current recovery despite the housing shortage. The extreme difficulty of obtaining construction loans appears to be hindering a robust recovery especially among locally based homebuilders. New financial regulations are said to be onerous and uncertain, preventing local lenders from making these loans. Meanwhile, those big homebuilders who do not need loans and can tap Wall Street funding – like Lennar, KB Homes, and Toll Brothers – are having an easier time due to lack of competition.
- It is worth recalling that Polish Girl Scouts in the aftermath of the Second World War went from construction site to construction site to help rebuild homes. These teenage girls, not yet in their twenties, did so spontaneously with high enthusiasm for the simple love of their country. (It was only for a couple of years before the mini-KGBs arrived from Moscow to flip Poland into a totalitarian state.) Today, in America, there is an historically low labor participation rate among adult men. The country needs more new homes to be built yet many men are not even in the labor force.
- Inflation ticked higher in March, with the consumer price index increasing by 1.5 percent from one year ago. The current inflation is not troublesome – yet.
- The Fed keeps a closer watch not on the broadest measure of inflation but a narrower one that excludes food and energy prices. This so-called core inflation rose 1.6 percent from one year ago, but the monthly gains were picking up fast with the March annualized rate clocking at 2.5 percent, the highest pace in over a year.
- Apartment rents grew by 2.9 percent. The murkier, but important, figure of homeowner equivalency rent rose by 2.6 percent, the highest gain in nearly 6 years! The continuing fall in apartment vacancy rates combined with the general housing shortage assures even a higher rent and homeowner equivalency rent for the remainder of the year.
- Home prices have also been rising quite fast. The NAR median home price rose 9 percent in February. The Case-Shiller index showed a 13 percent higher home price in January. The home price increases, however, are not counted as part of the consumer price trends because, like the stock market, a house is considered as an investment asset by government statisticians.
- Gasoline prices were lower by 4 percent. But that was offset by a strong 16 percent gain in piped-gas utility price.
- The price of meat is rising quite fast at a 5 percent rate. The price of veggies and fruits are rising at less than 1 percent. In the current economy, that is, vegetarians are faring better than meat eaters. If, however, there is a disruption to planting and harvest in Ukraine – historically the most fertile land in Europe – then the veggie prices will bite consumers next year.
- Watch the housing rent component very carefully. If it begins to accelerate upwards then the Federal Reserve may be forced to raise the short-term interest rates much sooner than the current planned timeline of mid-2015. Higher mortgage rates, sooner, will also be in the offing in such a case.
Tight credit characterizes the current housing environment. Buyers with large down payments are reported to have the bidding edge for houses. However, 60 percent of first–time buyers made a down payment of 6 percent or less as of February 2014, according to the REALTORS® Confidence Index survey.
How much down payment can a typical renter put down? The chart shows the median savings of renters in 2013 ($12,568) versus the down payment for a median-priced home ($197,400) under down payment scenarios of 3.5%, 5%, 10%, and 20% plus an assumed 3 percent closing costs. The typical renter’s savings are substantially less than a hefty down payment plus the closing cost. For renters with less than perfect credit, the path towards home ownership grows steeper as the needed down payment increase in times of tight credit.
What Does this Mean For REALTORS®?
The potential buyer typically looks to the REALTOR® for advice. An education on credit scores and financial priorities may be in order for some clients. Credit scores can increase—if the client focuses on financial basics. Some clients may need to hear this. In addition, knowledge of the lending requirements of a wide number of financial institutions may be helpful in getting a mortgage—particularly for the buyer with a less than perfect FICO score.
At the national level, housing affordability is up for the month of February due to an increase in home prices and minimal movement in wages. What is affordability like in your market?
- Housing affordability is up for the month of February as the median price for a single family home in the US increased slightly by 0.7% from January. The median single-family home price is $189,200, up 9.0 % from a year ago. Affordability is down from 209.8 in February 2013 to 175.7 in February 2014.
- Mortgage rates are up 91 basis points (one percentage point equals 100 basis points) from last year, nationally. Income levels are up 1.9% from last year. A balance of income and job growth will improve affordability options.
- By region, affordability is up slightly from one month ago in the Northeast and the Midwest, but the West and the South had a minor drop in affordability. The Northeast was the only region to have declines in home prices but a slight increase in mortgage rates. From one year ago, affordability is down in all regions. The West saw the biggest decline in affordability as a result of having the largest price gain at 17.0%.
- Improvements in underwriting will increase consumer confidence and bring more first-time home buyers into the market. The spring months have a tendency to see increased foot traffic, helping sales trend up and minimizing delays in transactions.
- What does housing affordability look like in your market? View the full data release here.
- The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principle and interest payment to income). See further details on the methodology and assumptions behind the calculation here.
- The cost to build homes has been rising much faster than the broader consumer price index. In February the construction cost to build homes rose 7.8 percent from one year ago. Cumulatively over the past 2 years, the cost has risen by 15 percent.
- New home prices have been carrying a much larger premium over existing home prices in recent years. One reason is due to some distressed properties in the existing home market. But another factor is simply due to the higher cost to build new homes. The median price of a newly constructed home was 38 percent higher than the median existing home price in February. The gap has typically been about 15 to 20 percent in the past.
