Current Climate

Current Climate – July 2020

We’ve always taken the perspective that year-over-year data trump month-over-month data when it comes to identifying trends.
But on this very slippery slope we now find ourselves, both indicators need to be addressed, and quite often, even weekly data may express benchmarks necessary to the decision-making process.

According to’s latest Housing Market Recovery report, the recovery index reached 95.8 on a national basis
for the week ending 6/27, the largest weekly increase
since the index was introduced.

The week’s 3.8-point increase over the prior week brings the index to just 4.2 points below the pre-COVID baseline.  

The employment picture continues bleak:
Those 7.3 million jobs reported in May and June were not “created”
but represented approximately 15% of the more than 46 million people unemployed by COVID-19 returning to their old jobs,
resulting in the unemployment rate dropping
3.6 percentage points to 11.1%.

Employment sectors to see the most activity include leisure and hospitality, construction, education and health services, and retail.  

Mortgage forbearance is a particularly fluid benchmark
that portends future distressed inventory.
Follow the bouncing ball:
Mortgage loans in forbearance increased from 3.74% to 5.95%
for the week ending April 12th.  
By May 15th that number had grown to 8.8%
representing 4.7 million loans.
By June 19th the ratio had fallen to 8.55%,
and by the last week of June, the rate fell to 8.39%,
coincidental with the unemployment rate dropping to 11.1%.

Distressed sales have been relatively static to date,
representing 3% of total sales in May, par with April
and up just one percentage point from 2% in May 2019.

Assuming more relief is forthcoming from the Federal
government, this indicator should continue static
over the short term .

Stay tuned . . .

Total existing home sales transactions fell to a seasonally-
adjusted annual rate of 3.91 million in May
for a 9.7% month-over-month decrease and a significant
25.8% drop since March.

The median existing home price for all housing types was,
nevertheless, up in May:

At $284,600, the May median price was 2.3% higher year-over-year
and 9.6% above the March median of $259,700.

May’s price increase marks 99 consecutive months of year-over-year gains.

Single-family homes performed better than multi-family properties in May.
While single-family sales were down 24.8% year-over-year,
condo/co-op sales dropped 41.4%.

Similarly, single-family homes saw a median sales price
($287,700) that was up 2.4% year-over-year
while condo/co-op sales saw a y/y price decrease of 1.6%.

NAR notes that the “relatively better performance of
single-family homes in relation to condominium properties
clearly suggest[s] migration from the city centers to the suburbs.”

Total housing inventory at the end of May stood at
1.55 million units, up 6.2% month-over-month,
but down 18.2% from May 2019.

Unsold inventory represented a 4.8-month supply in May.

Properties typically remained on the market for 26 days in May,
similar year-over-year and month-over-month.
Nearly 60% of homes sold in May were on the market for less than a month.

First-time homebuyers were responsible for 34% of existing-home
sales in May, down from 36% in April and up from 32% a year ago.

Investors/second home buyers accounted for 14% of sales in May,
up from 10% in April and 13% in May 2019.

Pending home sales took a u-turn in May after two previous months of declines.

The National Association of Realtors® Pending Home Sales Index
(PHSI) rose 44.3% month-over-month in May
to a reading of 99.6, representing the highest
month-over-month gain since NAR began tracking in January 2001.
NAR reports that every major region recorded an
increase in month-over-month pending home sales transactions.

Mortgage rates continue at all-time lows,
tumbling to 3.01% for the week ending 6/29,
down from 3.13% the prior week.
The rate is the lowest in a data series that goes back to 1971.

The most recent forecast from Zillow’s economic research team
shows an anticipated 1.8% drop in prices through
October 2020 from the highs in February.
Zillow also predicts a slow price recovery by mid-spring 2021,
and forecasts a nominal year-over-year change of -0.7%.

The U.S. Census Bureau reports that sales of new single-family
houses in May 2020 were at a seasonally-adjusted annual rate
of 676,000, reflecting a 16.6% increase over April,
and a 12.7% increase over May 2019.

Inventory of new homes for sale stood at 318,000 in May,
up 17.5% year-over-year representing a 5.6-month supply
at the current sales pace.  

The median new home sales price in May ($317,900)
was relatively flat compared to March ($321,400)
but reflected a 17.5% year-over-year increase.

Meyers Research New Home Pending Sales Index (PSI)
posted a rebound in May. At 101.6, the May Index reflected
an increase of 27.8 points from April when it stood at 73.8
for a year-over-year decline of nearly 33%.

For further perspective, the index was 122.7 in February
(prior to COVID) dropping 40.6 points to 82.1 by March.

With the exception of Seattle, all of the 20 “select” markets
monitored by Meyers saw month-over-month increases in May.
The best new home markets were concentrated in the South,
led by Houston, Jacksonville, and Tampa.

Year-over-year gains ranged from 11.7% in Tampa to 12.4% in Houston.

That’s all for now.
Stay safe, be well, and wear a mask.

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