Home Builder Confidence Hits All-Time Record

Last week, the National Association of Home Builders (NAHB) reported their Housing Market Index (HMI) hit an all-time high in the 35-year history of the series with a score of 83. The index gauges builder perceptions of current single-family home sales and sale expectations for the next six months, as well as the traffic of prospective buyers of new homes. As the following chart shows, confidence dropped dramatically when stay-in-place orders were originally mandated earlier this year. Since then, it has soared back.Looking at the three-month moving averages for HMI scores, confidence increased in every region of the country: The Northeast increased 11 points to 76 The Midwest jumped 9 points to 72 The South rose 8 points to 79 The West increased 7 points to 85 Confidence Is Validated by the Numbers This confidence is definitely warranted. According to a recent NAHB report, single-family housing starts increased 4.1% to a 1.02 million annual rate, and single-family permits increased 6% to a 1.04 million unit rate, meaning newly constructed homes are on the rise. A separate report from the Mortgage Bankers Association (MBA) shows mortgage applications for new home purchases increased by 33.3% compared to a year ago. Joel Kan, Associate Vice President of Economic and Industry Forecasting at MBA, commented on the numbers: “The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover…The new home market has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.” Bottom Line If you're thinking about putting your house on the market but are afraid you may not find a home to buy, let's connect to discuss new construction opportunities in our area.

The Cost of a Home Is Far More Important than the Price

Is the Economic Recovery Beating All Projections?

Earlier this year, many economists and market analysts were predicting an apocalyptic financial downturn that would potentially rattle the U.S. economy for years to come. They immediately started to compare it to the Great Depression of a century ago. Six months later, the economy is still trying to stabilize, but it is evident that the country will not face the total devastation projected by some. As we continue to battle the pandemic, forecasts are now being revised upward. The Wall Street Journal (WSJ) just reported: The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey. Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey. What Shape Will the Recovery Take? Economists have historically cast economic recoveries in the form of one of four letters – V, U, W, or L. A V-shaped recovery is all about the speed of the recovery. This quick recovery is treated as the best-case scenario for any economy that enters a recession. NOTE: Economists are now also using a new term for this type of recovery called the Nike Swoosh. It is a form of the V-shape that may take several months to recover, thus resembling the Nike Swoosh logo. A U-shaped recovery is when the economy experiences a sharp fall into a recession, like the V-shaped scenario. In this case, however, the economy remains depressed for a longer period of time, possibly several years, before growth starts to pick back up again. A W-shaped recovery can look like an economy is undergoing a V-shaped recovery until it plunges into a second, often smaller, contraction before fully recovering to pre-recession levels. An L-shaped recovery is seen as the worst-case scenario. Although the economy returns to growth, it is at a much lower base than pre-recession levels, which means it takes significantly longer to fully recover. Many experts predicted that this would be a dreaded L-shaped recovery, like the 2008 recession that followed the housing market collapse. Fortunately, that does not seem to be the case. The same WSJ survey mentioned above asked the economists which letter this recovery will most resemble. Here are the results: What About the Unemployment Numbers? It's difficult to speak positively about a jobs report that shows millions of Americans are still out of work. However, when we compare it to many forecasts from earlier this year, the numbers are much better than most experts expected. There was talk of numbers that would rival the Great Depression when the nation suffered through four consecutive years of unemployment over 20%. The first report after the 2020 shutdown did show a 14.7% unemployment rate, but much to the surprise of many analysts, the rate has decreased each of the last three months and is now in the single digits (8.4%). Economist Jason Furman, Professor at Harvard University‘s John F. Kennedy School of Government and the Chair of the Council of Economic Advisers during the previous administration, recently put it into context: An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison. The economists surveyed by the WSJ also forecasted unemployment rates going forward: 2021: 6.3% 2022: 5.2% 2023: 4.9% The following table shows how the current employment situation compares to other major disruptions in our economy: Bottom Line The economic recovery still has a long way to go. So far, we are doing much better than most thought would be possible.

