This Week in Real Estate: May 7, 2018

Home values and employment continue their favorable trajectory as reported by CoreLogic and the Bureau of Labor Statistics. All 50 states realized year-over-year price appreciation in March while unemployment fell to the lowest rate since 2001 in April. Below are a few highlights from the first week of May that influence our business:

* Remodeling in 2017: Baths Reclaim Top Spot from Kitchens. May is National Home Remodeling Month.  Following the tradition established in recent years, the month’s first related post covers the most common types of remodeling projects performed by NAHB Remodelers during the previous calendar year.  Results come from a special question on NAHB’s Remodeling Market Index (RMI) survey for the first quarter of 2018. The results show kitchen and bathroom remodeling continuing to duel for the top spot.  In the latest survey, 81 percent of NAHB’s remodelers cited bathrooms as one of their most common projects in 2017, slightly higher than the 78 who cited kitchen remodeling.  Previously, bathrooms had edged out kitchens in 2014 and 2015.  Kitchens then slid to the top in 2016 before the two switched positions again in the most recent numbers.  As in previous years, other remodeling jobs on the list in 2017 trailed baths and kitchens by a substantial margin.  The second tier included whole house remodeling (cited as a common project by 49 percent of remodelers), room additions (37 percent), and window or door replacement (30 percent). Although the whole house remodeling and room addition percentages were down year-over-year, they remain relatively strong compared to the rest of their post-downturn history.
* CoreLogic Reports Home Prices Up Again in March, This Time by 7 PercentCoreLogic released its Home Price Index (HPI) and HPI Forecast for March 2018 Tuesday, which shows home prices rose both year over year and month over month. Home prices increased nationally by 7 percent year over year from March 2017 to March 2018, while on a month-over-month basis, prices increased by 1.4 percent in March 2018 – compared with February 2018 – according to the CoreLogic HPI. All 50 states gained value year over year in March; with Nevada joining Washington at 12.6 percent. Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.2 percent on a year-over-year basis from March 2018 to March 2019. “Home prices grew briskly in the first quarter of 2018,” said Dr. Frank Nothaft, chief economist for CoreLogic. “High demand and limited supply have pushed home prices above where they were in early 2006. New construction still lags historically normal levels, keeping upward pressure on prices.”

* Modest Job Gains in April. In April, job gains increased by 164,000 and the unemployment rate fell to 3.9%, the lowest rate since 2001. The average job growth was 200,000 for the first four months in 2018, higher than last year’s average of 182,000. Meanwhile, the unemployment rate edged down to 3.9% in April, after six consecutive months at 4.1%. Monthly employment data released by the BLS Establishment Survey indicates that construction rose by 17,000 jobs in April, after the 10,000 decline in March. Residential construction employment is now 2.80 million, broken down as 785,000 builders and 2 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 14,717 a month. Over the last 12 months, home builders and remodelers have added 125,500 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 818,300 positions. After reaching a peak rate of 22% in February 2010, the unemployment rate for the construction sector has been trending downwards and remains historically low.
Have a productive week.

Jason

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