2017 closed with momentum, as evidenced by NAR’s release that the November Pending Home Sales Index (PHSI) remains at its highest level since June, and the Case-Shiller Home Price Index (HPI) set an all-time high in October. Below are a few highlights from the final week of 2017 that influence our business:
* Home Price Increases Outpace Inflation by 3X. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, rose 6.2 percent on a year-over-year basis in October. Seattle continues to soar. The city had another annual increase that was nearly double that of the nation as a whole, at 12.7 percent. Las Vegasalso saw a gain in the double digits at 10.2 percent.San Diego had the third highest rate of appreciation at 8.1 percent. Nationally, home prices are up 6.2 percent in the 12 months to October, three times the rate of inflation. Sales of existing homes dropped 6.1 percent from March through September; they have since rebounded 8.4 percent in November. Inventories measured by months-supply of homes for sale dropped from the tight level of 4.2 months last summer to only 3.4 months in November. In what has become a monthly occurrence, the National Index set another new all-time high; 195.63.
* Pending Home Sales Inch Up 0.2% in November.Pending home sales were mostly unmoved in November, but did squeak out a minor gain both on a monthly and annualized basis, according to the National Association of Realtors. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 0.2 percent to 109.5 in November from 109.3 in October. With last month’s modest increase, the index remains at its highest reading since June (110.0), and is now 0.8 percent above a year ago. Lawrence Yun, NAR chief economist, says contract signings mustered a small gain in November and were up annually for the first time since June. “The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” he said. The PHSI in the Northeast jumped 4.1 percent to 98.9 in November, and is now 1.1 percent above a year ago. In the Midwest the index rose 0.4 percent to 105.8 in November, and is now 0.8 percent higher than November 2016. In the South the index decreased 0.4 percent to 123.1 in November but are still 2.5 percent higher than last November. The index in the West declined 1.8 percent in November to 100.4, and is now 2.3 percent below a year ago.
* The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals.The final bill includes some big successes. NAR efforts helped save the exclusion for capital gains on the sale of a home and preserved the like-kind exchange for real property. Many agents and brokers who earn income as independent contractors or from pass-through businesses will see a significant deduction on that business income.