Homes Across the Country Are Selling Fast [INFOGRAPHIC]

Some Highlights Buyers are actively searching for and purchasing homes at a record-breaking pace. According to the latest report from the National Association of Realtors (NAR), in July, 68% of homes were on the market for less than a month. With homes moving from listing day to pending sale in an average of just 22 days, it's a great time to sell a house. Let's connect today so you can make your move while buyers are scooping homes up faster than they're coming to market.

How Low Inventory May Impact the Housing Market This Fall

Real estate continues to be called the ‘bright spot' in the current economy, but there's one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale. Buyers are actively searching for and purchasing homes, looking to capitalize on today's historically low interest rates, but there just aren't enough houses for sale to meet that growing need. Sam Khater, Chief Economist at Freddie Mac, explains: Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity. According to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs inventory for 6 months. Today, we're nowhere near where that number needs to be. If the trend continues, it will get even harder to find homes to purchase this fall, and that may slow down potential buyers. Danielle Hale, Chief Economist at realtor.com, notes: The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales. The realtor.com Weekly Recovery Report keeps an eye on the number of listings coming into the market (houses available for sale) and the total number of listings staying in the market compared to the previous year (See graph below):Buyers are clearly scooping up homes faster than they're being put up for sale. The number of total listings (the orange line) continues to decline even as new listings (the blue line) are coming to the market. Why? Javier Vivas, Director of Economic Research at realtor.com, notes: The post-pandemic period has brought a record number of homebuyers back into the market, but it's also failed to bring a consistent number of sellers back. Homes are selling faster, and sales are still on an upward trend, but rapidly disappearing inventory also means more home shoppers are being priced out. If we don't see material improvement to supply in the next few weeks, we could see the number of transactions begin to dwindle again even as the lineup of buyers continues to grow. Does this mean it's a good time to sell? Yes. If you're thinking about selling your house, this fall is a great time to make it happen. There are plenty of buyers looking for homes to purchase because they want to take advantage of low interest rates. Realtors are also reporting an average of 3 offers per house and an increase in bidding wars, meaning the demand is there and the opportunity to sell for the most favorable terms is in your favor as a seller. Bottom Line If you're considering selling your house, this is the perfect time to connect so we can talk about how you can benefit from the market trends in our local area.

Is Now a Good Time to Move?

Two New Surveys Indicate Urban to Suburban Lean

Virtual School Is Changing Homebuyer Needs [INFOGRAPHIC]

Some Highlights With remote learning sweeping the nation this academic year, organized spaces with enough room for kids to learn effectively are high on buyer wish lists. If you're trying to make room for your family's growing needs, multi-purpose rooms and dedicated workspaces may be features to consider in your next home. Let's connect today so you can find a home where your kids feel confident and comfortable too.

Homebuyer Traffic Is on the Rise

One of the biggest surprises of 2020 is the resilience of the residential real estate market. Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), is now forecasting that more homes will sell this year than last year. He's also predicting home sales to increase by 8-12% next year. There's strong evidence that he will be right. ShowingTime, a leading showing software and market stat service provider for the residential real estate industry, just reported on their latest the ShowingTime Showing Index: Home buyer traffic jumped again in July, recording a 60.7 percent year-over-year increase in nationwide showing activity. That means there are 60% more buyers setting appointments to see homes than there were at this same time last year. The number of potential purchasers was also up dramatically in every region of the country: The Northeast was up 76.6% The West was up 56.7% The Midwest was up 52.1% The South was up 46.7% The Housing Market Is Showing a ‘V' Type Recovery ShowingTime also indicates the real estate market has already come back from the downturn earlier this year that was caused by shelter-in-place orders. Here are the year-over-year numbers for each region on a monthly basis (See graph below):We're way ahead of where we were at this time last year. This data validates the thoughts of Frank Martell, President and CEO of CoreLogic, who recently noted: On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic. Bottom Line If you're thinking about selling your house, this may be a great time to get the best price and the most favorable terms.

The Latest Unemployment Rate Fell to 8.4%