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Updated: 3 days 11 hours ago

State and Metro Employment in December 2014

Wed, 02/04/2015 - 12:52
  • Job gains have been accelerating in the final months of 2014.  Nationwide, 2.95 million net new jobs were added to the economy over the 12-months to December.
  • North Dakota and Texas were leading the way.  But the oil price collapse will slow the job growth pace in the upcoming months.  Utah, Delaware, and Nevada round out the top-5 states in terms of job growth rates.
  • At the bottom are Ohio, Mississippi, New Jersey, Virginia, and Alaska.  Even so, these states are creating jobs, though not as strong as other states.  That means that all states are steadily building the source of housing demand.
  • Jobs will impact both residential and commercial real estate.  Among the mid-to- large metro markets, the winners (those running at 3% or higher) are:


  • Seahawks may be crying but they easily beat the Patriots home city of Boston in terms of job creation.  Seattle’s job growth rate was among the winners at 3.2 percent versus Boston’s 1.9 percent.  The thrilling ending just reminds us about how we wish we can take back one important decision in our life for a re-play.  Life hurriedly moves on, however.  What is done is done and no need to look back.


Rebounding Building Permit Activity

Tue, 02/03/2015 - 08:47

In which metro areas has building permit activity returned to the pre-bubble level?

Building permits have trended up during the past several months indicating that U.S. residential construction will likely strengthen in 2015.

Since building permits are an important leading indicator for developments in the economy, it is worthwhile to take a closer look at the number of building permits at the metropolitan level.  The visualization below tracks the number of building permits issued in the 100 largest Metropolitan Areas for the following four periods:

2000 – 2003: Pre – Bubble period,

2004 – 2006: Bubble period,

2007 – 2011: Bust period,

2012 – 2014: Recovery period.


The first page of the visualization shows the annual growth of building permits for each of these periods. We see that:

2000 – 2003 (Pre – Bubble period):

Eight out of ten metro areas had positive growth while Portland – South Portland, ME had the highest annual growth (31.3%).  In contrast, building permits decreased by 21.1% in Greensboro – High Point, NC.

2004 – 2006 (Bubble period):

The number of metro areas with positive annual growth of building permits dropped to one out four metro areas. Baton Rouge, LA showed the highest growth (32.3%) while Toledo, OH had the largest decline (-30.8%).

2007 – 2011 (Bust period):

None of the 100 largest metro areas exhibited annual growth in this period while Modesto, CA was the metro area with the largest decrease (-45.5%).

2012 – 2014 (Recovery period):

Three out of four metro areas had positive annual growth while Grand Rapids – Wyoming, MI took the lead with annual growth of 48%. However, Scranton – Wilkes – Barre – Hazleton, PA had the largest decrease among the 100 largest metro areas (-39.3%).

The second page of the visualization shows the change in the median number of building permits in each period compared with the pre – bubble period (2000-2003). The data seek to answer the question: In which metro areas has building permit activity returned to the pre-bubble level? Comparing the median number of the building permits during the pre – bubble period and the following periods, we observe that:

Bridgeport – Stamford – Norwalk[1], CT, El Paso, TX, and Shreveport – Bossier City, LA had permit activity that exceeded the pre-bubble period in each of the following three periods. For example, in El Paso, TX the median number of building permits was higher by 15.8% in the bubble period, 16.2% in the bust period and 14.6% in the recovery period compared with the pre-bubble period. Thus, those areas continued to experience solid levels of building permit activity throughout each phase of the cycle.

Austin – Round Rock – San Marcos, TX and Fayetteville – Springdale – Rogers, AR-MO recovered from the effects of the bust period and the number of building permits exceeded pre-bubble levels during the recovery period.

However, Greensboro – High Point, NC, Denver – Aurora – Broomfield, CO and Grand- Rapids – Wyoming, MI were not able to return to the pre-bubble level of building permit activity. For instance, in Grand Rapids – Wyoming, MI the median number of building permits decreased by 43.7% in the bubble period, by 87% in the bust period and by 78.5% in the recovery period compared with the pre-bubble level of building permit activity.

Please follow the tabs in the visualization below and see how much the number of building permits changed in your metro area over the years.

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[1]Bridgeport’s high percentages can be explained. The level of building permits during 2000-2002 was very low because of the financial problems in that area. However, in 2003, the number of building permits surged to 1,964 and it reached 3,119 in 2005 because many multifamily units were constructed. In 2010, in an effort to face the bust period effects, the local Housing Authority announced more plans for development and, thus the level of building permits rose again.


