No Scares in the Housing Industry This October
The headlines regarding the U.S. housing industry over the past month have swung like a pendulum from positive sightings to neutral or negative happenings. After two months of improvements in the real estate industry, the Cal-Culator remained stagnant at 6.9 due to a variety of opposing positive and negative trends.
Nationwide, home prices increased 6.4 percent from September 2014, but just 0.6 percent from August. Atlanta prices slipped 0.3 percent from August and increased 6.1 percent from 2014.
“After nearly 10 years of very high home price volatility, home price increases have been remarkably stable for the last 15 months, ranging between a 4.8 percent and 6.5 percent year-over-year increase,” said Sam Khater, deputy chief economist for CoreLogic. “Home price volatility is now back to the long-term trend prior to the boom and bust which is a good barometer of the market’s stability and health.”
National Mortgage Professional Magazine described the overall month for real estate well when reporting on mortgage applications: “The mortgage application picture for October is beginning to resemble an oscilloscope screen, with dramatic peaks and perilous drops coming one week after the next.” Mortgage applications increased in one October week more than 11 percent, to barely rise at all the next week.
“On an adjusted basis, application volume increased last week, led by a sharp rebound in government volume,” said MBA’s Chief Economist Mike Fratantoni. “We expect that application volume will remain volatile over the next few weeks as the industry continues to implement TILA-RESPA integrated disclosures.”
The housing trend that graced the most headlines this month was the drastic stalling of single-family home sales. The U.S. Census Bureau and the U.S. Department of Housing & Urban Development reported new, single-family sales declined 11.5 percent below the August rate and only 2 percent above a year prior.
However, existing-home sales rebounded strongly in September, following August’s decline, and have now increased year-over-year for 12 consecutive months. According to Lawrence Yun, National Association of Realtors chief economist, home sales are at their second highest pace since February 2007.
“Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent–up sellers realizing the increased equity they’ve gained from rising home prices and using it towards trading up or moving into a smaller home,” says Yun. “Unfortunately, first–time buyers are still failing to generate any meaningful traction this year.”
The final Cal-Culator of 2015 will be released December. Last December, we finished 6.2. Unless drastic changes occur in the next month, it appears the close of 2015 will reflect a dramatic improvement for the housing industry.