Current Climate

Current Climate – August 2020

Employment – Total nonfarm payroll employment rose by
1.8 million in July, far below the 4.8 million recorded in June.
The unemployment rate fell to 10.2% in July.

Construction employment increased slightly (+20,000)
following gains of 619,000 in the May/June period.
Industry employment remains 444,000 below its February level.

Existing Home Sales – After three consecutive months of decline,
existing home sales rebounded at a record pace in June,
up 20.7% month-over-month.
The sales pace was nevertheless down 11.3% year-over-year.

Single-family home sales saw a 19.9% month-over-month
increase while being down 9.9% year-over-year.
In comparison, existing condo sales were up 29.4%
from May and down 22.8% year-over-year.

All four major regions achieved month-over-month growth.
The West experienced the greatest level of recovery,
up 31.9% month-over-month.

Rates of month-over-month increase for the other three regions
ranged from 4.3% in the Northeast to 26.0% in the South.
Conversely, all four regions saw year-over-year declines ranging
from 4.0% in the South to 27.9% in the Northeast. 

The median existing home price for
all housing types was $295,300 in June,
reflecting a 3.5% year-over-year increase.
June’s national price increase marks 100 consecutive months
of year-over-year gains.

The median single-family home sales price was $298,600
in June reflecting a 3.5% year-over-year increase.
This compares to a median condo price of $262,700
reflecting a 1.4% year-over-year increase.

Home prices are expected to rise even further due to
strong buyer competition for a significantly low supply
combined with historically low mortgage rates.

Total housing inventory at the end of June was 1.57 million units,
up 1.3% from May, but down 18.2% year-over-year.
By July, inventory was down to 908,983 units
for a 33% year-over-year drop.
The median list price in July was $349,000, up 8% year-over-year.  

Properties remained on the market for 24 days, on average, in June.
This is a relatively flat condition month-over-month
and year-over-year.
62% of homes sold in June 2020 were on the market
for less than a month.

First-time homebuyers were responsible for 35% of sales
in June and investors/second home buyers
purchased 9% of homes in June.
Both indicators reflect a relatively flat y/y condition.

Distressed sales, i.e., foreclosures and short sales combined,
represented 3% of sales in June, up from 2% in June 2019.

The Pending Home Sales Index (PHSI) continued
on an upward trend in June rising 16.6% to 116.1.
Year-over-year contract signings rose 6.3%

New Home Sales – Sales of new single-family homes were
at a seasonally adjusted annual rate of 776,000 in June,
13.8% above the revised May rate and 6.9%
above the June 2019 estimate.

The median sales price of new homes sold in June was $329,200,
5.6% above the June 2019 median sales price of $311,800.

The seasonally adjusted new home inventory estimate
at the end of June was 307,000,
representing a 4.7-month supply at the current sales pace.

The Meyers Research New Home Pending Sales Index (PSI)
hit a record high in June with contracted sales rising 17.5%
month-over-month and 18.2% year-over-year
to a national Index reading of 132.2.

Raleigh, NC and Cincinnati, OH markets enjoyed
the greatest boosts with year/year
increases of 44.0% and 41.8%, respectively.

Mortgage Activity – New home purchase applications
increased a significant 20% month-over-month
and a whopping 54.1% year-over-year in June.
The Mortgage Bankers Association further reports
that the purchase index fell 2% week-over-week
the last week of July, but remained 20% higher than a year prior.

The average U.S. mortgage rate for a 30-year fixed loan
fell to an all-time low of 2.88% in the last week of July.
This marks the eighth time in 2020 that the weekly rate has
set a record in a Freddie Mac series that goes back nearly five decades.

In Closing – According to the most recent National Association
of Home Builders/Wells Fargo Housing Opportunity Index,
housing affordability declined again in Q220,
fueled by the continued supply shortage
and rising home prices.

Nationally, just 59.6% of new and existing homes sold between
April 1st and June 30th were affordable to families earning
an adjusted U.S. median income of $72,900.
This is the lowest reading since Q418.
Predictions call for an Affordability Index reading of 200
by the end of the year.

On a national basis, new listings for the most expensive homes
slowed dramatically in April and May, dropping by about half
year-over-year, while listings for the least expensive homes
dropped by less than one-third.
But buyer demand for high-end properties has effectively
doubled home values, driving new listings to increase
to a level that is now down just 9% year-over-year.
This compares to a 29% drop in listings for the most affordable homes.

Overall, affordable homes have seen an increase of
about three percentage points since May
while high-end listings jumped approximately
40 percentage points.
This national trend is prevalent in many large metros,
most notably San Francisco (up 33.5%)
and San Jose (up 27.3%).

Ciao for now.
Stay safe, be well, wear a mask.

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