Real estate daily market update: November 17, 2017

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Friday, November 17

November 2017 Re/Max National Housing Report

• October home sales increased 2.5 percent year-over-year and kept 2017 prices ahead of 2016.
• The Months Supply of Inventory dropped to 3.3 – the lowest for any October in this housing report.
• The Median Sales Price of $224,000 increased 3.3 percent over last October and was $18,000 higher than the same month in 2015.
• Of the 53 metro areas surveyed in October 2017, the overall average number of home sales decreased 3.4 percent compared to September 2017 but increased 2.5 percent compared to October 2016.
• In October 2017, the median of all 53 metro Median Sales Prices was $224,000, down 1.1% from September 2017 but up 3.3 percent from October 2016.
• The average Days on Market for homes sold in October 2017 was 51, up two days from the average in September 2017, and down seven days from the October 2016 average.
• The number of homes for sale in October 2017 was down 6.3% from September 2017, and down 13.4% from October 2016. Based on the rate of home sales in October, the Months Supply of Inventory decreased to 3.3 from September 2017 at 3.6, compared to October 2016 at 3.9.

“The housing market is steady and at least somewhat predictable with record-low inventory and increasing prices in markets across the country,” said Re/Max Co-CEO Adam Contos.

“With job growth and increased household formation, buyers will struggle and may even be priced out of the market until home building catches up,” he added.

U.S. Bureau of Labor Statistics State Employment and Unemployment Summary October 2017

• The national unemployment rate edged down to 4.1 percent in October and was 0.7 percentage point lower than a year earlier.
• Over the year, 27 states added nonfarm payroll jobs and 23 states and the District were essentially unchanged.
• Hawaii had the lowest unemployment rate (2.2 percent) in October, followed by North Dakota (2.5 percent).
• The rates in Alabama (3.6 percent), Hawaii (2.2 percent) and Texas (3.9 percent) set new series lows.
• Alaska had the highest jobless rate (7.2 percent).
• The only over-the-month rate increase occurred in North Dakota (+0.1 percentage point).
• Twenty-three states had unemployment rate decreases from October 2016, the largest of which occurred in declines occurred in Alabama and Tennessee (-2.5 percentage points and -2.0 points, respectively).
• The only over-the-year rate increases were in the District of Columbia (+0.8 percentage point) and Alaska and South Dakota (+0.6 point each).
• The largest increase in nonfarm employment over the month occurred in Florida (+125,300), followed by Texas (+71,500) and California (+31,700). In percentage terms, the largest increase occurred in Florida (+1.5 percent), followed by Oregon and Texas (+0.6 percent each).
• Three states had over-the-month decreases in nonfarm payroll employment in October: Connecticut (-6,600, or -0.4 percent), Nebraska (-6,600, or -0.6 percent), and South Dakota (-2,400, or -0.5 percent).
• Twenty-seven states had over-the-year increases in nonfarm payroll employment in October; the largest job gains occurred in Texas (+316,100), California (+256,800), and Florida (+197,500).
• The largest percentage gain occurred in Nevada (+2.8 percent), followed by Utah (+2.7 percent) and Texas (+2.6 percent).

The Mortgage Bankers Association (MBA) National Delinquency Survey for Q3 2017

• The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.88 percent of all loans outstanding at the end of the third quarter of 2017.
• The delinquency rate was up 64 basis points from the previous quarter, and was 36 basis points higher than one year ago, according to the survey.
• The percentage of loans on which foreclosure actions were started during the third quarter was 0.25 percent, a decrease of one basis point from the previous quarter, and five basis points lower than one year ago.
• The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
• The percentage of loans in the foreclosure process at the end of the third quarter was 1.23 percent, down 6 basis points from the previous quarter and 32 basis points lower than one year ago.
• The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.52 percent in the third quarter, up 3 basis points from the previous quarter, but 44 basis points lower than one year ago.

MBA Vice President of Industry Analysis Marina Walsh said:

“In the third quarter of 2017, the overall delinquency rate rose by 64 basis points over the previous quarter, with the 30-day delinquency rate accounting for 50 basis points of this variance.

“Hurricanes Harvey, Irma and Maria caused disruptions and destruction in numerous states. Florida, Texas, neighboring states, as well as devastated Puerto Rico, saw substantial increases in their past due rates.

“While forbearance is in place for many borrowers affected by these storms, our survey asks servicers to report these loans as delinquent if the payment was not made based on the original terms of the mortgage regardless of any forbearance plans in place.

“It will likely take about three or four more quarters for the effects of the most recent hurricanes on the survey results to dissipate,” she added. “That said, we see loan performance as still healthy and strong, supported by a positive employment and wage outlook. Thus far in 2017, job growth is averaging 169,000 jobs per month, unemployment rate has decreased from 4.8 to 4.1 percent, and wage growth is 3.8 percent on a year over year basis.”

