Morning Briefing: Northeast pushes existing home sales to highest in 9 years

by Steve Randall22 Dec 2016
Northeast pushes existing home sales to highest in 9 years
A jump in existing home sales in the Northeast has led to an overall gain for the national figures for the third straight month.

The National Association of Realtors says that the seasonally-adjusted annual rate was 5.61 million homes in November, up 0.7 per cent from October. The pace was the highest since February 2007 and was up 15.4 per cent from November 2015.

"The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months," said NAR chief economist Lawrence Yun. "Furthermore, it's no coincidence that home shoppers in the Northeast — where price growth has been tame all year — had the most success last month."

The median home price for all housing types was up 6.8 per cent year-over-year to $234,900. Housing inventory was down 8 per cent from November 2015.

For first-time buyers, the situation is challenging. The share of first-timers slipped in November by 1 percentage point to 32 per cent, but was up from 30 per cent a year earlier.

"First-time buyers in higher priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget or make compromises on home size, price or location," said Yun.

Existing home sales were up 8 per cent in the Northeast; 2.2 per cent in the Midwest; 1.4 per cent in the South; but down 1.6 per cent in the West.
 
More counties now unaffordable for average income households
The affordability of homes became a bigger issue for more counties in the fourth quarter and the overall level of affordability fell to its lowest level since 2008.

ATTOM Data Solutions revealed that 29 per cent of US county markets were below their historic level of affordability averages, up from 24 per cent in the third quarter and 13 per cent a year ago.

“Rapid home price appreciation and tepid wage growth have combined to erode home affordability during this housing recovery, and the recent uptick in mortgage rates only accelerated that trend in the fourth quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Counties with the lowest affordability index in Q4 2016 were Cumberland County, Tennessee in the Crossville metro area (58 out of 100); Genesee County, Michigan in the Flint metro area (77); Denver County, Colorado (79); Adams County, Colorado in the Denver metro area (81); and Wilson County, Tennessee in the Nashville metro area (83).

“The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability next year. Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets.”

Annual home price growth outpaced annual wage growth in 363 of 447 counties (81 per cent) analyzed in the report.
 
Mortgage apps up 2.5 per cent
There was a 2.5 per cent rise in mortgage applications in the week ending Dec. 16 according to the Mortgage Bankers’ Association.

Its index showed that the refinance and (seasonally-adjusted) purchase indexes both increased 3 per cent with the refinance share up to 57.9 per cent of applications from 57.2 per cent a week earlier.

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