Federal Reserve Archives - Hillwood Loves Realtor

Custom Home Building Share Improves in 2022

Ashok Chaluvadi2023-11-30T10:19:31-06:00

By Ashok Chaluvadi on November 30, 2023 • According to data from the Census Bureau’s Survey of Construction (SOC), custom homes share increased to 20.4 percent of all single-family homes started in 2022 from the 17.6 percent recorded in 2021. The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale (on the builder’s land, often in subdivisions, with the intention of selling the house and land in one transaction) and homes built for rent. In 2022, 71.4 percent of the single-family homes started were built for sale, and 5.9 percent were built for rent. While the custom-home percentage increased in 2022, the number of custom homes started in 2022 (207,472) was actually higher than the number of custom homes started in 2021 (199,675). The quarterly published statistics show that the custom-home share of single-family starts declined. Although the quarterly statistics are more timely, they lack the geographic detail available in the annual data set. When analyzed by the 9 census divisions, the annual data show that the highest custom home share in 2022 was 45.4 percent in New England Division. In the South Atlantic Division, on the other hand, the share was only 13.8 percent. In the East South-Central Division, 39.6 percent of new homes started were contractor-built or owner-built houses, followed by the East North-Central Division at 37.9 percent and 34.6 percent in the Middle Atlantic Division. In the West North Central Division 23.4 percent of new homes started where custom homes, followed by 15.6 percent in the West South-Central Division, 18.0 percent in the Pacific Division, and 15.5 percent in the Mountain Division. ‹ Unraveling the Complex Tapestry of Inflation Dynamics: Post-Covid ChangesTags: construction, economics, eye on the economy, Federal Reserve, home building, housing economics, single-family, starts

Custom Home Building Share Improves in 2022Ashok Chaluvadi2023-11-30T10:19:31-06:00

Consumer Debt Grows at Slowest Pace Since 2020

David Logan2023-11-08T12:18:34-06:00

By David Logan on November 8, 2023 • Consumer credit outstanding growth slowed to 0.4% in the third quarter of 2023 (SAAR) according to the Federal Reserve’s latest G.19 Consumer Credit report, as revolving debt grew 8.6% and nonrevolving debt declined 2.4%. On a monthly basis, revolving credit outstanding increased just 3.0% in September after surging 14.6% in August (SAAR). Total consumer credit outstanding stands at $4.98 trillion (break-adjusted[1] and seasonally adjusted), with $1.29 trillion in revolving debt and $3.69 trillion in nonrevolving debt. Seasonally adjusted revolving and nonrevolving debt accounted for 25.9% and 74.1% of total consumer debt, respectively. Revolving consumer credit outstanding as a share of the total increased 0.5 percentage point over the quarter and is the highest since Q1 2019. Auto and Student Loan Debt With every quarterly G.19 report, the Federal Reserve releases a memo item covering student and motor vehicle loans’ outstanding. Together, student and auto loans made up 88.6% of nonrevolving credit balances (NSA)—tied for the smallest share since Q1 2011 and equal to the share one year ago. The balance of student loans decreased 1.6% in the third quarter (not seasonally adjusted), superseding a prior month’s report that showed a $30.0 billion increase. In contrast, the amount of auto loan debt outstanding increased $14.2 billion and stands at $1.53 trillion (NSA). [1] The results of the 2020 Census and Survey of Finance Companies–delayed by the pandemic–are now incorporated in the Consumer Credit (G.19) statistical releases and include large revisions dating back to June 2021. Rather than retain the large spike in credit that now appears in the raw data, we have used the “break-adjusted” historical time series developed by Moody’s Analytics and will continue to do so moving forward. Click here for more information. Related ‹ Small Jump In Mortgage Activity As Rates DecreaseTags: consumer credit, consumer debt, credit, credit card debt, credit conditions, debt, Federal Reserve, household debt, nonrevolving credit, nonrevolving debt, revolving credit, student loan debt, student loans

Consumer Debt Grows at Slowest Pace Since 2020David Logan2023-11-08T12:18:34-06:00