4th Quarter Homeownership Rate of 2014

Mon, 02/02/2015 - 11:17
  • The U.S. homeownership rate fell again in the fourth quarter of 2014 to its lowest point in over two decades.  The latest 63.9 percent ownership rate is down from the bubble peak rate of 69.4 percent.  A further drop is likely this year before finally settling down in the upcoming years.
  • In the latest, 74.6 million American households owned their homes while 42.0 million households are renting their residence.  From 10-years ago, the number of homeowners has decreased by about 1 million while that of renter households has increased by nearly 10 million.  That is why we now have the lowest homeownership rate since 1994.
  • Clearly the lending conditions had been ridiculously lax during the housing bubble years.  But the pendulum on lending swung too much the other way and thereby has greatly limited the number of financially sound renters from converting into successful owners in recent years.
  • Back in 2008-09, Warren Buffet, one of the most astute investors of all time, said to buy homes and then buy more homes.  Many good renters did not or could not.  By contrast, institutional investors who no doubt were already homeowners were able to raise money from Wall Street and did indeed purchase many properties as part of their investment portfolio.  Given the rising home prices from 2008 in most places, those who bought are improving financially.
  • America has become more unequal in wealth distribution.  It’s a simple math.  A typical homeowner’s net worth is estimated to have risen to $205,000 in 2014 (from the Federal Reserve estimate of $195,000 in 2013.).  By contrast, a typical renter has $5,400 in net worth.  But America has fewer homeowners while renter population has exploded.  This is one key reason as to why many Americans continue to say tough economic times despite the economy officially being out of recession for over 6 years.
  • Over the short-run, the homeownership rate is likely to fall further.  The forecast for 2015 is about 500,000 net new renters and 500,000 net new homeowners. But the rise in numbers with a 50-50 split is such that the homeownership rate will continue to fall.  Fortunately though, the rise in the number of both the renters and homeowners will mean increased business opportunities this year for real estate business practitioners.

2014 4th Quarter GDP

Fri, 01/30/2015 - 11:41
  • The U.S. economy grew in the final quarter of 2014, but at a slower pace.  A sizable reduction in national defense spending and weakening exports from the rising dollar were key reasons for the slower expansion.  Despite hitting the speed bump there is sufficient economic momentum for the economy to move ahead and easily avoid recession in 2015.  Job creations will continue.
  • Specifically, GDP in the fourth quarter grew at 2.6 percent (annualized rate) after the robust rates near 5 percent in the prior two quarters.  The first quarter had been negative.  GDP for all of 2014 – over four quarters – grew by 2.4 percent.
  • The historical average GDP growth is right around 3 percent.  Anything under that mark is considered subpar and anything above robust.  The last time GDP grew above 3 percent for the whole year (and not just for one or two quarters) was in 2005.  One can say the U.S. economy has been underperforming for nine consecutive years.  The average over these nine years was 1.4 percent.  Over the recent five years (after the Great Recession) the average was 2.2 percent.
  • As to the most recent quarter, consumers opened their wallets with spending rising at 4.3 percent – the best growth in nearly a decade.  The job creations and the extra money not spent at the gas pumps are helping.  Business spending was soft, rising by only 2.3 percent (after 9.5 percent and 7.7 percent of the prior two quarters.)  National defense spending collapsed, falling 13 percent, though after a strong rise in the prior quarter.  Imports grew by 9 percent while exports grew by only 3 percent.  That’s because other major economies are not growing and are unable to buy U.S. goods.  This widening trade deficit hurts overall U.S. GDP growth.
  • The 2015 forecast is for GDP to expand at near 3 percent.  A big positive to economic growth this year will be the real estate sector.  Both residential and commercial real estate construction are primed to rise.  Low housing inventory and falling commercial vacancy rates will induce more construction and help the economy get back to normal growth rate.

Pent-Up Sellers?

Wed, 01/28/2015 - 12:54
  • For how long can people not move?  Historically home sellers lived in their homes for 6 or 7 years before deciding to put it for sale and make the next move.  That was not the case in 2014.  A typical home seller had lived in the same home for 10 years.
  • A somewhat related trend was occurring for vehicles.  The historic average age of a car was around 9 years.  Then it rose to a record high of 11.4 years in 2013 and car sales remain tepid.  But then in 2014 vehicle sales began to soar above historic average – to make up for the lost years, perhaps.  The reason for holding on to the car for longer up to 2013 was no doubt due to weaker economic conditions and stagnant wages.  However, with the economy strengthening and the job creation accelerating, people are ditching their old cars for new shiny ones.  Could a same bursting out phenomenon occur for home sales in 2015?
  • The underlying economic conditions for vehicle sales and home sales are the roughly same.  Homes, however, have other special factors.  Namely, the housing market crash had put a sizable number of homeowners in an underwater status and a good portion of them did not want to bother with the frustrating short-sale process.  They have been waiting for home value to turn higher.  Well, home values have been turning for the better, up 25 percent over the past 3 years on average.  Therefore, there are likely pent-up sellers who had to wait in a better position to make the next move in 2015.
  • One other factor for homes that is less relevant for auto sales is the lock-in effect of low interest rates.  Mortgage rates have been unimaginably low and homeowners like it.  They do not want to give that up to buy the next home.  That is understandable.  But today’s mortgage rates are also at essentially historic lows.  So making the next move still means tapping the very low mortgage rates.  Will 2015 therefore be a break out year for home sellers?

