Home Prices Continue to Decline in September

2022-11-29T11:16:59-06:00

Home prices declined for the third straight month in September as the housing market continues to cool. In September, all 20 metro areas experienced negative home price appreciation. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, fell at a seasonally adjusted annual growth rate of 8.7% in September, following a 6.4% decline in July and a 10.4% decrease in August. After a decade of growth, home prices started to decline in July, driven by elevated interest rates and high construction costs. The July decline marked the first decline since February 2012, and the September decline marks the third consecutive monthly decline. Nonetheless, national home prices are now 62.4% higher than their last peak during the housing boom in March 2006. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 10.6% annual gain in September, after a 12.9% increase in August. Year-over-year home price appreciation slowed for the sixth consecutive month. Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), increased at a seasonally adjusted annual rate of 0.9% in September, following the previous two months’ decreases. On a year-over-year basis, the FHFA Home Price NSA Index rose by 11.0% in September, following a 12.0% increase in August. The FHFA thus confirmed the slowdown in home price appreciation. In addition to tracking national home price changes, S&P CoreLogic reported home price indexes across 20 metro areas in September. All 20 metro areas reported negative home price appreciation. Their annual growth rates ranged from -23.2% to -3.7% in September. San Francisco, Las Vegas, and Phoenix experienced the most monthly declines in home prices. San Francisco declined 23.2%, while Las Vegas and Phoenix declined 22.7% and 22.3%, respectively. The scatter plot below lists the 20 major U.S. metropolitan areas’ annual growth rates in August and in September 2022. The X-axis presents the annual growth rates in August; the Y-axis presents the annual growth rates in September.  Compared to last month, home prices declined faster in September in the following 12 metro areas: Phoenix, Miami, Tampa, Atlanta, Chicago, Boston, Detroit, Charlotte, Las Vegas, New York, Cleveland, and Dallas. Related ‹ Declining Trend of Two-Story FoyerTags: FHFA Home Price Index, home prices, S&P CoreLogic Case-Shiller Home Price Index

Home Prices Continue to Decline in September2022-11-29T11:16:59-06:00

Declining Trend of Two-Story Foyer

2022-11-28T11:23:16-06:00

By Fan-Yu Kuo on November 28, 2022 • Information obtained from the US Census Bureau’s Survey of Construction (SOC) and tabulated by NAHB, shows the share of new homes with a two-story foyer decreased in 2021. For 2021, most new single-family homes were built without a two-story foyer nationally and regionally. According to the Census, a two-story foyer is defined as the entranceway inside the front door of a house and has a ceiling that is at the level of the second-floor ceiling. In the United States, the share of new homes with two-story foyers fell from 29% to 25% in 2021, the lowest level in the last 5 years. A two-story foyer has been an unwanted feature from both buyers’ and builders’ perspectives since 2012, as many homebuyers consider two-story foyers energy-inefficient. Regionally, the share declined in seven of the nine divisions. Among these divisions, the West South Central has the highest share of new homes started with two-story foyers (35%). The New England and West North Central are the only two divisions to see an increase in the share of two-story foyers from 2020 to 2021. Related ‹ New Home Sales Increase in OctoberTags: SOC, two-story foyer

