This Week in Real Estate: Nov. 28, 2016

image001Strong October existing home sales reported This Week in Real Estate result in the highest annualized pace of sales since February 2007 and the federal government acknowledges the continued price appreciation by increasing the conforming loan limit in 2017. Below are a few highlights from the fourth week of November that influence our business:

* Existing Sales Revival. Existing home sales, as reported by the National Association of Realtors (NAR), increased 2.0% in October to become the highest annualized pace since February 2007. October 2016 sales were up 5.9% from the same month a year ago. Total existing home sales in October increased to a seasonally adjusted rate of 5.60 million units combined for single-family homes, townhomes, condominium and co-ops, up from an adjusted 5.49 million units in September. October existing sales increased in all four regions, ranging from 2.8% in the South to 0.8% in the West. Year-over-year, October sales also increased in all regions, ranging from 10.4% in the West to 1.4% in the Northeast. Total housing inventory decreased slightly by 0.5% in October, and remains 4.3% lower than its level a year ago. At the current sales rate, the October unsold inventory represents a 4.3-month supply, compared to a 4.4-month supply in September. The first-time home buyer share was 33% in October, down a point from the solid September report, but above the first-time buyer share of 31% in October 2015. The October median sales price of $232,200 was 6.0% above the same month a year ago, and represents the 56th consecutive month of year-over-year increases.
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* Conforming Mortgage Limits Rise for 2017. For the first time since 2006 the Federal Housing Finance Agency (FHFA) announced Wednesday that the limit for conforming mortgages for single-family homes will increase from $417,000 to $424,100 in most regions of the United States starting January 1, 2017. The FHFA bases the loan cap on its quarterly Housing Price Index, which gauges average single-family home prices. The index rose 1.5 percent during the third quarter of 2016 and is up 6.1 percent over the past year, enough to push it above its previous high point. Conforming loan limits are significant because they apply to home loans that meet the underwriting guidelines of Fannie Mae and Freddie Mac, the government-sponsored entities that acquire mortgages from lenders and ensure a steady flow of money to the mortgage market. “Today’s conforming loan limit increase is a much-needed recognition of rising home prices in high-cost markets, and a help to first-time and lower-income borrowers looking to utilize an FHA mortgage,” said NAR President William Brown.
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* Homeowners Becoming Homebodies. CoreLogic says it is now able to closely track household mobility through various data sets including property taxes and sales transactions. CoreLogic senior economist Kristine Yao says the median time between the recorded purchase and the subsequent sale of homes nationally was 4.4 years in 1985, but had increased to 6.6 years by 2015. Yao says this trend is similar to that noted in the Census Bureau’s latest Current Population Survey; only 5.1 percent of owner-occupied households moved between 2014 and 2015 compared to 9.2 percent between 1987 and 1988. When people did move last year, Yao says, 61 percent stayed within the same metropolitan area while only 24.6 percent moved to a different state, a 15 year-low. Those who moved within their own metro area tended to trade up, buying a home that was a median of $61,000 more costly than the old one. However, those who moved to another state tended to buy laterally – paying about the same for the new home as they had gotten for the old one.
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Have a productive week.

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