New residential construction for October: U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau

Build permits:

• Privately-owned housing units authorized by building permits in October were at a seasonally adjusted
  annual rate of 1,297,000 — 5.9 percent (±1.4 percent) above the revised September rate of 1,225,000
  and 0.9 percent (±1.6 percent) above the October 2016 rate of 1,285,000.
• Single-family authorizations in October were at a rate of 839,000 — 1.9 percent (±1.7 percent) above the revised September figure of 823,000.
• Authorizations of units in buildings with five units or more were at a rate of 416,000 in October.

Housing starts:

• Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,290,000 —
  13.7 percent (±10.5 percent) above the revised September estimate of 1,135,000, but 2.9 percent (±10.1
  percent) below the October 2016 rate of 1,328,000.
• Single-family housing starts in October were at a rate of 877,000 — 5.3 percent (±12.1 percent) above the revised September figure of 833,000.
• The October rate for units in buildings with five units or more was 393,000.

Housing completions:

• Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,232,000 — 12.6 percent (±12.2 percent) above the revised September estimate of 1,094,000 and is 15.5 percent (±11.7 percent) above the October 2016 rate of 1,067,000.
• Single-family housing completions in October were at a rate of 793,000 — 2.6 percent (±11.1 percent)* above the revised September rate of 773,000.
• The October rate for units in buildings with five units or more was 433,000.

“The South region is quickly getting back on its feet with a big jump in new housing starts, after a pause in the prior month from the aftermath of the hurricanes,” said NAR Chief Economist Lawrence Yun. “The Midwest and the Northeast regions also made gains. Only the West region, the very region that is most in need of new supply, experienced fewer housing starts.

“Overall, the total activity for the country is moving in the right path. More supply will boost future home sales. The West region, however, could experience slowing job growth as affordability conditions worsen from the ongoing inventory shortages that are driving up prices. This could ultimately force residents and potential job seekers to start looking to other parts of the country,” Yun added.

Thursday, November 16

Freddie Mac Primary Mortgage Market Survey

• 30-year fixed-rate mortgage (FRM) averaged 3.95 percent with an average 0.5 point for the week ending November 16, 2017, up from last week when it averaged 3.90 percent. A year ago at this time, the 30-year FRM averaged 3.94 percent.
• 15-year FRM this week averaged 3.31 percent with an average 0.5 point, up from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 3.14 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.21 percent this week with an average 0.4 point, down from last week when it averaged 3.22 percent. A year ago at this time, the 5-year ARM averaged 3.07 percent.

Freddie Mac chief economist Sean Becketti said, “Rates increased this week. The 10-year Treasury yield ticked up 6 basis points, while the 30-year mortgage rate jumped 5 basis points to 3.95 percent. Today’s survey rate is the highest rate in nearly four months.”

News from earlier this week

Thursday, November 16

Redfin: Home prices rose 7.1 percent as home sales stalled in October

• October home price growth increased 7.6 percent year over year to a national median sale price of $288,000 across Redfin markets.
• Homes on the market decreased 12.2 percent — the steepest year-over-year inventory decline since 2013.
• Year over year, homes on the market declined by more than 50 percent, shooting prices up to a medium $1.05 million (19.2 percent).

“Despite strong buyer demand, sales are sputtering due to low inventory,” said Nela Richardson, Redfin’s chief economist. “The last time we saw a substantial increase in the number of homes for sale, Donald Trump was a candidate in a Republican field of 11.”

• Most homes in Seattle found a buyer in 10 ten days, 3 days less than the same time a year ago, followed by San Jose (12) and Boston (14), Oakland (15) and San Francisco (15).
• San Francisco remained the most competitive market, with 78.6 percent of homes selling above list price, followed by San Jose (76.3 percent), Oakland (63.7 percent), Seattle (45.6 percent) and Tacoma, Washington (42.8).
• San Jose saw a 19.2-percent price growth year-over-year to $1,049,000. Seattle came in second with 16.5 percent, followed by Las Vegas (14.6 percent), Oakland (13.1 percent) and Salt Lake City (12.6 percent).
• Baton Rouge home sales fell 20.3 percent, the largest sales drop since last year. Fort Lauderdale sales dropped by 18.0 percent.
• San Jose’s overall inventory had the largest decreased (51.6 percent) since last October. Followed by San Francisco (-28.5 percent), Atlanta (-27.8 percent) and Buffalo (-26.7 percent).
• Out of 74 metros, only eight reported a year-over-year increase in inventory: Raleigh (16.1 percent), Baton Rouge (12.9 percent), Austin (8.8 percent), New Orleans (7.5 percent), St. Louis (4.8 percent), Dallas (4.1 percent), Nashville (2.7 percent) and Allentown (2.5 percent).

Attom Data Solutions: Seriously underwater U.S. properties decrease by 1.4 million from a year ago in Q3 2017

• There were 4.6 million (4,628,408) U.S. properties that were seriously underwater at the end of Q3 2017, down by more than 800,000 properties from the previous quarter and down by more than 1.4 million properties from Q3 2016 — the biggest year-over-year drop since Q2 2015.
• The 4.6 million seriously underwater properties at the end of Q3 2017 represented 8.7 percent of all U.S. properties with a mortgage, down from 9.5 percent in the previous quarter and down from 10.8 percent in Q3 2016.
• 14 million equity rich U.S. properties represented 26.4 percent of all U.S. properties with a mortgage, up from 24.6 percent in the previous quarter and up from 23.4 percent in Q3 2016.
• Among 93 metropolitan statistical areas with a population of 500,000 or more, the highest share of equity rich properties were in Hawaii, California, New York, Oregon and Washington.
• States with the highest share of seriously underwater properties were Louisiana (19.2 percent); Iowa (14.2 percent); Pennsylvania (14.0 percent); Mississippi (13.8 percent); and Alabama (13.7 percent).

