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Bedford Corners NY Real Estate

Mortgage rates drop with inflation drop | Bedford Corners Real Estate

Finally, some good news: the growth rate of inflation is cooling off for now, and with the CPI inflation report being positive, the 10-year yield fell noticeably, and mortgage rates will fall with that! So, the question is, are we reaching the peak of inflation and close to the end of the Fed rate hike cycle? Let’s take a look at today’s data.

From the CPI report: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis, the same increase as in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 7.7 percent before seasonal adjustment.

The estimates for the CPI inflation data were for 7.9% year-over-year growth. Some people in the markets had speculated that the data would come in even hotter than anticipated —some whisper numbers were for 8.2% – 8.4% year-over-year growth. This of course led some people to believe that bond yields and mortgage rates would go much higher today.

However, the report came in at 7.7% — lower even than the forecast. As a result, mortgage rates went from 7.37% yesterday to 6.67% as of this writing.

Screen-Shot-2022-11-10-at-2.57.15-PM

On Thursday morning, the 10-year yield had a big rally, and bond yields headed lower (see above) and mortgage rates will be below 7% today. What a difference a year makes — now we’re excited to see mortgage rates getting below 7%! But it makes sense when you consider that over the last 52 weeks, mortgage rates have ranged from 3.14% to 7.37%.

One of my talking points with inflation data is that the biggest driver of core inflation is shelter, and this data line lags. It lagged back in August 2020 when it was still down, and it’s crawling now on the CPI data.

We already have more current data lines to show that the growth rate of inflation is cooling off. Some Federal Reserve members have commented on the fact that they know the shelter inflation data on the CPI lags — that’s a positive. Some people feared the Federal Reserve didn’t understand the lag in the CPI data, but this doesn’t appear to be the case.

So, we need to understand that the CPI shelter data lags, and the cooldown will be more of a 2023 story, especially in the second half of the year. Back in September, I went on CNBC before the CPI report came out to make this point and explain that shelter inflation did have legs to grow but the growth rate couldn’t be sustained.

Shelter CPI inflation data

As we can see in the graph below, the growth rate of shelter inflation is moving up and this has the potential to keep going higher. One thing to remember is that we have 910,000 two-unit housing that will come on line in 2023 and this will help cool the growth rate of inflation down next year. We already see the growth rate of shelter cooling off in the data lines that are more current, so this will be a positive story in 2023. 



When this data line starts to cool down, it will be the biggest factor in core inflation cooling down. This is why I wrote about how we all need to root for housing completion data to get better so we get more supply into the marketplace. The best way to deal with housing inflation is more supply, and we have a lot of two-unit construction in the pipeline. 

We see some inflation data cooling off recent peaks; food and energy are not part of core inflation data as they can have wild swings. As we can see below the growth rate of the Mad Max inflationary basket is cooling off, mostly due to energy prices coming off the recent highs.



Other inflationary data is also cooling off. We all know that used car prices exploded during the pandemic as supply crashed. That is already changing and has room to go lower. If you’re trying to defeat inflation by killing demand and losing jobs, you don’t have the proper supply in the market.

The history of global pandemics traditionally means supply chains are stressed for two years. Now that we are all walking the earth freely (outside of China), the production supply levels are returning to normal.

For today’s CPI report, the new vehicle price index, which also went parabolic during the pandemic, is coming down. Again, the best way to deal with inflation is to get more supply in the market.



So does this data represent a turning point? Have we seen the peak growth rate in inflation?

I would say this about this topic. Last year at this time the growth rate of a lot of inflationary data was still rising and then, on top of everything else, we had the Russian Invasion of Ukraine in February. Since then we have had massive Fed rate hikes in the system and the biggest driver of core inflation in America is set to cool down in 2023. Those facts are here today where they weren’t in November of 2021.

But, the Federal Reserve feels pressure to create a job-loss recession to get the inflation data back down toward 2% and even with today’s CPI inflation data being lower, they’re still going to push us into a job-loss recession.

I raised my sixth and final recession red flag as of Aug. 5, but I did write about two ways we could still avoid a nasty job loss recession. Here are two things that I would be looking for:

1. Rates fall to get the housing sector back in line.

Mortgage rates falling toward 5% can stabilize housing if they have duration. Traditionally, mortgage rates below 4% boost housing demand. The bleeding needs to stop and what we have seen in the data is that buyers did come into the housing market when rates got back down toward 5%.

