Atlanta Residential Real Estate Index Reflects Steady Gains in Housing
Georgia may be going through its traditional summer dry season, but there’s certainly nothing dry about the housing industry. Last month’s Cal-Culator, Atlanta’s residential real estate index, rose 0.1. This month, the index will jump an additional 0.3 to hit 7.4. Home sales shattered a decades long record, and positive data emerged regarding home prices, construction starts and foreclosures.
One of the most encouraging pieces of news regarding the housing industry this year, and a significant contributor to this month’s Cal-Culator climb, comes from a new report released by the Commerce Department: new U.S. single-family homes sales recorded their biggest gains in 24 years in April.
“Consumers are taking the leap and buying the biggest of big ticket items of their lives and this speaks to confidence. The Federal Reserve can raise rates at their June meeting without fear the economy is going to slow,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
S&P/Case-Shiller Home Price Indices confirm home prices are continuing to make steady climbs. Atlanta experienced a 1.1 percent monthly change and a respectable 6.5 percent 1-year change, while the National Home Price Index reported a 5.2 percent gain in March.
“Home prices are continuing to rise at a 5% annual rate, a pace that has held since the start of 2015,” says David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices. “The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates.”
Single-family residential new construction starts are anticipated to increase as much as 20 percent in dollar value in 2016, according to Dodge Data & Analytics. This matches the 17 percent growth in single-family housing units to reach more than the 800,000 in 2016.
Foreclosure news has also been generally positive in recent months. The seriously delinquent rate is currently at 3.1 percent – the lowest level since November 2007. There were 36,000 recorded foreclosures in March, down significantly from 42,000 in March 2015. According to CoreLogic, 427,000 homes in the U.S. were in some stage of foreclosure in March, a decline of 23.2 percent from last year, marking the 53rd consecutive month with year-over-year decline.
One factor holding back further gains in this month’s Cal-Culator is the ongoing inventory shortage that continues to plague the market in many cities. S&P Dow Jones Indices revealed the number of homes currently on the market is less than two percent of the number of households in the U.S., the lowest percentage seen since the mid- 1980s.
The next Cal-Culator will be released July 12 – check back to see if the drought and the inventory shortage will ease by then.