Declining Trend of Two-Story Foyer2022-11-28T11:23:16-06:00

Labor Market Softens in October

2022-11-04T11:18:49-05:00

Job growth slowed in October as the Fed continues its tightening of financial conditions to fight inflation, but the overall labor market remains tight. The unemployment rate increased by 0.2 percentage points to 3.7% in October as the number of persons in the labor force decreased for the second straight month. Total nonfarm payroll employment increased by 261,000 in October, following a gain of 315,000 in September, as reported in the Employment Situation Summary. It marks the smallest monthly job gain in nearly two years. The estimate for August was revised down by 23,000, from +315,000 to +292,000, while the September increase was revised up by 52,000, from +263,000 to +315,000. In the first ten months of 2022, nearly 4.1 million jobs were created, and monthly employment growth averaged 407,000 per month. The unemployment rate ticked up by 0.2 percentage points to 3.7% in October. The number of unemployed persons increased by 306,000 to 6.1 million, while the number of employed persons decreased by 328,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, edged down 0.1 percentage point to 62.2% in October, reflecting the increase in the number of persons not in the labor force and the decrease in the number of persons in the labor force. Moreover, the labor force participation rate for people aged between 25 and 54 decreased to 82.5%. Both of these two rates are still below their pre-pandemic levels in the beginning of 2020, and are not fully recovered from the COVID-19 pandemic. For industry sectors, health care (+53,000), professional and technical services (+43,000), and manufacturing (+32,000) led job gains in October. Employment in the overall construction sector was little changed (+1,000) in October, following a 22,000 gain in September. Residential construction gained 900 jobs, while non-residential construction employment gained 300 jobs in October. Residential construction employment currently exceeds its level in February 2020, while 83% of non-residential construction jobs lost in March and April have now been recovered. Residential construction employment now stands at 3.2 million in October, broken down as 904,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 6,217 a month. Over the last 12 months, home builders and remodelers added 105,300 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,195,000 positions. In October, the unemployment rate for construction workers rose by 1.0 percentage points to 5.5% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic. Related ‹ Share of Young Adults Living with Parents Declined in 2021Tags: employment, labor force, labor force participation rate, residential construction employment

Labor Market Softens in October2022-11-04T11:18:49-05:00

Bidding Wars Jump as Top Reason (Remaining) Buyers Can’t Make Purchase

2022-11-02T09:20:49-05:00

By Rose Quint on November 2, 2022 • An earlier post revealed that a record 70% of buyers who were actively engaged in the process of finding a home in the third quarter of 2022 have spent 3+ months searching for a home without success. Those buyers also have higher incomes and education levels than in previous quarters.  The most common reason these long-term searchers cite for not having bought by now is they are getting outbid by other offers (54%).  In second place is the inability to find an affordable home (39%), followed by not being able to find a home in their desired neighborhood (30%). When asked what they are most likely to do next if still unable to find a home in the next few months, 50% of active buyers searching for 3+ months said they will continue looking for the ‘right’ home in the same location (up from 46% a quarter earlier); 35% will expand their search area (down from 38%), 33% will accept a smaller/older home (up from 30%), and 28% will buy a more expensive home (up from 26%). Meanwhile, the share who plan to give up their home search until next year or later climbed to 28%, up from 25% in the second quarter of 2022. This share has increased or remained flat in each of the past five quarters. ** Results come from the Housing Trends Report– a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the final post in a series of six highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy, new vs. existing preference, housing availability, housing affordability, and active buyers. Related ‹ September Private Residential Spending Stays FlatTags: housing economics, housing trends report

Bidding Wars Jump as Top Reason (Remaining) Buyers Can’t Make Purchase2022-11-02T09:20:49-05:00

Affordability Expectations Improve as the Typical Buyer Changes

2022-10-31T09:17:12-05:00

By Rose Quint on October 31, 2022 • Prospective buyers in the third quarter of 2022 are more likely to have higher levels of income and education than earlier in the year.  This helps explain why affordability expectations have improved.  In the third quarter of 2022, 69% of buyers could only afford a minority of homes for sale in their markets, a much lower share than in the first (81%) or second (77%) quarters of the year.  Conversely, the share able to afford at least half the homes available rose to 31%, up from 19% and 23% in the first two quarters of the year. Affordability expectations between the second and third quarters of 2022 improved in all regions.  In the Northeast, the share of buyers only able to afford a minority of homes dropped from 73% to 66%; in the Midwest, from 84% to 83%; in the South, from 82% to 77%, and in the West, from 70% to 58%.   **Results come from the Housing Trends Report– a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the fourth in a series of six posts highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy, new vs. existing preference, and housing availability. Related ‹ All-Cash New Home Sales Outnumber FHA-Backed for the First Time Since 2007Tags: housing economics, housing trends report