However, 5% rates didn’t stay for long as the Federal Reserve found this to be counter-productive for their job loss recession to happen. We need to see lower rates and have it stick for some time for it to be more useful to get the housing market out of recession. 

2. The inflation growth rate falls, and the Fed stops hiking rates and reverses course, as it did in 2018.

Some inflation data is already cooling off and will find its way into the data lines. However, rent inflation won’t come down in the data until 2023, even though we already see some change in that sector. 

Since all my six recession flags are up, I am keeping a close eye on the jobless claims data, which rose today — this is the last data line that is preventing the economy from falling into a job-loss recession as so far, the honey badger labor market is holding up.

So for today, this is a small victory, but we will need many more months to change this economy.

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housingwire.com/articles/

Black Knight Mortgage Monitor reports prices up 12.1% | Bedford Corners Real Estate

Home prices are now posting the biggest monthly declines since January 2009, according to the latest Mortgage Monitor report from Black Knight.

Median home prices in August fell 0.98%, only slightly better than July’s 1.05% monthly decline. The average home price is down 2% ($8,800) from its June peak nationally as we enter the historically slower fall-winter homebuying season.

The housing market has not seen such a significant two-month drop in prices since shortly after the collapse of Lehman Brothers in winter of 2008, Black Knight said on Monday.

Skyrocketing mortgage rates – now in the 7% range for some buyers – and limited inventory have driven mortgage affordability to its lowest levels since the early 1980s, a reversal from the frenetic boom in buying during 2020 and 2021.

With mortgage rates at 6.7% as of Sept. 29, it takes 38.2% of the median household income to make the monthly mortgage payment on the median-priced home bought with a 30-year mortgage and 20% down, Black Knight said. That monthly payment is up $930 from August 2021, a 73% increase.

“Historically low inventory – along with record low interest rates – was one of the key drivers behind U.S. home prices seeing essentially a decade’s worth of appreciation in just two-and-a-half years,” added Ben Graboske, Black Knight’s president of Black Knight data & analytics.

Creating a path to success in today’s purchase market

Meeting the needs of a new generation of homebuyers while managing the ebbs and flows of a volatile housing market is a major endeavor for any mortgage lender. So, what should lenders be doing to thrive in the face of a post-pandemic housing market rife with new hurdles?

Presented by: Calyx

Home prices are beginning to fall from post-pandemic peaks but remain up 12.1% from Aug. 2021 due to the record growth seen in late 2021 and early 2022, Black Knight said in its report. Annual home price growth rates are poised to continue falling in coming months, though it’s unclear where the bottom is.

Much of that depends on how much inventory returns to the market. After seeing an uptick in listings from May through July, inventory levels stalled in August, growing at just 1/10th the rate of recent months. The market grew from just 1.7 months of for-sale inventory to 3.1 months before dropping down to three months in August.

“Right now, prospective sellers are not only coming to grips with falling demand and declining prices due to sharply higher interest rates, but they also have a growing disincentive to give up their own historically low-rate mortgages in this environment,” said Graboske. “Some may be waiting out the market to see if demand – and prices – return in the spring.” 

While 20% of markets have seen only marginal declines (less than 1%) so far, a third have experienced drops of 3% or more – including nine where prices have fallen more than 5%, Black Knight researchers found. The sharpest correction was in San Jose (-13%, or, about $203,000), followed by San Francisco (-10.8%, or roughly $137,000) and Seattle (-9.9%, or about $83,000), but other formerly scorching-hot markets have also cooled majorly since June. Las Vegas, Austin, Minneapolis, Washington, D.C., Raleigh and Nashville have all shed 3% of home value in recent months.

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housingwire.com/articles/

Mortgage rates average 5.78% | Bedford Corners Real Estate

 Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey (PMMS), showing that the 30-year fixed-rate mortgage (FRM) averaged 5.78 percent.

