This Week in Real Estate: Aug. 22, 2016


As builder confidence continues to rise so does the equity in one’s home. ATTOM Data Solutions (new parent company of RealtyTrac) released This Week in Real Estate that 22.1 percent (12.3 million) of all U.S. properties with a mortgage are equity rich – meaning the owner’s owe less than 50 percent of what the home is worth.  Below are a few highlights from the third week of August that influence our business:

* Builder Confidence Rises in August. Builder confidence in the market for newly constructed single-family homes in August rose two points to 60 from a downwardly revised reading of 58 in July on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builder confidence remains solid in the aftermath of weak GDP reports that were offset by a positive job growth in July. Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year. Two of the three HMI components posted gains in August. The component gauging current sales conditions rose two points to 65, while the index charting sales expectations in the next six months increased one point to 67. The component measuring buyer traffic fell one point to 44. Looking at the three-month moving averages for regional HMI scores, the South registered a two-point uptick to 63, the Northeast rose two points to 41 while the West was unchanged at 69. The Midwest dropped two points to 55.
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* Foreclosure Starts Drop to 11-Year Low in July. Banks started the public foreclosure process on 36,863 U.S. residential properties in July 2016, down 5 percent from the previous month and down 19 percent from a year ago to the lowest level since May 2005 – a more than 11-year low. Banks completed the foreclosure process through repossession (REO) on 27,907 U.S. properties in July, down 8 percent from the previous month and down 41 percent from a year ago to the lowest level since January 2015. One in every 1,540 U.S. housing units had a foreclosure filing during the month of July.
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* Consumer Spending Expected to Bolster Economic Growth Outlook for Second Half of 2016. Economic growth is expected to rebound in the second half of 2016 after a disappointing second quarter, keeping the full-year growth outlook at 1.8 percent, according to Fannie Mae’s Economic & Strategic Research Group’s August 2016 Economic and Housing Outlook. The stellar July jobs report suggests consumers may benefit from near-term improvement in personal incomes and a strengthening hiring trend. This, in turn, will likely support a more sustainable pace of inventory accumulation and help soothe concerns over the health of businesses, which have face lackluster profits and productivity and have pulled back on capital expenditures. “Second quarter growth was a disappointment, but consumer spending appears solid heading into Q3, and we expect inventory investment to balance out after a surprising drawdown in Q2,” said Fannie Mae Chief Economist Doug Duncan. The positive July jobs report may encourage some Federal Open Market Committee members to argue for a Fed rate hike at the September meeting. However, we remain convinced that the Fed will hold the target rate steady this year given global uncertainties.
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* Equity Rich Housing Heat Map Q2 2016. More than 12.3 million U.S. properties were equity rich – meaning their owners owed less than 50 percent of the property’s value on outstanding mortgages – as of the end of Q2 2016, according to the Q2 2016 Home Equity and Underwater Report published by ATTOM Data Solutions. Those 12.3 million properties represent 22.1 percent of all U.S. properties with a mortgage.
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Have a productive week.

Have a productive week!

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