REALTORS® Confidence Index Survey: December 2014 Survey Highlights

Wed, 01/28/2015 - 10:58

The information provided by REALTORS® about local market conditions in December 2014 indicated a broad uptick in confidence and market activity compared to that in November 2014, according to the  December 2014 REALTORS® Confidence Index Survey.

REALTORS® were also more optimistic about the outlook for the next six months. An improving jobs market, the decline in the 30-year fixed mortgage rate to slightly less than 4 percent since October 2014, and recent measures such as the 0.5 percentage point reduction in monthly mortgage insurance premiums for FHA-insured loans and acceptance of GSEs (Fannie Mae and Freddie Mac) of originated loans with 3 percent down payment may be underpinning this increased optimism.  Optimism also picked up in anticipation of the seasonal uptick in the spring season.

Lower interest rates appeared to have steered investors back into the market.  The share of investors accounted for a slightly higher share of the market, at 17 percent.  The share of first-time homebuyers slightly dipped to 29 percent.

The impact of lower oil prices on housing is generally positive, putting more money into consumers’ pockets and creating a downward pressure on interest rates. However, REALTORS® in states with greater dependence on the oil and gas industry cautioned about the adverse effect of the continued drop in oil prices.

Case-Shiller Home Price index

Tue, 01/27/2015 - 11:14
  • Today, Case Shiller released their housing price index data for November which showed that house prices rose 4.2 percent from November one year ago for the 10-city composite, 4.3 percent for the 20-city composite, and 4.7 percent for the national index.
  • While FHFA and NAR reported growing, even accelerating prices which we covered here last week, the Case Shiller headline shows a decline from the month of October to November of 0.1 to 0.3 percent (national and 10-city index).  A closer look will reveal that this data is not seasonally adjusted and thus is not ideal for month to month comparisons.  Using the seasonally adjusted data, we find that prices increase 0.7 to 0.8 percent from October to November.  This notable rate of increase is similar to what was reported by the FHFA and marks the 4th month of accelerating prices in the 10- and 20- city indexes and the 6th month of acceleration in the national index.  On a year over year basis, however, only the national index shows a very slight acceleration in prices.
  • Both FHFA and NAR data showed that the November annual growth rate in prices was higher than that observed in previous months.  NAR’s December price data showed growth slightly under November’s pace, but at 6.3 percent, above what might be considered a normal rate of home price growth.  As long as tight housing inventory persists, which we expect to see as long as housing starts remain at a subpar level, we expect to see upward pressure on home prices which adds an additional challenge to potential first-time buyers.
  • Case Shiller’s city by city data demonstrates this phenomenon.  Cities where prices are growing above normal pace, such as San Francisco (8.9%), Miami (8.6%), Dallas (7.7%), Las Vegas (7.7%), and Denver (7.5%), tend to have tighter inventory.
  • In other areas where growth rates have been slower, like Cleveland (0.6%), Minneapolis (1.5%), New York (1.5%), Phoenix (1.9%), and Washington DC (1.9%), inventory has tended to be more available.

Shrinking Inventory

Mon, 01/26/2015 - 14:55
  • The total inventory of homes available for sale fell in December for the first time in 16 months.  The decline was very modest of less than 1 percent from the comparable month the year before.  Nonetheless, it represents a reversal to the general growth of listings that had been occurring throughout 2014.  Months supply is already low at 4.4 months.  More inventories are needed, not less.  Or else, home prices could re-accelerate.
  • Specifically, at the end of December there were 1.85 million properties listed for sale, down 11 percent from November and down 0.5 percent from one year ago.  The monthly decline was fairly normal which occurs every year from November to December.  But what is of interest is the year-over-year decline in inventory because this hints at possible acceleration in home prices in upcoming months.
  • For those technically minded, after applying statistical seasonable adjustment factors, the inventory has declined for two straight months, implying a genuine tightening of supply.  Therefore, home prices could re-accelerate.
  • Home prices in fact appear already to be re-accelerating.  In spring and summer of last year, the median price was rising at 4 to 5 percent.  In November and December, the price increased by 6 percent.
  • Do not expect any help to inventory from distressed properties.  The shadow inventory – those homes already in the foreclosure process or with serious mortgage delinquency – has greatly shrunk.  Hence, far fewer newly foreclosed properties will be hitting the market.  Those REALTORS® who specialize in distressed property sales should be aware that there will be less business opportunities in this field going forward.
  • Because of shorter supply, distressed properties are no longer being sold at deep discounts.  Many buyers of these previously thought to be worthless properties have done well in terms of rental return and price appreciation.  From this experience, buyers are now eager to bid up.
  • As a country, America has been a fine real estate investor.  What was thought to be worthless properties were acquired on the cheap.  France sold the vast ‘useless discovery’ made by LaSalle – the Louisiana Territory – to America for a mere $15 million.  Few years later, the ‘insect infested’ land of Florida was bought for $5 million from Spain.  The mocked ‘icebox’ of Alaska was purchased at 2 cents an acre from Russia.  (The mocking ended when gold was discovered).  But the paradise island of Cuba was not purchased or even given the chance after serious and realistic considerations during President Buchanan’s term.

