The National Association of Realtors reported This Week in Real Estate that 2016 recorded the highest number of existing-home sales since 2006. Below are a few highlights from the fourth week of January that influence our business:
* Consumer Confidence Hits Highest Level in 12 Years. Consumers are now more confident in the economy than they have been in the previous 12 years. The Index of Consumer Sentiment increased 0.3% from December to 98.5 in January. This marks an increase of 7.1% from January of last year. “Consumers expressed higher level of confidence January than any other time in the last dozen years,” Surveys of Consumers Chief Economist Richard Curtin said. “The post-election surge in confidence was driven more a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years.” “Consumers also reported much more positive assessments of their current financial situation due to gains in both incomes and household wealth, and anticipated the most positive outlook for their personal finances in more than a decade,” Curtin said. The Index of Consumer Expectations also increased by 0.9% from last month’s 89.5 and up 9.2% from 82.7 last year to 90.3 in January.
* 2016 Sales Best Since 2006. Existing-home sales had a banner 2016, amounting to 5.45 million sales and surpassed the 5.25 million sales in 2015 as the highest since 2006 (6.48 million), according to the National Association of Realtors (NAR). “Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” says NAR Chief Economist Lawrence Yun. “The inventory of homes for sale fell to the lowest level in the 17 years for which data is available,” Nationwide Chief Economist David Berson said. “Looking at just single-family sales, the inventory of home for sale dropped to the second lowest level in the nearly 34 years for which data is available.” “This low level of inventories has two significant impacts: it reduces the number of sales as there are fewer homes to be purchased and it pushes up re-sale prices, with the median sales price of existing homes sold up by 5.5% in 2016 – the fifth consecutive year in which prices rose by more than 5%,” Berson said. “Given current population and economic growth trends, housing starts should be in the range of 1.5 million to 1.6 million completions and not stuck at recessionary levels. More needs to be done to address the regulatory and cost burdens preventing builders from ramping up production,” Yun said.
* Sold Out: These 10 U.S. Cities Have The Biggest Housing Shortages. Increasingly across the U.S., there just aren’t enough homes being listed to meet demand. For the past 28 months, the housing market has been defined not just by demand, but also by the shrinking number of available homes for sale. First-time buyers are especially hard hit as housing shortages drive up prices. Realtor.com recently took a look at the 150 largest housing markets in the U.S., studying the proportion of homes available for sale in each city. These numbers were then compared to 2015-2016 percentages. Half of the top 10 lowest inventory markets are concentrated on the West Coast, with the other half composed mostly mid-sized midwestern cities. “More than two-thirds of the markets are seeing less inventory now compared to a year ago,” said Jonathan Smoke, chief economist at Realtor.com. Seattle took the cake with just 0.4 percent of the city’s homes up for sale, a decrease of 13.4 percent from 2016. Eugene, Oregon is next on the list with just 0.6 percent of homes on the market at an inventory decrease of 27.3 percent from last year. Sacramento, Portland and Santa Rosa also broke the top 10.
Have a productive week,