Current Climate

Current Climate – January 2021

Employment – Total non-farm employment
increased by 49,000 in January after a loss of
140,000 jobs in December. Just 6,000 of the
jobs added in January were in the private sector.

Economic Growth – GDP increased at an annual rate of 4.0%
in Q4 2020 and decreased 3.5% year-over-year.
Look for January data February 25, 2021. 

Existing Home Sales – Existing home sales rose 0.7%
over the month in December and
22.2% year-over-year.
Total sales were 6.76 million,
the highest since 2006.

The median existing home sales price for all
housing types was $309,800 in December,
up 12.9% year-over-year and marking 106
consecutive months of year-over-year gains.

Prices increased by double-digits in every region
with the Northeast leading the fray
with a 27.4% surge.

Single-family home sales were at an annual rate of
6.03 million in December, reflecting a 22.8%
year-over-year increase.

Existing condominium and co-op sales recorded
an annual rate of 730,000 units, up 17.7% over the year.

The median single-family home sales price was
relatively flat over the month at $314,300
in December but was up 13.5% y/y.

The condo/co-op median sales price was $272,200
for a y/y increase of 6.9% and a relatively
flat condition month-over-month.  

Housing inventory totaled 1.07 million units in
December, reflecting a 16.4% drop from November
and a 22.2% drop year-over-year.

At the December sales pace, unsold inventory sat
at an all-time low or a 1.9-month supply,
down from a 2.3-month supply in November.

Properties typically remained on the market for
21 days in December, down from 41 days a year prior.

70% of homes sold in December were on the
market for less than one month.

For perspective, in December 2018 the ratio of
homes on the market for less than one month was 39%.

Individual investors/second home buyers purchased
14% of homes, and first-time buyers were responsible
for 31% of sales in December. Both benchmarks
are essentially flat month-over-month and year-over-year.

New Residential Construction – New construction
activity finished out the year on a high. 

Privately-owned housing units authorized by
building permits were at a seasonally adjusted
annual rate of 1,709,000 in December,
4.5% above the November rate
and 17.3% higher than December 2019.

Housing starts were at a seasonally adjusted
annual rate of 1,669,000 in December,
up 5.8% month-over-month and 5.2% year-over-year.

Single-family housing starts ended 2020 at a rate
of 1,338,000 reflecting a 27.8% y/y increase,
the highest since 2006. 

Housing completions soared 15.9%
month-over-month and 8.0% year-over-year.

Needless to say, builder sentiment remains strong.
According to the National Association of Home Builder’s
Housing Market Index (HMI), the measure stood at 83
in January, albeit down from a near-record high of 86
in December. The Covid resurgence and increasing
material costs were cited as causes.

For perspective, year-over-year the HMI is up
8 points from 75 in January 2020.

New Home Sales – Sales of new single-family homes
in December 2020 were at an annual rate of
842,000, reflecting a 1.6% month-over-month bump
and a 15.2% year-over-year gain.

The median sales price of new houses sold in December
was $355,900 reflecting an 8.0% year-over-year increase.

The estimate of new homes for sale at the end
of December was 302,000, representing a
4.3- month supply at the current sales pace.

The median sales price for new houses sold was
$330,600 for a 4.4% year-over-year increase.

The estimate of new homes for sale at the end of October
stood at 278,000, representing a supply of just 3.3 months
at the current sales pace.

Pending (Existing) Home Sales
At 125.5, the NAR® Pending Home Sales Index (PHSI)
registered the highest ever recorded for the month of December.
Contract signings were up a significant 21.4% over the year.

On a regional basis, the South and the West remained flat,
the Northeast increased by 3.1 points and the
Midwest declined 3.6 points.

The December activity level is on the heels of the PHSI
hitting an all-time high of 125.7 in November.   

The Meyers Research New Home Pending Sales Index
(NHPSI) came in at 168.8 in November, the most
current data available at this writing. The Index
represents a significant 44.9% increase over the year.

Mortgage Activity – According to the Mortgage Bankers
Association (MBA) the Freddie Mac Primary Mortgage Market
Survey revealed that the 30-year fixed-rate mortgage
ended the year at 2.66% on average, down from 2.67%
the previous week and 3.74% from the same time one year ago.
The end-of-year rate broke all records and was just
the second time it fell below 2.7%.

However, as of 2/3/21, after increasing for three
consecutive weeks, the average purchase mortgage
rate had dropped three basis points to 2.92%.

Nevertheless, as of January 29th, the Market Composite
Index, a measure of mortgage loan application volume,
increased 8.1 percent on a seasonally adjusted basis
from one week earlier. On an unadjusted basis, the Index
increased 10 percent compared with the previous week.

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

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