Will We Have A Strong Winter In 2011?
Like most housing data in November, the most recent New Home Sales report showed sales volume increasing last month, and home supplies falling.
According to the U.S. Department of Commerce, sales of new, single-family homes increased to 290,000 in November on an annual basis, a figure equal to the New Home Sales 6-month rolling average, and a 6 percent improvement from October.
At the current pace of sales, the national supply of new homes for sale will be exhausted in 8.2 months — a strong 0.6-month improvement from October.
This data is consistent with the most recent Existing Home Sales report. It showed sales volume rising 6 percent, too, and a similarly-strong inventory drop.
For the housing market in Hiawassee and Blairsville, it’s another step in the right direction. Since May’s post-tax credit plunge, home prices have stabilized and a foundation for growth has been built. Home builder confidence data highlights this point.
Also interesting in the November New Home Sales report is the volume breakdown by price point. Less expensive homes powered the market:
- Homes under $200,000 : 47 percent of all sales
- Homes between $200,000-$299,999 : 29 percent of all sales
- Homes between $300,000-$399,999 : 14 percent of all sales
Luxury homes accounted for less than 2 percent of sales last month suggesting that builders count first-time and move-up buyers as their core market.
As 2010 comes to a close, housing looks poised for a rebound. Sales in all categories are improving, relative to 6 months ago, and the economy is improving. In conjunction with rising mortgage rates, the best time to buy a new home may be now.
Housing Starts Rise In November; But With A High Margin Of Error
The number of single-family Housing Starts increased in November, adding 30,000 units as compared to October.
The Census Bureau defines a “housing start” as a home on which construction has started.
November’s starts represents a 7 percent increase from the month prior. However, if you see the Housing Starts story online or in the papers, you’ll notice that the press is calling the market gain at 4 percent.
So which result is right? The answer is both.
The government’s monthly Housing Starts data is published as a composite report; lumping activity among 3 separate housing types into a single, group reading.
The 3 housing types are:
- Single-family homes (i.e. 1-unit)
- Multi-unit homes (i.e. 2-4 units)
- Apartments (5 units or more)
The group reading is a fair description of the market and it’s easy-to-understand. As a result, it’s what the press tends to report. However, for home buyers in the North Georgia Mountains, it’s the single-family category that’s most relevant.
The reason why single-family homes accounted for 84% of November’s Housing Starts is because that’s the type of home that most buyers buy. Few purchase 2-4 unit properties, and even fewer buy entire apartment complexes.
That said, it’s possible that November’s Housing Starts data is wrong. Within the press release, the government placed an asterisk next to the data, indicating that the figure’s margin of error exceeds its actual measurement.
Against a 7 percent gain, the reported margin of error is 13.5%. There is no statistical evidence, therefore, to prove the actual change was different from zero.
If Housing Starts did fall in November, it will help to reduce the Blairsville and Blue Ridge housing inventory, which will, in turn, help keep home prices high. For home sellers, this could mean good news. Fewer homes for sale increase competition among buyers.
Foreclosure Activity Plunges But With An Asterisk
According to foreclosure-tracking firm RealtyTrac, the foreclosure filings fell 21 percent in November to 262,339 units nationwide. A Foreclosure filing is defined as default notice, scheduled auction, or bank repossession.
November marked the first time since February 2009 that the number of monthly filings failed to surpass 300,000 units.
There were other notable November statistics, too, included:
- November’s 21 percent month-to-month decrease was the largest in RealtyTrac’s recorded history
- November’s 14 percent year-to-year decrease was the largest in RealtyTrac’s recorded history
- Nevada led the nation in foreclosure activity for the 47th straight month
However, we can’t read into November’s RealtyTrac report too much; ultimately, history may treat it with an asterisk. Controversy surrounding the so-called robo-signers forced some of the biggest banks to institute a temporary halt to foreclosures in November. Foreclosure activity did fall last month, but the moratorium makes the figures look better for housing than if there had been no interference.
The halt in foreclosures is also why Utah leaped into the #2 state for foreclosures nationwide. Perennial foreclosure-leading states like California, Michigan and Arizona posted double-digit improvements in November whereas Utah did not.