All-Cash Share of New Home Sales Climbs in Q3

David Logan2023-10-25T12:16:29-05:00

NAHB analysis of the most recent Quarterly Sales by Price and Financing report reveals that the all-cash share of new home sales climbed substantially in the third quarter of 2023 while VA-backed sales share fell by nearly half. Additionally, the median purchase price of homes bought with cash surged by one-third over the quarter. After declining each of the two prior quarters, the share of cash purchases surged from an upwardly revised 7.1% of new home sales in Q2 to 9.2% in the third quarter of 2023. The 2.1 ppt quarterly increase—equal to the increases in Q3 2011 and Q2 2021—is tied for the largest since climbing 2.5 ppts to 6.7% in 2010.† Over the 30-year period preceding the current, aggressive Federal Reserve rate hike cycle, the share of all-cash new home sales averaged 5.3%. In the seven quarters since, the share has averaged 8.9%. The chart below illustrates how much more pronounced the relationship between the all-cash share (four-quarter moving average) and the Federal Funds rate has become since 2017. Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 29% of existing home transactions were all-cash sales in September 2023, up from 27%% in August and 22% in September 2022. Conventional loans financed 74.7% of new home sales, up 1.3 percentage points over the quarter but 1.5 ppts higher than the 2022 Q3 share. In contrast, the share of FHA-backed sales declined from 13.6% to 13.2%. Although this represents a 4.8 ppt increase over Q3 2022, it remains well below the post-Great Recession average of 17.0%. The share of VA-backed sales fell by nearly half–declining from 6.0% to 3.4%, over the quarter—reaching the lowest share since 2007. Price by Type of Financing Different sources of financing also serve distinct market segments, which is revealed in part by the median new home price associated with each. In the third quarter, the national median sales price of a new home was $431,000. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $466,600, $330,700, $373,000, and $486,800, respectively. The purchase price of new homes declined over the past year regardless of means of financing, In contrast, the year-over-year change in median price varied greatly in both direction as well as magnitude. The median cash sales price surged 33.4% over the quarter while the price of FHA- and VA-backed sales both declined roughly five percent. † Some caution should be exercised when interpreting both nominal as well as percentage changes in the all-cash and VA-backed share new home sales. The number of sales is small in historical terms relative to conventional loan and FHA-backed sales. This may result in higher volatility in the initially reported data and in the magnitude of revisions in percentage terms. Related ‹ Lack of Resales Boost New Home Sales in SeptemberTags: conventional loans, conventional loans market share, fed funds rate, federal funds rate, Federal Reserve, FHA, FHA loans, fha mortgages, new home cash purchases, new home sales by type of financing, sales by financing, VA

All-Cash Share of New Home Sales Climbs in Q3David Logan2023-10-25T12:16:29-05:00

Revolving Credit Growth Reaccelerates in July

David Logan2023-09-12T15:16:12-05:00

By David Logan on September 12, 2023 • Consumer credit outstanding growth slowed to 2.5% in July, down from 3.4% in July (SAAR) according to the Federal Reserve’s latest G.19 Consumer Credit report. Revolving credit growth reaccelerated to 9.2% in July, potentially reflecting strong consumer sentiment and job security in a tight—albeit cooling—labor market. In contrast, nonrevolving consumer debt outstanding inched up just 0.2% over the month. Total revolving consumer credit has surged 10.8% over the past 12 months, more than offsetting slow growth in nonrevolving credit outstanding. Total consumer credit outstanding stands at $5.0 trillion (break-adjusted[1] and seasonally adjusted), with $1.3 trillion in revolving debt and $3.7 trillion in non-revolving debt. Seasonally adjusted revolving and nonrevolving debt accounted for 25.5% and 74.5% of total consumer debt, respectively. Revolving consumer credit outstanding as a share of the total increased 0.2 percentage point over the quarter and is 0.5 percentage point higher than it was one year ago. [1] The results of the 2020 Census and Survey of Finance Companies–delayed by the pandemic–were incorporated in the latest Consumer Credit (G.19) statistical release, resulting in large revisions dating back to June 2021. Rather than retain the large spike in credit that now appears in the raw data, we have used the “break-adjusted” historical time series developed by Moody’s Analytics and will continue to do so moving forward. Click here for more information. Related ‹ Household Real Estate Value Jumps in the Second QuarterTags: consumer credit, credit card debt, employment, Federal Reserve, g.19, nonrevolving debt, revolving debt

Revolving Credit Growth Reaccelerates in JulyDavid Logan2023-09-12T15:16:12-05:00

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