Affordability Expectations Improve as the Typical Buyer Changes2022-10-31T09:17:12-05:00

Buyers’ Expectations of Housing Availability Continue to Improve

2022-10-28T09:17:39-05:00

By Rose Quint on October 28, 2022 • For the second straight quarter, more prospective buyers expect housing availability to improve. In the third quarter of 2022, 37% of buyers expect the home search to get easier in the months ahead, up from 17% and 22% in the first and second quarters of the year, respectively. More for-sale inventory and less competition from buyers priced-out by higher mortgage rates are likely driving the improvement. In contrast, 59% expect the search to get harder/stay the same, down from 74% and 67% in the first two quarters of 2022. Housing availability expectations improved in all regions of the country in the third quarter of 2022. In the Northeast, 44% of buyers expect easier conditions, up from 28% in the second quarter. In the Midwest, the share rose from 14% to 33%; in the South, from 18% to 23%; and in the West, from 31% to 52%. Another way to measure buyers’ perceptions of housing inventory is to ask them if they are seeing more/fewer/the same number of homes for-sale* in their markets. In the third quarter of 2022, 36% reported seeing more homes, up from 23% and 28% in the first two quarters of the year. Inventory perceptions have improved across all regions. From the second to the third quarters of 2022, the share of buyers seeing more homes on the market rose in the Northeast (27% to 43%), Midwest (23% to 30%), the South (24% to 33%), and West (36% to 42%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the third in a series of six posts highlighting results for the 3rd quarter of 2022. See previous posts on plans to buy and new vs. existing preference. Related ‹ Economic Growth and Signs of Cooling Inflation in Third QuarterTags: housing availability, housing economics, housing trends report

Buyers’ Expectations of Housing Availability Continue to Improve2022-10-28T09:17:39-05:00

Economic Growth and Signs of Cooling Inflation in Third Quarter

2022-10-27T12:17:44-05:00

Real GDP grew in the third quarter, after shrinking for the first two straight quarters of 2022. This quarter’s growth was mostly fueled by a decline in the trade deficit. More important, the data from the GDP report suggests that inflation is cooling. The GDP price index, rose 4.1% for the third quarter, down from a 9.0% increase in the second quarter. Also, the Personal Consumption Expenditures (PCE) price Index, capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior, rose 4.2% in the third quarter, down sharply from 7.3%. Looking forward, a mild recession is expected in the coming year as the Federal Reserve continues to tighten financial conditions. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.6% in the third quarter, following a 0.6% decrease in the second quarter and a decline of 1.6% in the first quarter. This quarter’s increase reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, partially offset by decreases in residential fixed investment and private inventory investment. In the third quarter, exports increased 14.4%, while imports, which are a subtraction in the calculation of GDP, decreased 6.9%. Net exports rose by $156.6 billion in the third quarter, contributing 2.77 percentage points to GDP growth. Meanwhile, federal government spending increased 3.7% in the third quarter, reflecting increases in both national defense and nondefense spending, while state and local government spending rose 1.7%, led by an increase in compensation of state and local government employees. Consumer spending rose at an annual rate of 1.4% in the third quarter, down from a 2.0% increase in the second quarter. An increase in services was partly offset by a decrease in goods services. While expenditures on services increased 2.8% at an annual rate, goods spending decreased 1.2% at an annual rate, led by motor vehicles and parts (-11.7%) as well as food and beverages (-3.8%). Nonresidential fixed investment increased 3.7% in the third quarter. Increases in equipment and intellectual property products were partly offset by a decrease in structures. Within residential fixed investment, single-family structures declined 36.3% at an annual rate, multifamily structures declined 5.5% and other structures (specifically brokers’ commissions) decreased 21.5%. Related ‹ Housing Share of GDP Continues to DecreaseTags: economics, gdp, inflation, macroeconomics, macroeconomy, PCE, residential fixed investment, the GDP price index

Economic Growth and Signs of Cooling Inflation in Third Quarter2022-10-27T12:17:44-05:00