“Accelerating home price appreciation this year is increasing the velocity at which seriously underwater homeowners are recovering home equity lost during the Great Recession,” said Daren Blomquist, senior vice president at Attom Data Solutions.

“Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013. Continued home price appreciation is also helping to grow the number of equity rich homeowners across the country compared to a year ago,” he added.

Tuesday, November 14

Ten-X reports homes sales drop in Phoenix

• Single-family home sales in the Phoenix housing market fell 4.3 percent in the second quarter from the same time period one year ago.
• The Second Quarter 2017 Economic and Single-Family Housing Market Outlook Report for Phoenix found a strong and resilient market diminish slightly as the homeownership rate fell over the past year to 62 percent, below the national average of about 64 percent.

“The Phoenix housing market remains on a path toward recovery, even though both sales and homeownership rates dipped slightly in the second quarter,” said Ten-X Executive Vice President Rick Sharga. “Affordability may start to become an issue, since home prices continue to increase at a rate much higher than the U.S. average, and in many cases, it’s now less expensive for Phoenix residents to rent than to own a home.”

• Existing home sales in Phoenix fell in the second quarter to a seasonally adjusted annual rate (SAAR) of 116,435, or a 4.3 percent year-over-year decline.
• Inventory of homes for sale in Phoenix fell again to 20,188 on a seasonally adjusted basis, 11.6 percent lower than one year ago.
• Housing starts and completions rose sharply in the second quarter by 23.4 percent and 16.5 percent respectively.
• Completions were still down 67.4 percent from their prior peak and housing starts were 66.5 percent lower, so oversupply is not yet a concern.

• Phoenix home prices continued to outpace the U.S. average with an 8.2 percent year-over-year jump.
• The median home price stood at $239,427, which is still below pre-recessionary levels, suggesting there is more room for prices to grow.

“At the moment, the Phoenix market remains affordable for most buyers thanks to the strong local economy,” Sharga said. “Moving forward, expected increases in new home construction should add to the inventory of homes for sale and help maintain housing affordability in the region.”

Corelogic Loan Performance Insights Report August 2017

• The 30 days or more delinquency rate for August 2016 was 5.2 percent.
• In August 2017, 4.6 percent of mortgages were delinquent by at least 30 days or more including those in foreclosure.
• This represents a 0.6 percentage point decline in the overall delinquency rate compared with August 2016.
• As of August 2017, the foreclosure inventory rate was 0.6 percent down from 0.9 percent in August 2016.

• The share of mortgages that transitioned from current to 30-days past due was 0.9 percent in August 2017, down from 1.2 percent in August 2016.
• By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent and peaked in November 2008 at 2 percent.

Monday, November 13

Home prices boom 10 years after housing crisis: realtor.com

• U.S. median home sales price in 2016 was $236,000, 2 percent higher than in 2006.
• 31 of the 50 largest U.S. metros are back to pre-recession price levels. Austin, TX, has seen the largest price growth in the past decade: 63 percent. It’s followed by Denver, at 54 percent, and Dallas, at 52 percent.
• Nationwide, realtor.com data show that listing prices have been up by double digits for the majority of 2017.

• The biggest change on the housing scene over the past decade is that lending standards are the tightest they’ve been in almost 20 years.
• The median 2017 home loan FICO score was 734, significantly up from 700 in 2006.
• The bottom 10 percent of borrowers have an average FICO of 649 in 2017, up from 602 in 2006.

“Lending standards are critical to the health of the market,” said realtor.com Chief Economist Danielle Hale. “Unlike today, the boom’s under-regulated lending environment allowed borrowing beyond repayable amounts and atypical mortgage products, which pushed up home prices without the backing of income and equity.”

• In October, unemployment hit a 17-year low, at a rate of 4.1 percent. In 30 of the 50 largest U.S. metros, unemployment is less than half of 2010 levels.
• In September, employment reached 79 percent in the 25-34 age group, back up to 2006 levels and 5 percent higher than 2010.
• There are 600,000 fewer total housing starts and nearly 700,000 fewer single-family housing starts.

“The healthy economy is creating more jobs and households, but not giving these people enough places to live,” Hale said. “Rapid price increases will not last forever. We expect a gradual tapering as buyers are priced out of the market — not a market correction, but an easing of demand and price growth as renting or adding roommates becomes a more affordable alternative.”

• Las Vegas; Tucson, AZ; and Riverside, CA — remained more than 20 percent below 2006 price levels at the end of 2016, at 25 percent, 22 percent, and 22 percent, respectively.

Email market reports to press@sandbox.inman.com.