“Mortgage rates surged as the 30-year fixed-rate mortgage moved up more than half a percentage point, marking the largest one-week increase in our survey since 1987,” said Sam Khater, Freddie Mac’s Chief Economist. “These higher rates are the result of a shift in expectations about inflation and the course of monetary policy. Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”

News Facts

  • 30-year fixed-rate mortgage averaged 5.78 percent with an average 0.9 point as of June 16, 2022, up from last week when it averaged 5.23 percent. A year ago at this time, the 30-year FRM averaged 2.93 percent.
  • 15-year fixed-rate mortgage averaged 4.81 percent with an average 0.9 point, up from last week when it averaged 4.38 percent. A year ago at this time, the 15-year FRM averaged 2.24 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.33 percent with an average 0.3 point, up from last week when it averaged 4.12 percent. A year ago at this time, the 5-year ARM averaged 2.52 percent.

The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

Mortgage rates average 5.25% | Bedford Corners Real Estate

 Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey ®(PMMS®), showing that the 30-year fixed-rate mortgage (FRM) averaged 5.25 percent.

“Economic uncertainty is causing mortgage rate volatility,” said Sam Khater, Freddie Mac’s Chief Economist. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”

News Facts

  • 30-year fixed-rate mortgage averaged 5.25 percent with an average 0.9 point as of May 19, 2022, down from last week when it averaged 5.30 percent. A year ago at this time, the 30-year FRM averaged 3.00 percent.
  • 15-year fixed-rate mortgage averaged 4.43 percent with an average 0.9 point, down from last week when it averaged 4.48 percent. A year ago at this time, the 15-year FRM averaged 2.29 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.08 percent with an average 0.2 point, up from last week when it averaged 3.98 percent. A year ago at this time, the 5-year ARM averaged 2.59 percent.

The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

Mortgage applications and new home sales drop as rates jump | Bedford Corners Real Estate

The MBA Mortgage Application Index declined 8.1% last week, following the prior week’s decrease of 1.2%. The downward move came as a 14.4% drop in the Refinance Index was accompanied by a 1.5% fall for the Purchase Index. The average 30-year mortgage rate extended its climb, jumping 23 basis points (bps) to 4.50%, and is up 114 bps versus a year ago.

In other housing news, new home sales (chart) fell 2.0% month-over-month (m/m) in February to an annual rate of 772,000 units, shy of the Bloomberg consensus forecast calling for a rate of 810,000 units, and below January’s downwardly-revised 788,000-unit level. The median home price rose 10.7% y/y to $400,600. New home inventory rose to 6.3 months from January’s level of a 6.1-months supply at the current sales pace. Sales jumped m/m in the Northeast, and were higher in the Midwest, while lower in the South and West. Sales in all regions were lower y/y, except for the Northeast which gained ground. New home sales are based on contract signings, offering a timelier read on housing activity compared to the larger contributor of existing home sales, which are based on closings

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schwab.com

Building Materials Prices Increase 1.5% in December | Bedford Corners Real Estate

The prices of goods used in residential construction ex-energy climbed 1.5% in December (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The index was driven higher by large price increases for wood products.

Building materials prices increased 15.9% in 2021 and have risen 18.6% since December 2020. Since declining 1.8% between July and August 2021, the index has climbed 4.5%.

The price index of services inputs to residential construction increased 0.4% in December following a five-month period over which the index declined 13.6%.  The index is 9.6% higher than it was 12 months prior and 19.6% higher than the January 2020 reading.

Softwood Lumber

The PPI for softwood lumber (seasonally adjusted) increased 24.4% in December and has gained 44.5% since September.  According to Random Lengths data, the “mill price” of framing lumber has roughly tripled since late August.

The PPI of most durable goods for a given month is largely based on prices paid for goods shipped, not ordered, in the survey month. This can result in lags relative to cash market prices, suggesting another sizable increase in the softwood lumber producer price index may be in the next PPI report.

Record-high volatility of softwood lumber prices continues to be as problematic as high prices. The monthly change in softwood lumber prices averaged 0.3% between 1947 and 2019. In contrast, the percent change of the index has averaged 12.0% since January 2020—the highest 24-month average since data first became available 1947 and nearly triple the previous record.

Steel Products

Steel mill products prices rose 0.2% in December, the smallest monthly increase since September 2020. Monthly price increases have slowed in each of the past five months.

The last monthly price decrease in steel mill products occurred in August 2020, and the index has climbed 152.2% in the months since–with more than 80% of that increase taking place in 2021.

Ready-Mix Concrete

The PPI for ready-mix concrete (RMC) gained 0.9% in December after increasing 1.1% in November.  The index for RMC increased 6.5% between January and December 2021 and is 9.3% higher than the January 2020 level.

