This Week in Real Estate: June 6, 2016


Strong consumer spending and the pace of home price appreciation compared to inflation top the headlines This Week in Real Estate. Below are a few highlights from the last week of May that influence our business:

* The 10 Hottest Housing Markets for Millennials Looking to Buy. The National Association of Realtors compiled a list of the top 10 metro areas for young homeowners, analyzing employment gains, population trends, income levels and housing conditions in the largest 100 metropolitan statistical areas across the country. The metros NAR identified were picked for their above-average share of current Millennial residents and recent movers, favorable employment opportunities and relatively low qualifying incomes needed to purchase a home. The top 10 metros include Portland, OR and Seattle, WA.
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* Case-Shiller: Home Prices Rising Twice as Fast as Inflation. Average home prices for the top 10 metropolitan areas is up by 5.1%, and up 5.7% in the top 20 metropolitan areas. Monthly, these three rose by a seasonally adjusted 0.5%, 0.8% and 0.7% respectively. “Home prices continue to climb at more than twice the rate of inflation,” says David Blitzer, Index Committee at S&P Dow Jones Indices managing director and chairman. “The recovery of the sale and construction of new homes has lagged the gains seen in existing home sales,” Blitzer said. “This may be starting to change: starts of single family homes in February were the highest since November 2007. The single family home share of total housing starts was 70% in February, up from a low of 57% in June 2015, and approaching the 75%-80% range seen before the housing crisis.”  Whereas the western U.S. saw large home price increases, the northeast saw the lowest increases.
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* U.S. Consumer Spending Increase Strongest in Over Six Years. U.S. consumer spending recorded its biggest increase in more than six years in April as households stepped up purchases of automobiles, suggesting an acceleration in economic growth that could persuade the Federal Reserve to raise interest rates soon. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.0 percent last month as households bought a range of goods and services. Last month’s increase was the largest since August 2009. “Consumer spending will continue to lead economic growth in 2016, as more jobs, rising wages and houses prices give households more money to spend,” said Gus Faucher, deputy chief economist at PNC Financial.
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* U.S. Houses Are Still Getting Bigger. The median size of a new single-family house was 2,467 square feet last year, the biggest on record, according to Census Bureau data out this week. With all that floor space, homes are 61% larger than the median from 40 years earlier and 11% larger than a decade earlier. American homes have not only been getting larger, they’re also including more bathrooms and amenities such as air conditioning. Some 93% of new houses had air conditioning in 2015 compared with 46% in 1975. About 96% of new homes last year had at least two bathrooms versus 60% four decades earlier. The median sales price of a new home was $296,400 last year, according to Census, a new high. Even when adjusted for inflation, new-home prices hit a record last year.
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Have a productive week!


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