- Less talked about but a likely possibility for the much higher new home prices may also be due to less competition among homebuilders. The small guys have been effectively shut out of the market because of the extreme difficulty of obtaining construction loans. Local community lenders have indicated the burdensome new financial regulations as to why they cannot easily make those loans. In the meantime the big guys among the Wall Street-funded homebuilders like Lennar, KB Homes, Toll Brothers, and the like are having a field day with less competition. As with anything, less competition means a higher price.
- As to other prices, producer prices are well-behaved with only a 2 percent inflation rate on finished products. But the crude producer prices rose faster at 6 percent in March.
- Copper prices are markedly less expensive now than few years ago. That is why there are fewer reports of thieving and stealing of copper wires from building sites in the past year. Still, copper prices are at near the historical high end. Gold prices, though not for homebuilding, are always worth monitoring as a key benchmark for overall commodity price movement and for a general measurement of “inflationary fears”. Gold prices have come off the very high points, though they are still at a historically high range.
- Gold, because of its unique function as a store of value, has at times caused human misery. Spanish conquistadors came to the New World to take gold from the Aztec Indians. One story has it that when the Spanish approached a river crossing while being chased by the Aztecs, rather than dropping the gold behind and swim across, they tried to swim carrying the heavy load. Nearly all drowned. Separately, a good number of American 49ers who scrambled to San Francisco never struck gold. Rather they died in gunfights among themselves.
- North Dakota has been dethroned, knocked from the top as the best job creating state in the latest state level jobs data. Nevada moved to the top with a 3.8 percent job addition rate over the past 12 months versus North Dakota’s 3.7 percent. Despite this change, North Dakota is still the king in terms of longer-term job growth.
- Colorado, Florida, and Oregon round out the top-five fastest job creating states.
- On the bottom, New Mexico and Kentucky encountered very modest net job losses. New Jersey, Virginia, and Alaska had minimal or no job creation.
- Large cities are doing relatively well. That means traffic jams are getting worse in these markets, simply a byproduct of more people driving to work. San Jose in particular is red hot, with a 4.4 percent job growth rate. That is why both rent and home prices are escalating as more people seek housing in areas where there is minimal new home construction.
- Detroit is reversing some of its recent gains in jobs. In the latest data, Detroit shed 4,200 jobs. But the western part of the state is doing well, with Grand Rapids job growth rising by 3.0 percent.
- Irrespective of short-term job market trends, over the long haul job creation will favor large major cities because job growth will be faster in professional services than in manufacturing or agriculture. Jobs like accounting, software development, legal services, management consultants, and medical services will principally be in cities. Moreover, people are drawn to large cities because of cultural amenities that only a large city can justify, such as concerts, museums, and zoos. Companies, knowing that talented workers are drawn to cities, will want to be based in large cities to have access to a large pool of potential job candidates. Traffic unfortunately will get hellish. That is why developers of condominiums near downtowns in traffic congested cities can anticipate turning a good profit.
- Initial claims for unemployment insurance filed in the week ended April 5 dropped to their lowest level in years to 300,000. The last time the weekly number of claims filed hit around this level was in 2000. The Department of Labor noted in its report that “there were no special factors impacting this week’s initial claims.” One might read that the drop may be due to just the regular volatility in the data. Still, it is hard to dispute that claims have been trending down and have normalized to levels prior to the Great Recession.
- The pace of job cuts is down. Now, let’s hope the pace of job creations accelerates. Today, only 58% of adult population is working compared to 62% to 64% prior to the recession.
- The largest decreases in initial claims for the week ending March 29 were in Pennsylvania (-2,007), Texas (-1,821), Missouri (-889), and New Jersey (-774). However, claims rose in California (+17,626), Oregon (+1,851), Ohio (+1,200), Kentucky (+1,119), and Illinois (+941).
- What this Means for REALTORS®: Fewer claims filed means fewer workers lost their jobs during the week and indicates greater job stability.
 Claims filed under the regular state programs, seasonally adjusted
The FHA has more than doubled its mortgage insurance premiums since 2010 and most recently eliminated the phase out of mortgage insurance on certain products. As a result, the private mortgage insurance industry has been able to recover and to expand in the conventional space. However, buyers that cannot shift to the conventional space bear the brunt of these higher costs at a time when growth in both mortgage rates and home prices have cut into homebuyers’ affordability.
- FHA’s annual mortgage insurance is currently 1.35%, 0.8% higher than in early 2010 and for its most popular products the insurance must now be paid for the life of the loan.
- The higher rates have priced out numerous potential homeowners, shifting many buyers to the private sector
- However, conventional financing cannot serve many of the borrowers FHA is intended to serve, leaving those priced-out, potential homeowners in the cold.
