Economical Updates March 24, 2017

Welcome Stats

We reported earlier that positive responses to the “good time to sell” question in Fannie Mae’s National Housing Survey hit an all-time high; NAR’s existing home report added an exclamation point. In some West Coast metro areas, notably the areas around San Jose, San Francisco, and Vallejo, selling appears to be a matter of putting up a sign and getting out of the way. Median marketing times in those areas in February were 27, 33, and 35, days respectively. Seattle and Boulder were also hot markets with marketing times of 36 and 37 days.
Existing home sales started out 2017 with a bang, increasing by 3.2% from December to January, but that rally was short-lived. The National Association of Realtors (NAR) again blamed the lack of available homes for February numbers that completely wiped out the earlier gain, falling 3.7%. NAR Chief Economist Lawrence Yun said affordability issues also took a toll.
The bang got louder for new homes however. Those sales built on a strong January–up 3.7%–with another 6.1% gain. Sales are now running at a seasonally adjusted annual rate of 592,000 units, a whopping 12.8% increase from last year.
Affordability Relief
There were signs of potential relief this week for the affordability issues cited by Yun. The Federal Housing Finance Agency said that, in January, for only the second time since early 2013, its House Price Index did not increase on a month-over-month basis. The annual price increase also flattened to 5.7% after gaining more than 6% every month since last June.
Affordability got another tiny boost as mortgage rates eased back slightly. Freddie Mac said the 7 basis point drop in its 30-year rate “Signals continued uncertainty.”
During the housing crisis, a lot of companies that report housing statistics began to track data to which they had paid little attention in the past. In addition to info on mortgage defaults, loan modifications, and foreclosures, several started following cash home sales. This was considered a secondary measure of the number of homes sold to investors.
Even in “normal” times about 25% of homes are bought without using a mortgage, but at the peak, in January 2011, that share almost doubled. This week CoreLogic reported that while the number is still higher than before the crash, cash sales throughout 2016 were at the lowest level, 32.1%, since 2007.

This is good news for first-time homebuyers who have often found themselves at a disadvantage when competing with investors and their all-cash offers.