National housing market indicators available as of January show continuing the 5.2 percent annual change in November. The CoreLogic-Case-Shiller recovery in housing markets. Trends in some of the top indicators for this month index shows home values are at their highest levels since October 2007;
- Sales of previously owned (existing) homes climbed to the strongest pace in a decade. The National Association of Realtors® (NAR) reported that sales of existing homes (including single-family homes, townhomes, condominiums, and cooperatives) rose 3.3 percent in January to 5.69 million (SAAR)—the highest level since February 2007 (5.79 million). January sales were 3.8 percent higher than a year ago.
- Purchases of new homes increased in January. New single-family home sales climbed 3.7 percent in January to 555,000 (SAAR) from a downwardly revised 535,000 pace the prior month and were 5.5 percent higher than a year earlier. Home sales rose in all regions except the West. Note that monthly data on new home sales can be volatile and are often revised. (Source: HUD and Census Bureau.)
- Single-family construction starts rose in January, while multifamily housing starts fell. Single-family housing starts, at 823,000 homes (SAAR), were up 1.9 percent from December and 6.2 percent from one year ago. Construction starts for multifamily housing (5 or more units
in a structure), at 421,000 units (SAAR), were down 7.9 percent from December but up 25.7 percent from a year earlier. Note that month-to- month changes in the construction of multifamily homes can be volatile. (Source: Census Bureau.)
- Home prices were up again in December with annual house price changes remaining fairly stable in a 5- to 6-percent range. The Federal Housing Finance Agency (FHFA) seasonally adjusted purchase-only house price index for December estimated that home values rose 0.4 percent over the previous month and 6.2 percent over the previous year, down slightly from an annual gain of 6.3 percent in November. The FHFA index shows that U.S. home values are now 7.1 percent above their previous peak set in March 2007 and stand 35.3 percent above the low point reached in May 2011. Another index tracked in the Monthly Update, the non-seasonally adjusted CoreLogic Case-Shiller 20-City Home Price Index, posted a 0.3 percent month-over-month change in home values in December and year-over-year returns of 5.6 percent, which was higher than
house prices peaked during the housing bubble in July 2006 according to this index. (The FHFA and CoreLogic-Case-Shiller price indices are released with a 2-month lag.)
• Mortgage rates fell slightly. The 30-year xed rate mortgage (FRM) averaged 4.10 percent the week ending March 2, 2017, which was down from the lowest weekly average in February of 4.15 percent. The 30-year FRM was 3.64 percent one year ago at this time. (Source: Freddie Mac.)
• The affordability of renting a home dropped in the fourth quarter of 2016. In real terms, the median price of renting a home rose 2 percent in the fourth quarter of 2016, while the median income of a renter household only increased 0.5 percent, resulting in a decline in rental affordability. HUD’s Rental Affordability Index shows that the ability to rent a home fell 2 percent in the fourth quarter of 2016, although it improved
1 percent over the four-quarter period. NAR’s Home Affordability Index,
on the other hand, indicates that the affordability of purchasing a home increased 2 percent in the fourth quarter but fell 1 percent from a year earlier.
• Foreclosure starts fell in January, while foreclosure completions rose. Lenders started the public foreclosure process on 31,965 U.S. properties in January, a drop of 10 percent from December and 23 percent from a year earlier. Newly initiated foreclosures have
been below the pre-crisis (2005 and 2006) monthly average of 52,280 since March 2015. Lenders completed the foreclosure process (bank repossessions or REOs) on 32,157 U.S. properties in January, an increase of 10 percent from both the previous month and previous year. The pre- crisis average of foreclosure completions was 23,120 properties a month. Year-over-year foreclosure completions had declined for ten consecutive months before increasing in January. Prior to that, annual foreclosure completions had declined for 27 consecutive months before starting to increase in March 2015; they began to decline again in March 2016. Note that foreclosure activity has been volatile in recent months as states with a substantial pool of foreclosure inventory move to reduce the backlog. (Source: ATTOM Data Solutions; formerly RealtyTrac).