More Buyers Taking a Look at New Construction

2022-10-26T19:15:13-05:00

By Rose Quint on October 25, 2022 • After bottoming out at 19% in the first quarter of 2022, the popularity of new homes continues to rebound, as the share of buyers looking for new construction rose to 21% and 27% in the second and third quarters of the year, respectively.  A possible factor behind this trend is that the inventory of new homes for-sale is 25% higher than a year ago, while the supply of existing homes on the market is unchanged. The recent increase in interest for new homes is countrywide.  From the second to the third quarters of 2022, the share of prospective buyers looking to purchase a new home rose in all four regions: Northeast (18% to 27%), Midwest (12% to 18%), South (20% to 26%), and West (30% to 31%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here. This is the second in a series of six posts highlighting results for the 3rd quarter of 2022.  See previous post on plans to buy. Related ‹ Prospect of Higher Rates Leads Some to Consider Buying a HomeNew Home Sales Fall Back in September ›Tags: housing economics, housing trends report

More Buyers Taking a Look at New Construction2022-10-26T19:15:13-05:00

Prospect of Higher Rates Leads Some to Consider Buying a Home

2022-10-24T09:17:34-05:00

By Rose Quint on October 24, 2022 • The share of adults planning a home purchase within a year rose to 15% in the third quarter of 2022, up from 13% in the first half of the year. The marginal increase suggests that the prospect of higher mortgage rates in the near term may be leading a small segment of consumers to consider the purchase of a home sooner rather than later. It is important to note that the typical prospective buyer in the third quarter had higher levels of education and income than the typical buyer earlier in 2022. Sixty-six percent of those contemplating a home purchase are first-time home buyers, up from 59% in the second quarter. The increase marks a sharp reversal, following three quarters of declines in the share of prospective buyers considering homeownership for the first time. The share of adults with plans to buy a home changed unevenly across regions from the second to the third quarter of 2022, rising in the Northeast (12% to 15%) and West (16% to 20%), but falling in the Midwest (11% to 9%) and South (15% to 14%). Over half of all prospective buyers in every region are 1st-timers. From the second to the third quarter of 2022, the share rose most prominently in the Northeast (54% to 70%) and West (60% to 70%), and marginally in the Midwest (54% to 56%) and South (62% to 66%). ** Results come from the Housing Trends Report – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are seasonally adjusted. A description of the poll’s methodology and sample characteristics can be found here. This is the first in a series of six posts highlighting results for the 3rd quarter of 2022. Related ‹ Employment Situation in September: State-Level AnalysisTags: housing economics, housing trends report

Prospect of Higher Rates Leads Some to Consider Buying a Home2022-10-24T09:17:34-05:00

Residential Building Wage Growth Slowing

2022-10-11T10:20:39-05:00

By Jing Fu on October 11, 2022 • Average hourly earnings for residential building workers* continue to rise in August but at a slower pace. Wage growth has retreated from the highest rate of 2021. The recent housing slowdown indicates that, while labor demand is still high, employers are cautious about hiring amid a slowing economy and rising interest rates. According to the Bureau of Labor Statistics (BLS) report, average hourly earnings (AHE) for residential building workers were $29.32 in August 2022, increasing 3% from $28.45 a year ago. This was 16.8% higher than the manufacturing’s average hourly earnings of $25.11, 10.8% higher than transportation and warehousing’s, and 11.5% lower than mining and logging’s. Average hourly earnings for residential building workers have increased significantly since the COVID-19 pandemic recession. The year-over-year growth rate reached to 8% in October 2021, the highest rate since February 2019, but this rate is now decelerating. Indeed, the construction labor market is generally cooling off as economic activity slows due to tighter monetary policy. Note: * Data used in this blog relate to production and nonsupervisory workers in the residential building industry. This group accounts for approximately two-third of the total employment on residential building industry. Related ‹ Job Growth Slows in SeptemberTags: average hourly earnings, labor market, residential building, wages

Residential Building Wage Growth Slowing2022-10-11T10:20:39-05:00

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