This Week in Real Estate: August 21, 2017

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While default rates are at their lowest level in a decade, builder confidence in the single-family market has surged in August as reported This Week in Real Estate by the National Association of Home Builders. Below are a few highlights from the third week of August that influence our business:

* Builder Confidence Springs Back with Four Point August Jump. Builder confidence in the market for newly-built single-family homes rose four points in August to a level of 68 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builder sentiment is being supporting by ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence. The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with the NAHB forecast for a gradual strengthening in the housing market. GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs. All three HMI components posted gains in August. The component gauging current sales conditions rose four points to 74 while the index charting sales expectations in the next six months jumped five points to 78. Meanwhile, the component measuring buyer traffic increased a single point to 49. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 48. The West, South and Midwest all remained unchanged at 75, 67 and 66, respectively.
Full Story… http://eyeonhousing.org/2017/08/builder-confidence-springs-back-with-four-point-august-jump/

* S&P/Experian: Mortgage Default Rate at Lowest Level in a Decade. Despite a slight increase in July, the default rate for first mortgage loans still sits at its lowest point in the last 10 years, according to the latest S&P/Experian Consumer Credit Default Indices. In fact, the mortgage default rate for first and second mortgages aren’t too far off from their July 2016 level, as homebuyers get better at paying their mortgage on time. “Default rates for autos and first mortgage loans are at their lowest points in the last ten years, while bank card defaults remain modest,” says David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.” “Consumers’ use of credit is growing and the level of consumer credit outstanding is at an all-time high. In the year ending June 2017, consumer credit outstanding rose 5.7%, outpacing most spending categories across the economy,” he said. “However, retail sales excluding autos as well as auto sales are down slightly since April, while home sales are little changed in recent months.
Full Story… https://www.housingwire.com/articles/41000-spexperian-mortgage-default-rate-at-lowest-level-in-a-decade?eid=322520585&bid=1839633

* We Are Definitely Not In A Housing Bubble. As home prices continue to rise across the U.S., the dreaded b-word is beginning to be heard in some overheated markets. However, many companies insist that despite the 8.3 million low-income residents who can’t afford their local rent, according to a new study from the U.S. Department of Housing and Urban Development, the housing market is still not in a bubble. The most recent Case Shiller results pointed out the housing market is growing more expensive, however it is not about to repeat the bubble years. The chart below from Bloomberg shows home prices already passed up the 2005 and 2006 levels. “We’re definitely not in a bubble. We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but the fact of the matter is, while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars. We’ve had 9 years of inflation to factor into home prices today…and, in fact, if you really dug into the analysis what you would find is that home prices today have basically recovered to about where they were in 2004,” said Rick Sharga, Executive Vice President at Ten-X.
Full Story… https://www.housingwire.com/articles/40988-charts-ten-x-we-are-definitely-not-in-a-housing-bubble?eid=322520585&bid=1837374

 

Have a productive week!

Jason

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