Banks have since resumed foreclosure activity so December’s results may be a better gauge for how the market is truly performing.
Foreclosures tend to be sold at discount and low home prices can entice home buyers to make an offer. If you’re such a buyer in Blue Ridge, Blairsville, Hiawassee or Ellijay Georgia and want to look at Foreclosed Homes, give me a Call at 706.994.8686 first, or Contact Me to begin your search.
Although there’s a host of online search engines that specialize in foreclosures, I have access to broader inventory, plus the ability to negotiate it more effectively.
Why Builder Confidence Surveys Matter To Buyers Of New Homes
Home builder confidence is holding firm this month, according to the National Association of Home Builders.
The group’s monthly Housing Market Index survey posted 16 for December. That’s the same value as from November. It’s also equal to this 2010′s average HMI reading.
HMI is scored on a scale of 1-100, and is a composite of 3 separate home builder surveys measuring single-family sales; projected single-family sales over the next six months; and prospective buyer foot traffic.
The results of the 3 surveys were as follows:
- Single-Family Sales : 16 (unchanged from November)
- Projected Single-Family Sales : 25 (unchanged from November)
- Prospective Buyer Foot Traffic : 11 (from 12 in November)
Values of 50 or better indicate favorable conditions for home builders. Values below 50 indicate unfavorable conditions.
In other words, although improving, conditions for home builders remain less from excellent. Home buyers in Blairsville and Blue Ridge, GA. can use this to their advantage. When builders feel pressure from the market, they’re more likely to offer discounts.
On the other hand, job growth is returning, the economy is expanding, and mortgage rates are rising. These 3 factors are thought to boost housing markets. So, despite an unfavorable HMI reading, home builders might still be less willing to “make a deal”; holding out for a better 2011.
November’s strong Housing Starts data supports that line of thinking.
If you’re buying a newly-built home in the North Georgia Mountains area , or expect to buy sometime in 2011, keep an eye on home builder sentiment surveys. The better the builders feel, the more you may be asked to pay to buy your next home.
Understatement : Freddie Mac Says Mortgage Rates Rose Last Week
It’s been a wild 30 days for home affordability.
Since the Federal Reserve’s November 3 press release, in which our nation’s central banker committed $600 billion to bond markets, mortgage rates have leaped, moving quicker than the news can report them.
This week is a terrific example of that.
Today, newspaper headlines in Georgia and around the country read that mortgage rates rose 0.06% on average over the past 7 days, and that average loan fees remain unchanged at 0.8 points. The data is based on Freddie Mac’s Primary Mortgage Market Survey, a weekly poll of more than 100 lenders around the country.
Unfortunately for Blairsville and Blue Ridge Home Buyers and other local rate shoppers, the Freddie Mac figures are low. Both mortgage rates and fees rose by more than what’s being reported.
Freddie Mac’s data is not real-time. It’s out of date for today’s pricing.
According to Freddie Mac, the survey’s methodology has it collecting rates from participating lenders between Monday and Wednesday, averaging the results, and then publishing that data Thursday late-morning. The problem there, as you know if you’ve shopped for a mortgage rate, is that mortgage rates change all day, every day.
Monday’s rates are unrelated to Wednesday’s rates, yet both are included and given equal weight by Freddie Mac. Some weeks, it’s not a problem; rates are relative static.
This week was not such a week.
Rates were jumpy Monday and Tuesday, rising and falling throughout the course of the day. Action like that is normal. But Wednesday, mortgage bonds put forth their third-worst daily showing of the year. Rates rose by as much as 3/8 percent between the market open and close, with the bulk of the sell-off coming late in the day. In other words, after the deadline of Freddie Mac’s survey.
Mortgage lenders accurately reported their rates to Freddie Mac, but they reported them before the market turn a turn for the worse.
The lesson is that mortgage rates are time-sensitive and can’t be captured by a weekly, average survey. When you need to know what mortgage rates are doing right now, the best place to check is with your loan officer. Otherwise, you may just get yesterday’s news.