At the regional level, prices increased in the South (+1.0%) and West (+1.1%) as prices declined in the Midwest (-0.1%).  The price of RMC held steady in the Northeast.

 Gypsum Products

In December, the PPI for gypsum products decreased 0.5%–the second consecutive monthly decline.  Gypsum products prices ended the year 18.2% higher than they were in January.

Paint

The PPIs for exterior architectural coatings (i.e., paint) increased 1.6% in December while the price of interior paint was unchanged. Neither index has declined since January 2021 and the January-to-December price increases of architectural coatings is unprecedented–exterior and interior paint prices climbed 19.8% and 10.9%, respectively, in 2021.

Other Building Materials

The chart below shows the 12-month and year-to-date price changes of other price indices relevant to the residential construction industry.

Building Materials Wholesaling and Retailing

In contrast to the PPI for building materials retailing—which increased 0.4% in December—the Producer Price Index for building materials wholesaling decreased 1.3% over the month.  The wholesale and retail services indices measure changes in the nominal gross margins for goods sold by retailers and wholesalers. Gross profit margins of retailers, in dollar terms, have declined 25.7% since reaching an all-time high in June 2021 but remain 27.3% higher than the January 2020 level.

Building materials wholesale and retail indexes account for roughly two-thirds of the PPI for “inputs to residential construction, services.”

Professional Services

The category of professional services carries the third most weight among those that make up the service inputs to residential construction PPI.  The prices of legal, architectural, and engineering services changed 0.5%, 0.0%, and -0.1%, respectively, in December. Although the year-to-date increase in prices of professional services used in residential construction are quite modest compared to that of materials, prices have increased more in 2021 than they had by December 2020; the difference is especially striking for architectural services.

Though the difference in price changes for legal services is small, the percentage increases are large relative to engineering and architectural.  This follows with a trend in recent years.  Since December 2018, the price of legal services has risen 13.6%–much more than the three-year increase in architectural (+1.1%) and engineering services (+5.8%).

Metal Treatment Services

Prices of metal treatment services increased 1.2%, on average, in December.  The subset of these services used to calculate the services inputs to residential construction includes plating and polishing, coating and allied services, and heat treating.

Metal coating and allied services increased the most over the course of 2021 (+14.9%, NSA).  Metal heat treating and plating and polishing services climbed 6.2% and 3.8%, respectively, between January and December.  The average monthly price increase of the three services was just 0.1% over the course of 2020.

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eyeonhousing.org/2022/01/

Home sales on Long Island dropped 16.9 percent | Bedford Corners Real Estate

Median sales prices up at least 9 percent year-over-year

November ended a five-month streak of year-over-year prices increasing by at least 10 percent

The housing market on Long Island has slowed from a year ago in terms of sales volume, but a lack of inventory is likely the culprit.

Home sales on Long Island dropped 16.9 percent year-over-year in November, according to data from OneKey MLS reported by Newsday. Home sales in Nassau County fell 19.2 percent, while Suffolk County sales decreased by 14.9 percent.ADVERTISING

As home sales dropped, so did availability of homes on the market. A 1.9-month supply of homes were for sale in Nassau last month and a 2.1-month supply of homes were available in Suffolk. The counties’ supply numbers in November 2020 were 3.3 months and 2.4 months, respectively.

Low supply could continue to hamper the market for the near future.

“We’ve had low inventory for quite a while now,” OneKey MLS CEO Jim Speer told Newsday. “I would expect it to stay at a pretty low level, hopefully not at this low a level, but I expect we wouldn’t see a great increase in the coming months.”ADVERTISEMENT

While listings are dropping and prices remain high, they aren’t soaring to the heights seen in recent months, a likely relief for homebuyers.

In Nassau, the median sale price was $655,000, a 9.3 percent increase year-over-year. But it was only an 0.8 percent, or $5,000, increase from October. November also ended a five-month streak of year-over-year prices increasing by at least 10 percent, according to Newsday, suggesting a slowing in price growth.ADVERTISEMENT

In Suffolk, the median sale price in November was $520,000, a 10.3 percent increase year-over-year, but only a 0.2 percent gain month-over-month, $1,000 in all.