FHFA Price Indicator

Thu, 01/22/2015 - 11:48
  • Today, FHFA released their housing price index data for November which showed that house prices rose 0.8 percent from October on a seasonally adjusted basis.
  • That rate of growth is the highest one-month growth rate reported by FHFA since December 2013; it would translate into an annual price growth of 10 percent.
  • While month to month data can be somewhat volatile, looking at the year over year data, we see a similar acceleration though not yet that strong.  From one year ago, home prices were up by 5.3 percent, according to the FHFA, very close to the 5.6 percent change reported in NAR’s median price in November.
  • Both FHFA and NAR data showed that the November annual growth rate in prices was higher than that observed in previous months.  Tomorrow, NAR will release December price and sales data, and we’ll get a first look at whether the acceleration in home price growth will continue.  As long as tight housing inventory persists, which we expect to see as long as housing starts remain at a subpar level, we expect to see upward pressure on home prices which adds an additional challenge to potential first-time buyers.
  • In addition to national data, FHFA releases data at the Census division level.  The most robust gains in FHFA data from a year ago were still in the West though other Census divisions were stronger than the Mountain division.  NAR data showed less strength in prices in the West.
  • According to FHFA year over year prices rose 7.5 percent in the Pacific division which includes Hawaii, Alaska, Washington, Oregon, and California and 5.6 percent in the Mountain division which includes Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, and New Mexico.  But divisions that make up the South region actually had growth in excess of 6 percent from a year ago.
  • NAR and FHFA data both showed the smallest price gains from November a year ago in the Northeast.  NAR showed that prices grew by 2.0 percent in the Northeast and FHFA showed that prices rose 1.6 percent in New England (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut) and 2.1 percent in the Middle Atlantic states (New York, New Jersey, Pennsylvania) from one year ago.
  • NAR reports the median price of all homes that have sold while FHFA reports the results of a weighted repeat-sales index.  For this reason, the trends in the NAR median price can differ from the trends in the weighted repeat sales index—which computes price change based on repeat sales of the same property, but they typically track very closely and the timeliness of the NAR median price data makes it a good early indicator of price conditions in the housing market.
  • 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 while NAR uses data reported from Realtor-assisted transactions in the MLS.

How are first-time homebuyers becoming more diverse?

Wed, 01/21/2015 - 15:46
  • Using data from NAR’s 2006-2014 Profile of Home Buyers and Sellers, we can examine how the demographics of first-time homebuyers have changed over the last 9 years. What do these numbers show us about the diversity of buyers, and what insight can they provide for the future?
  • The demographic characteristics of first-time buyers overall has remained consistent over the last 9 years with slight increases and decreases.

Household Composition of First-Time Buyers:

  • Since 2006 the distribution of first-time buyers’ household composition has remained predominantly married couples, making up an average of 52% of first-time buyers.
  • On average 22% of first-time buyers were single females and 12% were single males or unmarried couples.


Median Age of First-Time Buyers:

  • The median age of first-time buyers has remained within a 3 year age gap between 30-32 years old.
  • The average median age of first-time buyers since 2006 was 31 years old.



Racial and Ethnic Distribution of First-Time Buyers:

  • The racial and ethnic distribution of first-time buyers has remained predominately White/Caucasian, making up an average of 77% of first-time buyers since 2006.
  • The averages of other races and ethnicities are:
    • Black/African American: 8%
    • Hispanic/Latino: 8%
    • Asian/Pacific Islander: 7%
    • Other: 3%


Country of Birth of First-Time Buyers:

  • Since 2006 the number of first-time buyers who were born outside of the U.S. has increased and then decreased settling back to 86% in 2014, the same as in 2006.
  • On average 87% of first-time buyers were born in the U.S. and 13% were born outside of the U.S.


Primary Language Spoken by First-Time Buyers:

  • Over the last 9 years, English has remained the primary language of first-time buyers.
  • On average 7% of first-time buyers spoke other languages, while 93% spoke primarily English.


The Future of First-Time Buyers:

  • While the demographics of first-time buyers over the last 9 years have not necessarily seen great changes, there is still the outlook for the future.
  • William Frey, of the Brookings Institution, recently published the book “Diversity Explosion” which looks at the demographic future of America.
  • Frey expounds that America is becoming a country with no racial majority, with a dramatic growth of young minority populations expected.
  • Frey predicts that sometime after 2040 there will be no racial majority; this would ultimately change the demographics of the first-time homebuyers moving towards greater diversity. 


