This Week in Real Estate: March 21, 2016


The most significant news This Week in Real Estate was that the Federal Reserve left the interest rates unchanged following their March meeting. Where the U.S. central bank at its December meeting had projected 4 rate hikes in 2016, new estimates released Wednesday reduced that number to 2. Below are a few highlights from the third week of March that influence our business:

* Residential Housing Starts Hit 5-Month High While Single-Family Home Starts Hit 9-Year High. New residential construction reached its highest in five months as there remains a huge demand for single-family homes. According to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, home starts rose 5.2% and increased with a seasonally adjusted annual rate of 1.18 units. An improvement from January’s estimate of 1.12 and is 30.9% above February 2015’s rate of 900,000. Construction for single-family homes increased 7.2% to an 822,000 unit pace, the highest since November 2007. While construction activity in the northeast were low at 51.3%, home starts increased 19.9% in the Midwest and 26.1% in the west regions. In the south, home starts were at 7.1%. Single-family home completions also increased, rising 6.1% to a 736,000 annualized rate, the highest peak since November 2008.
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* Loan Closings Back to Pre-TRID Timelines. Ellie Mae’s Origination Insight Report published on Wednesday by Ellie Mae shows there was a sharp decline in the time it took to close a loan in February. Average closing timelines rose with the introduction of new Truth-in-Lending (TRID) disclosure rules for loans applied for on or after October 3. It took an average of three or four additional days to take a loan from application to closing for all loans that closed in November than it did in October and those timelines remained elevated through January. The drop in February brings most closing days back to levels that prevailed before TRID became an issue. Ellie Mae reports that the time to close all loans dropped from 50 days in January to 46 in February, the shortest timeframe since last May. The average time to close a purchase decreased from 51 days in January to 48 days in February.
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* NAR HOME Survey Underscores Need for More Single-Family Home Construction. Over three-quarters of surveyed households would purchase a single-family home if they were to buy in the next six months, and 79 percent of renters would choose to buy outside of an urban area, according to the second installment of the National Association of Realtors new quarterly consumer survey. The survey also found that confidence about now being a good time to buy is waning amongst renters, particularly in the West – where prices have solidly risen. The survey data reveals an overwhelming consumer preference for single-family homes in suburban areas. Most current homeowners (85%) and 75 percent of renters said they would purchase a home in a suburban area, while only 15 percent of homeowners and 21 percent of renters said they would buy in an urban area.
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Have a productive week!



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