The median sale prices in both counties are down from the historic highs hit during the summer, when Nassau reached $670,000, while Suffolk hit $531,000. The median pending sale in November for deals that hadn’t closed were for $650,000 and $515,000 in each county, respectively.

“I have definitely seen the market become more realistic,” Keller Williams Realty real estate agent Maria Wilbur told Newsday. “The offers coming in the last month or two have been closer to what the value of the house should be. They’re not so inflated.”

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https://therealdeal.com/tristate/2021/12/16/

NYC rents skyrocket amid record-high inflation rates | Bedford Corners Real Estate

As New Yorkers struggle with higher gas and grocery prices amid record-high inflation rates, the cost of rent is also increasing — and isn’t expected to level off anytime soon, according to data and experts. 

The net effective median rent in Manhattan increased by a whopping 10.1 percent between July and October and 20 percent since January as inflation jumped to the highest level seen since 1990, according to data compiled by Miller Samuel/Douglas Elliman.

In Queens, the third-quarter median asking rent was $2,200 this year, just $100 shy of the pre-pandemic peak set in quarter three of 2019, according to data from StreetEasy. 

While numbers from Miller Samuel/Douglas Elliman show housing costs across Manhattan, Brooklyn and Northwest Queens are still lower than 2019, early numbers from real estate analytics company UrbanDigs show prices jumped beyond pre-pandemic levels this month. 

So far, the median asking rent in Manhattan is up 27 percent this month compared to last year and up 4 percent compared to November 2019, the data show. 

Cityscape at dusk of the upper westside looking to midtown.
New York’s numbers reflect a nationwide trend that’s seen a 0.4 percent increase in housing cost for renters between September and October.

In Brooklyn, the median asking rent is up 15 percent so far this month compared to last year and up 5 percent compared to Nov. 2019. 

“I wish I had better news on that one, I think a lot of tenants are likely to get sticker shock at their next lease renewal,” Greg McBride, the chief financial analyst at the personal finance website Bankrate.com, told The Post. 

“If inflation does eventually moderate and we get back to that 2 percent rate of inflation, then OK, that’s an environment where rents would likely increase at a much more modest, pedestrian pace, but if inflation stays at 4 or 5 percent, that’s going to translate into similar increase in rents year after year.” 

New York’s numbers reflect a nationwide trend that’s seen a 0.4 percent increase in housing cost for renters between September and October amid a dwindling supply of listings, high demand and a supply chain bottleneck that’s increased the cost of home building materials, Labor Department data show. 

Earlier this year, rents in tech hubs like New York City, Los Angeles and Chicago were declining by 15.8 percent but in September, they jumped by 7.6 percent year over year, according to data from Realtor. 

“In New York City, the vacancy rate here is already absurdly low and rents have been steadily rising post pandemic as there is more demand than supply. Additionally, if mortgage rates start to go up and affordability is affected it will force potential buyers to become renters as they are priced out of the market,” Pamela Liebman, the CEO of real estate giant Corcoran, told The Post. 

“If mortgage rates rise, that will put additional pressure on an already robust rental market and we could see a serious rise in rent. And as landlords’ costs go up due to inflation, they will continue to pass the increases on to the tenants.” 

High angle view of Lower East Side in Manhattan.
Earlier this year, rents in tech hubs like New York City, Los Angeles and Chicago were declining by 15.8 percent but in September, they jumped by 7.6 percent year over year

The pandemic massively disrupted New York’s housing market and is partly to blame for the sky-high increases, said Jonathan Miller, the President and CEO of Miller Samuel Inc.

“The rate of growth in 2021 has been like a rocket ship, but it’s coming from a very low place because rents fell to 25% during the early days of the pandemic and now are rising,” Miller explained. 

“If we look at net-effective median rent for all of Manhattan compared to October of 2019, so pre-pandemic but the same seasonal period in the year, median rent is 0.8 percent below 2 years ago. It’s very close to parity.” 

Still, with billions in stimulus dollars flowing through the region, expected wage growth and the return of international buyers, demand is only expected to go up and unless the housing supply increases, rent costs are slated to jump even more, too, said Miller.  

In 2020, the number of new housing permits decreased by 26.3 percent citywide and in Manhattan, only 1,896 new housing permits were issued last year, down 65.6 percent from 2019 and the lowest level seen since the 2010 Great Recession, city statistics show.  