For more information on this research, check out the:

2014 Profile of Home Buyers and Sellers and William Frey’s book Diversity Explosion





Latest Housing Starts (December 2014)

Wed, 01/21/2015 - 11:05
  • Single-family housing starts in December reached their highest monthly activity in nearly 7 years.  Still, the increase is coming off very depressed levels and another 50 percent jump is needed to help relieve a potential housing shortage.
  • Multi-family starts took a dip in December.  But this sector has been strong and can be said to be back close to normal.  A strong rise in rental demand and the need for apartments have been the main reason.
  • Numerically in December, single-family housing starts rose 7 percent to reach 728,000 (annualized rate) while multi-family starts fell 1 percent to hit 361,000 (annualized rate).  With the final month’s data collected, for the year as a whole in 2014, the total housing starts reached 1.05 million.  That is woefully inadequate and well below historical normal.  Over the past 50 years, housing starts have averaged 1.5 million units a year.  This great underproduction is principally related to single-family units.  Multi-family production is back to normal.
  • Homebuilders are not having problems selling what they build.  The latest data suggests it only takes around 3 months to find a buyer for a newly built single-family house.  That’s fast.  Yet, the builders are evidently not in a hurry to build more.  Why?  Many of the small local builders simply cannot obtain construction loans.  In the past, they may have received a loan amount to build 20 homes.  But now, they are approved to build only 1 or 2 homes and only after this loan is repaid a new loan is then approved to build another 1 or 2 more.  Moreover, there are fewer construction workers around now after many went to Texas and North Dakota to work in oil drilling.  Now that the oil price has come down, there could be more construction workers for home building in 2015.
  • The forecast is for single-family housing starts to rise by 25 to 30 percent in 2015 as construction loans become more accessible.  Multi-family housing starts will rise by additional 15 percent given the very low apartment vacancy rates.  That translates into a good recovering year for homebuilders in 2015.
  • As an aside, Americans know that a home is a person’s castle.  Winds and elements may enter, but Kings and soldiers cannot.  Because of its long founding tradition these rights are taken for granted in America.  By contrast in China many rural local government officials arbitrarily demolish people’s home with neither homeowner’s approval nor proper compensation.  China in a few years will be the largest economy in the world, surpassing the U.S.  But China looks to face future social unrest because land ownership is not respected.

Diversity of REALTORS® Members

Tue, 01/20/2015 - 15:48

Looking at data from NAR’s 2005-2014 Member Profile, we can see how the demographics of our members have changed over the last 10 years.

Gender of REALTORS®:

  • Since 2005 the distribution of gender has remained predominantly female.
  • On average 42% of members were male and 58% of members were female.



  • The median age of members has increased overall, with slight increases and decreases throughout the last 10 years.
  • The average median age of members since 2005 was 54 years old.



Racial and Ethnic Distribution of REALTORS®:

  • The racial and ethnic distribution of members has remained predominately White/Caucasian, making up an average of 86% of our members since 2005.
  • The averages of other races and ethnicities are:
    • Black/African American: 4%
    • Hispanic/Latino: 5%
    • Asian/Pacific Islander: 3%
    • American Indian/Eskimo/Aleut: 1%
    • Other: 1%


Country of Birth of REALTORS®:

  • Since 2005 there has been a slight increase in the number of members who are born outside of the U.S., increasing from 9% in 2005 to 11% in 2014.
  • On average of 90% of members were born in the U.S., and 11% were born outside of the U.S.


Formal Education of REALTORS®:

  • Since 2005 the percentage of members with a Bachelor’s Degree has shown the greatest increase, and has remained at 30% for the last two years.
  • The largest average proportions of members have completed some college, with an average of 32%, and an average of 28% hold a Bachelor’s degree.



For more information on this research, check out the: 2014 Member Profile

November 2014 EHS Data Vs. The Ten-Year Average

Tue, 01/20/2015 - 15:42

Every month NAR produces existing home sales, median sales prices, and inventory figures. The reporting of this data is always based on homes sold the previous month, and the data is explained in comparison to the same month a year ago. We also provide a perspective of the market relative to last month, adjusting for seasonal factors, and comment on the potential direction of the housing market.

The data below shows what our current month data looks like in comparison to the last ten November months, and how that might compare to the “ten year November average” which is an average of the data from the past ten November months.