In late 2010, the FHA initiated a series of changes to the pricing of its mortgage insurance program. These changes included both the upfront portion (UFMIP) as well as the annual premium structure (MIP). The initial increase in the annual insurance premium was just 5 basis points between 2008 and 2010, but the changes accumulated to 85 basis points by 2013. Simultaneously, the upfront mortgage insurance premium, which is often financed adding only modestly to monthly payments, increased and fell before being set in 2013 roughly where it had been five years earlier. The net effect though is significantly higher costs for the consumer. As depicted below, holding the mortgage rate and home price constant, the monthly payment of principle, interest, annual MIP and financed UFMIP rose 13% from $834 in 2008 to $942 in 2013 by which time the FHA’s fees accounted for roughly 20% of the monthly payment.
These changes were intended to shore up the agency’s books while promoting growth of the private finance sector. Private mortgage insurers have indeed benefited from the higher rates but also the recapitalization of their industry and new entrants as discussed in an earlier post.1 Their rates are risk based and often cheaper than FHA mortgage insurance, particularly for borrowers with larger down payments and higher credit scores. However, these rates rise significantly as credit scores decline and down payments shrink and at least one of the larger private mortgage insurers does not offers insurance for borrowers with less than a 620 credit score. Herein has historically been the purview of the FHA.
Change in MIP vs 10/3/2010
550,000 to 750,000
1,000,000 to 1,250,000
1,200,000 to 1,400,000
1,250,000 to 1,450,000
1,450,000 to 1,650,000Source: FHA, Census, NAR
The increase in mortgage insurance rates at the FHA has had an impact on affordability for renters or potential first-time homeowners. Based on income data from the American Community Survey and estimating a renter’s front-end debt-to-income level relative to historical standards for sustainable lending (28% to 31%), the number of renters adversely impacted by the increase in the annual mortgage insurance premium has increased in lock-step with the rise in the FHA’s MIP. By 2013, the MIP was 80 bp higher than the rate of 55 bp from 2010. These additional 80 basis points pushed an estimated 1.45 million to 1.65 million renters over a sustainable front-end debt to income ratio for purchase of a median priced home in 2013. Adjusting for FHA market share and taking repeat buyers into account, these changes may have priced out as many as 125,000 to 375,000 home buyers.
An Alternative for Some
Could these potential homeowners migrate to private mortgage insurance? Private mortgage insurance2 for a borrower with a down payment below 5% and a FICO score of 720 or higher is currently 1.1% annually, but that rate rises to 1.31% if the FICO falls between 680 and 719 and increases further to 1.48% if the FICO is below 680. Combined with the higher funding cost of roughly 37.5 basis points for a conventional mortgage (e.g. the difference in base 30-year fixed rates, roughly 4.5% vs 4.125% for a prime borrower) as well as loan level pricing adjustments (LLPAs) and the adverse market delivery fee (AMDC), only borrowers with the highest credit could afford to migrate to GSE financing. For example, the difference in the monthly payment between a conventional loan for a median priced home with a down payment of less than 5% and a FICO score of 670 compared with the same loan financed through the FHA with annual MIP and financed UFMIP is approximately an additional $92 a month. Likewise, for a larger down payment of 5 to 10 percent with a FICO score of 670, the cost of PMI falls to 1.15%, but the payment is still $58 per month more expensive than FHA when all costs are included. The higher pricing of conventional financing for borrowers with lower down payments and low credit scores suggests that many priced out of the FHA program would not have a private alternative.
The FHA has undertaken several important changes in recent years; expanding to support the housing market as the private finance sector pulled back and then adopting best practices to prevent adverse selection and softening books. However, there is a price paid for the higher costs placed on consumers, the impact of which will be amplified in an environment of rising mortgage rates and home prices.
1 http://economistsoutlook.blogs.realtor.org/2013/08/09/lending-shifting-but-still-tight/ 2 http://mortgageinsurance.genworth.com/RatesAndGuidelines/RateFinder.aspx
- Seasonally adjusted applications to purchase homes rose 2.7% for the week ending April 4th, the 4th consecutive increase. The purchase index is 13.9% lower than the same time in 2013. Purchase applications appear to have bottomed relative to last year and are clawing their way back if only modestly.
- The average rate for a 30-year fixed rate mortgage as reported by the Mortgage Bankers Association was unchanged from the prior week at 4.56%. The average rate a year ago this week was 3.68%.
- A strong increase in applications for government financing, up 3.6% relative to last week, led the improvement, though applications for conventional financing rose for the 3rd consecutive week with an increase of 2.3%. The cost of FHA insurance remains high by recent standards, but it is the only option for most borrowers with low down payments and credit scores less than 700. The high cost of FHA mortgage insurance combined with the general rise in rates since last year is crimping affordability on this portion of the market…particularly first-time borrowers and some minority groups.
- This week’s reading suggests a very modest thaw in the weak year-over-year trend for purchase applications. The index improved for the 4th consecutive weak but remains anemic relative to last year’s strength which was driven by sub-3.5% rates. Strong price growth and higher rates since last spring impacted affordability. However, the strong trend last spring also muted the normal seasonal pattern, suggesting that part of the trend this spring is a restoration of the normal seasonal pattern. Sales and applications will continue to pick up as we move towards summer in the typical seasonal pattern, but may remain muted relative to last summer until credit overlays ease and mortgage insurance pricing improves.