Aerial photo of Manhattan buildings.
Rents are expected to continue to grow throughout the end of the year and throughout next spring according to an economist at StreetEasy.

“Rents are going to continue to grow throughout the end of the year and throughout next spring,” said Nancy Wu, an economist with StreetEasy. 

“We’re going to see a very busy rentals market [next year] and high demand is going to lead to higher rents, given the supply is pretty constant.” 

At the start of the pandemic, New York implemented a moratorium on evictions barring landlords from booting tenants who can show they’re behind on their rents because of COVID-era financial difficulties but the program will end come January 15. 

Beyond that, cash-strapped renters can apply for state aid through a federally financed program designed to help lower-income New Yorkers pay their housing costs but that program has a bottom, too. 

So far, tenants have filed 252,000 applications, 73,000 of which have been paid out, totaling $913 million in aid. 

An additional 73,000 applications, totaling $917 million in aid, have been tentatively approved.

read more…

nypost.com/2021/11/11/

New homes sales down 17.6% | Bedford Corners Real Estate

The numbers: New-home sales surge higher

Sales of new homes in the U.S. rose in September, even though home prices rose to a new high.

U.S. new-home sales increased 14% to an annual rate of 800,000, the government said Tuesday. That figure represents the number of homes that would be sold over a yearlong period of time if the same number of properties were bought each month based on the rate of sales in September. Compared to a year ago, sales were down 17.6%.

The median forecast of economists polled by MarketWatch was that new home sales would come in at an annual rate of 760,000 for September.

The new-home sales report from the U.S. Census Bureau, unlike the existing-home sales report from the National Association of Realtors, reflects sales where the contract is signed but the transaction has not yet closed. The report’s small sample size also means that it is quite volatile and prone to large revisions.

What happened

The median sales price of new houses sold in September was $408,800, marking a new record high. The supply of new homes for sale fell by more than 12% between August and September, equating to a 5.7-month supply.

Regionally, the Northeast notched the largest percentage gain in new-home sales, while the Midwest was the only part of the country to record a decrease, as was the case the month prior.

The big picture

As Pantheon Macroeconomics chief economist Ian Shepherdson noted, Americans may be seeing “something of a revival in the housing market.” Both new and existing home sales have rebounded from the downturn earlier this year. A mix of factors could be at play.

“A combination of lower rates, easier lending standards and, perhaps, a renewed bout of COVID fear in cities, has driven the turnaround, which appears to be continuing in October, though perhaps at a slowing pace,” Shepherdson wrote in a research note.

To his latter point, rising mortgage rates could price out some home buyers at the margins, which could become a headwind for the market in the months to come.

What they’re saying

“Noticeably, the cost of lumber bounced off the August bottom of around $400, moving into the mid-$600s per thousand board feet. The increase ensured that homebuilders kept higher prices, pushing the median new home sale price up double-digits from a year ago,” said George Ratiu, manager of economic research for Realtor.com.

Market reaction

The Dow Jones Industrial Average and S&P 500 index both increased in Tuesday morning trades.

Major home-builder stocks such as D.R. Horton, Lennar Corp. and PulteGroup turned positive following the new home sales report’s release.

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realtor.com/news/real-estate

Single family construction spending up 41% | Bedford Corners Real Estate

NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 0.5% in July to a seasonally adjusted annual rate of $773.0 billion. Total private residential construction spending was 27% higher than a year ago.

The monthly gains are attributed to the strong growth of spending on single-family construction and improvements. Single-family construction spending rose to a $416.3 billion annual pace in July, up by 0.9% over the upward revised June estimates. It increased by 47.1% on a year-over-year basis. Spending on improvements edged up 0.2% in July, after a 0.7% dip in June. Multifamily construction spending stayed flat in July but was 14.9% higher than a year ago.

The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the solid growth in single-family construction and home improvement from the second half of 2019 to February 2020, before the COVID-19 hit the U.S. economy, and the quick rebounds since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019.

Private nonresidential construction spending slipped to a seasonally adjusted annual rate of $458.0 billion in July, a 0.2% dip from upwardly revised June estimates. And it was 3.6% lower than a year ago. The largest contribution to this month-over-month nonresidential spending decrease was made by the class of power ($0.8 billion), followed by transportation ($0.2 billion), and class of communication ($0.1 billion).

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eyeonhousing.org/2021/09