  • The total number of homes sold in the US for November 2014 is lower the ten year November average. In recent months, the 2014 sales figure has been within 5 percent of or even higher than the 10-year average figure.  November’s low figure relative to the 10-year average may be partially due to the rush of closings in November 2009, as the first time home buyer’s tax credit was set to expire. Regionally, only the South had higher than average sales while the Northeast, Midwest, and West show current sales below the ten year November average.
  • Comparing November of 2004 to November of 2014 fewer homes were sold in 2014 in all regions, with the Northeast undergoing the biggest decline of 40.4%. The South, still leading all regions in home sales had the smallest drop in sales at 19.9% over the ten year period.    Population growth may help explain some of the South’s resilience.  From 2005 to 2013, data show that the population there grew by 13% whereas the nation as a whole grew by less than 10 percent and the Northeast and Midwest grew by less than 6% each.
  • The median home price this November is higher than the ten year November average median price for the US and all regions except the Northeast which was modestly close. The median price of a home in 2014 is up approximately 3% higher in the US, Midwest, and South compared to 2004. Only the Northeast had a drop in price of 2% while the West remained flat.
  • The median price year over year percentage change shows that home prices began to fall in 2006, but did not fall considerably in most areas until around 2008. Still, the graph shows the major turn-around in growth rates from nearly double-digit gains in 2005 to a slight loss in 2006.  Home prices made their biggest jump from 2011 to 2012 except for the Northeast which saw prices slip slightly in 2012.  The West had the largest gain up to 22% price growth in 2012, which is also the largest November year over year gain observed in this 10-year period in any region. This November the Midwest has the highest year over year price percentage change over the US and the other three regions.  While prices are still growing, the rate of price growth in the West has slowed considerably since last year.
  • There are currently fewer homes available for sale in the US this November than the ten year November average.  In 2004 the US had the fastest pace of homes sold relative to the inventory while in 2008 the US had the slowest pace taking 11 months to sell the supply of homes on the market. The ten year November average months supply is 7 and this November we are at 5.1 months supply. The ten year average month supply for November for condos is 7.9 while single family is 6.9. The condo market is currently performing better than single family, having only at 4.6 months supply while single family is hovering around 5.2.

Inflation Rate in 2014

Tue, 01/20/2015 - 08:36
  • Consumer prices fell in December, yielding a low one-year 2014 inflation rate of only 0.7 percent.  However, renters are getting squeezed.  Rents increased at the fastest clip since 2008 with a 3.4 percent jump in 2014.  Home prices are not part of the consumer price measurement, but something consumers deeply care about, and they look to have risen by around 5 percent.
  • The overall consumer price index (CPI) fell in December by 0.4 percent.  It is the second straight month of decline, thanks to a plunge in gasoline prices.  Over a 12-month period to December, CPI increased 0.7 percent, which is the lowest one year inflation rate since 2009.  A 21 percent decline in gasoline prices will also filter to areas that require fuel.  Already airfare has fallen by 5 percent while delivery service fees are no longer rising as it had in the past.
  • However, not everything is all right for consumers.  In particular, housing costs are rising significantly.  Though the rent increase in December moderately slowed to 3.4 percent (compared to 3.5 percent in November), the above 3 percent increases are the strongest rises since 2008.  For those fed up with the higher rents and can escape, home prices are rising at an even faster pace of 5 percent.  (Home prices are considered an asset, like stock prices, and hence are not counted as part of CPI).  Only the historically low mortgage rates are helping in home buying affordability.  For homeowners who are on a fixed interest rate, their mortgage payments have increased 0 percent.
  • Property management companies should be aware that even though they are extracting higher rents from tenants, the cost of operation appears to be rising.  The price of water/sewer/trash collection services are rising at a 4.6 percent clip.
  • The cost-of-living-adjustment on many government benefit checks, like social security that went to effect from January was 1.7 percent.  In the meantime workers’ wages have been rising at a 2 percent rate.  With CPI inflation at 0.7 percent, it would appear that Americans are experiencing a modest rise in their standard of living – at least statistically.  That’s not the case for many renters, including the elderly who are not homeowners.  Housing costs – both rents and home prices – are outpacing wages.  The fast rising housing costs are happening because there has been a great underproduction of new supply over the recent years.  Fewer homes in relation to population growth will make the housing costs more expensive and this trend will likely continue throughout 2015.

EHS in 2014 by the Numbers – Part 4 – Popular Contract Dates

Thu, 01/15/2015 - 10:46

This blog post was written by Danielle Hale, Director of Housing Statistics, and Hua Zhong, Data Analyst.

