It’s been a weird spring. The weather has been decent in much of the country (except Texas, of course) yet builders are not taking advantage of it and the usually hot spring market so far is sort of tepid. Inventories are being blamed and that may be true for existing/resale houses. We aren’t sure what is going on with the new home sector.
Existing home buyers did return last month, creating a rebound in sales but not a full recovery from an unexpected 7.1% loss in February. The National Association of Realtors (NAR) reported that sales grew by 5.2% for the month to a seasonally adjusted annual rate of 5.33 million units, 1.5% ahead of last year’s pace
Single-family home sales did slightly better, up 5.5% for the month, but condo/coop sales gained only 1.8% from February and are now running 6.6% behind last year.
NAR chief economist Lawrence Yun called sales “softer both at the very low and very high ends of the market because of supply limitations and affordability pressures.” At the end of March there were 1.98 million existing homes for sale, a 4.5-month supply.
March new home sales data isn’t out yet, but February sales were down 6.1% from February 2015 with an inventory estimated at a five to six-month supply and builders have pulled back from their optimism of last fall. Their perception that buyer traffic is subpar left the National Association of Home Builders’ (NAHB’s) Housing Market Index frozen at 58 for the third month.
Whether it is a reflection of sales, builder unease or, as NAHB maintains, a shortage of labor and building lots, this week’s residential construction numbers were dismal. Building permits were down 7.7% in March on top of a 3.1% drop in February and housing starts fell by 8.8%, wiping out February’s 5.2% gain. Permits were down in all four regions but the Northeast did have a very large surge in housing starts. However, both permits and starts remain ahead of last year’s numbers–by 4.6% and 14.2% respectively.
Home price increases seem to be moderating–FHFA put the change at +0.4% in February, identical to the January gain. Interest rates also seem to have stabilized, and at a very good place. Freddie Mac’s average rate was 3.59%.
Finally, lenders have seemed to have conquered TRID. The new Truth-in-Lending Disclosure rule that went into effect in October initially caused average loan processing time to jump as underwriters and settlement agents adjusted. Now Ellie Mae reports that loan closing timelines fell in February to their lowest level in a year. Your new purchase or refi will now take only about 44 days from start to finish.