You probably know that recent home listings went under contract slightly more often on Mondays, Tuesdays, and Fridays.  Here is the data to back up your intuition:

  • As we start the New Year, this is a good time to take a look and recap the year behind us to see what insights 2014 holds for 2015. The last sales data for December 2014 is just now being collected, but we can get a good sense of the year by looking at the data we currently have for the past 12 months. In our first posts, (Part 1, Part 2, and Part 3) we looked at closings and listings by day.  Here, we’ll take a look at contracts.
  • Below, we see the most popular under-contract days of 2014[1]. Similar to the pattern in home listings, we see a strong preponderance of spring dates and lack of weekends.
  • The biggest months for new contracts were May, April, and June. These months alone accounted for about 3 in 10 new contracts in this analysis.
  • While not devoid of contract activity, the weekends are not common contract signing days.  Among weekdays, Mondays, Tuesdays, and Fridays are the most common days for new contracts to be signed, though Wednesdays and Thursdays are almost equally common. In spite of that fact, not a single Wednesday made the list of top 25 days for contracts in 2014.
  • While home closings exhibit a strong tendency to get done at the end of the month, contracts are, like listings, much steadier throughout the course of the month.  Listings show a slight tendency to be posted earlier rather than later in a month, and contracts have a very slight tendency to be signed more often in the middle of a month rather than at the end.

This is part 4 of a week-long series on EHS. Check back tomorrow at 12 p.m. ET for the final post in the series.

[1] This analysis includes listings that went under contract at any point in the period under observation, December 1, 2013 to November 30, 2014.  If two contracts existed in the observation period on the same listed property because, for example, one contract fell through and another contract was signed in a later month, both contract dates would be counted as “new contracts” in the analysis.  Thus, some contracts counted here may have fallen through.

Mortgage Purchase Applications

Wed, 01/14/2015 - 11:46
  • Seasonally adjusted applications to purchase homes surged 23.6% for the week ending January 9th relative to a week earlier, a significant increase following the prior week’s 4.5% improvement.  The purchase applications index is 1.6% higher than the same time in 2014.  The week-to-week figures may be volitile, but the unadjusted 4-week moving average has improved steadily since early November and is down just 0.6% from a year.
  • Despite the sharp increase, credit overlays and limited supply continue to constrain purchase application volumes.  However, sub-4% mortgage rates combined with new products offered by the GSEs and lower MI pricing by the FHA point to strong affordability in the spring market.

  • The average rate for a conforming 30-year fixed rate mortgage as reported by the Mortgage Bankers Association fell 12 basis points to 3.89%, the lowest level since the week ending May 17th 2013.  The average rate a year ago this week was 4.66%.  At the current rate and median price, a borrower would save $46 per month, or an improvement in affordability of 5.2% relative to last year.

  • This week’s readings suggest a solid improvement in mortgage applications and dovetails with the robust economic and affordability data as well as foot traffic figures from the last two months.  Stronger applications are one more signal pointing to a solid spring market.  However, the market would benefit from both income and inventory growth.

EHS in 2014 by the Numbers – Part 3 – Popular Listing Dates

Wed, 01/14/2015 - 10:52

This blog post was written by Danielle Hale, Director of Housing Statistics, and Hua Zhong, Data Analyst.

You probably know that home listings go up most often on Thursdays and Fridays.  Here is the data to back up your intuition:

  • As we start the New Year, this is a good time to take a look and recap the year behind us to see what insights 2014 holds for 2015. The last sales data for December 2014 is just now being collected, but we can get a good sense of the year by looking at the data we currently have for the past 12 months.  In our first posts, (Part 1 and Part 2) we looked at closings by day.  Here, we’ll take a look at listings.
  • Below, we see the most popular listing days of 2014. Note the strong preponderance of spring dates and obvious lack of weekends.
  • The biggest months for new listings are May, April, June, and March, and June.  These months alone accounted for two-fifths of all new listings in this analysis.
  • While not devoid of new listings, the weekends are obviously not popular days to list.  Among weekdays, Fridays and Thursdays are the most common days for new listings to go up, with Monday trailing a bit and Tuesdays and Wednesdays are not too far behind. Wednesdays and weekends are the only days of the week absent in the top 25 days for listings.
  • While home closings exhibit a strong tendency to get done at the end of the month, listings are much steadier throughout the course of the month with a slight tendency to be posted earlier rather than later.

This is part 3 of a week-long series on EHS. Check back tomorrow at 12 p.m. ET for the next post in the series.


EHS in 2014 by the Numbers – Part 2 – Least Common Closing Dates

Tue, 01/13/2015 - 11:10

This blog post was written by Danielle Hale, Director of Housing Statistics, and Hua Zhong, Data Analyst.

You probably know that home closings slow down during the holidays and earlier part of the week.  Here is the data to back up your intuition:

  • As we start the New Year, this is a good time to take a look and recap the year behind us to see what insights 2014 holds for 2015. The last sales data for December 2014 is just now being collected, but we can get a good sense of the year by looking at the data we currently have for the past 12 months.  In our first post, http://bit.ly/1y7G1Dp we looked at top closing days of 2014.
  • In this list, we see the slowest closing days of 2014. The resulting list depends very much on how you define the eligible days.
  • Very few closings happen on weekends and federal holidays.  Excluding these days as well as Christmas Eve and the day after Christmas, we find that the slowest closing day was January 2, 2014.  Interestingly, there are a few weekend days that performed at least as well as these slow business days.  They were Sunday, November 30, 2014 and Sunday, August 31, 2014. Two other weekend days, Saturday, August 30 and Saturday, May 31, outperformed most other weekends and holidays with respect to number of closed home sales.  As we saw with the top closing days, the end of the month is a popular time for closing and this can even be observed among weekend days as those at the end of a month tend to outperform other weekend days.
  • Because this ranking was compiled with data that was not seasonally adjusted, we see that winter days figure prominently in the list of slowest days for home closings.
  • Those who have been in business a few years can probably expect these seasonal fluctuations, but for those who are new to real estate, take note and plan your vacations accordingly.


This is part 2 of a week-long series on EHS. Check back tomorrow at 12 p.m. ET for the next post in the series.

Strong Dollar and Foreign Home Sales

Mon, 01/12/2015 - 15:40
  • The U.S. dollar has become mighty once again.  It has strengthened against most foreign currencies.  That permits Americans to buy foreign products at cheaper prices and to travel abroad with fewer dollars.  However in the opposite direction, the strong dollar means foreigners will face higher prices on American-made goods and will buy less of them, including real estate.  There will be fewer foreign tourists in the U.S. as well in 2015.
  • Not too long ago, $1 could be converted for 100 Japanese Yen or 70 euro cents.  Today, $1 gets a lot more: 120 Yens or 83 euro cents.  Similar trends against other currencies can be observed. The reason is that the global economy is no longer growing.  The only bright spot is the U.S., where GDP and job growth rates have been accelerating of late.  This disparity in the growth rates has made the dollar become measurably stronger.
  • The table below shows what foreigners paid for U.S. real estate last year and what they are facing today given the stronger dollar.  For Canadians, they are seeing 22 percent higher prices for a typical U.S. home after conversion.  For Russians, prices are higher by 122 percent.  Venezuela’s currency rate is fixed by the government but not available for transaction.  On the black market it is estimated that U.S. home prices to have risen by 195 percent.
  • REALTORS® experienced 35 percent growth in sales of U.S. real estate to foreigners in the most recently measured period (March 2013 to March 2014 versus comparable one year prior period).  Such a growth rate is unlikely given the strength of the U.S. dollar.  Russians and Venezuelans in particular are hard pressed.  Professional hockey players in Russia are very envious of Washington Capitals star Alex Ovechkin, not because of his talent per se, but because he is getting paid in dollars and not in rubles.

Part 1: EHS in 2014 by the Numbers – Popular Closing Dates

Mon, 01/12/2015 - 10:55

This blog post was written by Danielle Hale, Director of Housing Statistics, and Hua Zhong, Data Analyst.

You probably know that home closings predominate on Fridays and the end of the month.  Here is the data to back up your intuition:

  • As we start the New Year, this is a good time to take a look and recap the year behind us to see what insights 2014 holds for 2015.  The last sales data for December 2014 is just now being collected, but we can get a good sense of the year by looking at the data we currently have[1].
  • A list of top closing days of 2014 shows that the last business day of a month and Fridays are the most popular days to complete a home sale transaction.  In fact, these days are so popular that the top 25 closing days are expected to account for roughly a quarter of all home sale closings for the year.
  • The top 7 closing days were the last business days of June, May, August, April, July, September, and February.  The next 18 most popular days were all Fridays except for three dates, all of which were at or near the end of the month: Monday, March 31, Thursday, October 30, and Wednesday, July 30.
  • Because this ranking was compiled with data that was not seasonally adjusted, we see that spring and summer days figure prominently in the top of the list, but all seasons are represented.
  • This day by day data confirms the unadjusted monthly EHS data which shows that June and July were the top months for home sales in 2014, followed by August and May[2].  In fact, June and July alone are likely to account for more than 20% of sales for 2014[3].
  • It is expected that spring and summer months will be strong from a home sales perspective.  This is why NAR Research reports seasonally adjusted home sales data each month, so we can see how sales are performing relative to what we might typically expect given the season.
  • By this metric, the second half of 2014 is on track to be stronger than the first half of the year[4].  The peak month of 2014 sales, adjusted for seasonal fluctuations, was October when sales reached the 5.25 million level[5].  We expect the strength in the second half of 2014 to carry through into 2015.
  • What was your busiest day in 2014?

 This is part 1 of a week-long series on EHS. Check back tomorrow at 12 p.m. ET for the next post in the series.

[1] This analysis considers data from December 1, 2013 to November 30, 2014.

[2] December 2014 data is not yet complete, so a projection is made.

[3] ibid.

[4] Even a surprisingly low December would be unlikely to pull down the better performance of the second half of 2014.

[5] Revisions to seasonal adjustment factors that will be made in February 2015 when 2014 data is complete and finalized are likely to shift the precise magnitude of this figure but unlikely to change the fact that October 2014 was the peak month for seasonally adjusted home sales.