FHFA Index Shows Mortgage Interest Rates Increase Slightly in April

National data shows interest rates on mortgages slightly increased, 0.02 percent from March to April, according to an index of new mortgage contracts.

According to the Federal Housing Finance Agency (FHFA), the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.24 percent for loans closed in late April. The index is calculated using FHFA's Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.23 percent, a slight increase from 4.22 percent in March.

Interest rates are typically locked in 30-45 days before a loan is closed. Consequently, April data reflects market rates from mid- to late-March. The effective interest rate was 4.38 percent, up 1 basis point from 4.37 percent in March. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.

FHFA's interest rate survey shows the average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.53 in April, an increase of 2 basis points. The average loan amount for all loans was $283,800 in April up $5,300 from $278,500 in March.

Contractors brace for labor shortage

Your HBA of Greenville has been reporting on this for months now. Take a look at the most recent article from GSA Business.

 After having worked decades in construction, Waldrop Inc. President and CEO Bill Caldwell sees a labor problem that is about to get a lot worse. He said that, unlike in the past, young people who might have chosen to start construction jobs and move up through the ranks are now opting for college or training for manufacturing jobs that are less physically demanding.

“I think it’s an issue that is silent and people really don’t realize the potential impact long term on the cost of getting things done,” Caldwell said.

Many skilled construction workers changed careers during the Great Recession and have not returned, Caldwell said.

Waldrop Inc. President and CEO Bill Caldwell said that, unlike in the past, young people who might have chosen to start construction jobs are now opting for college or training for manufacturing jobs that are less physically demanding. (Photo by Bill Poovey)

Previous coverage: Construction workforce climbs in S.C. metro areas S.C. construction jobs fall by 1,700 Commercial construction in the Upstate slips, report says Beach Co.: Construction to start next fall on Greenville project at North Main and Stone Avenue S.C. moves to block labor agreements on public construction projects

The National Center for Construction Education and Research has predicted a nationwide shortage of 2 million skilled construction workers by 2017. On top of that, the industry is aging, with most craft professionals close to 50 years old.

“We as an industry are not doing what we need to do to make the public, the academic world and the youth aware of the opportunities that are available today,” Caldwell said.

He said companies in the Upstate and elsewhere in the Southeast “have to compete in our industry against other areas in our country that may be in a boom.” He said there are huge gas and oil projects in the Gulf Region and “people will be flocking to that work from all over the country.”

Dan Doyle — vice president of development at The Beach Co. in Charleston, a company that has announced plans for mixed-use residential projects in Greenville — said that “from the multifamily rental perspective, availability of labor to build” is a potential pitfall for the industry, along with increasing material costs.

Doyle said the labor pool is a “serious issue.”

Robert Hughes, project manager at Hughes Development Corp., said labor availability is “always a concern for anyone in the development business. With how much construction currently is in the marketplace and … it’s not just in Greenville-Spartanburg. It seems to be everywhere. Contractors can be a little pickier about what they want to do and who they want to work with,” and can price things more competitively.

Brian Gallagher, director of marketing at O’Neal Inc., said there is “growing concern” among contractors.

“There are simply not enough trained and skilled construction craftsmen to fill the construction jobs in South Carolina,” Gallagher said.

“Regional construction booms, in the Gulf Coast and other areas, are examples of the challenges facing the industry,” he said. Gallagher said demand for workers in areas where there is a boom in construction, such as the Gulf Coast, “are pulling resources from the surrounding area including South Carolina.”

He said the “result will be escalating costs for S.C. companies.”

The Center for Construction Education has developed programs used in some schools, and Caldwell has met recently with representatives of the S.C. Chamber of Commerce to discuss a strategy to head off a worsening labor shortage. Caldwell said he and others are working to “make people in public education aware there are a lot of career opportunities available in the construction industry. All we hear is manufacturing. I think our industry is getting left out.”

Caldwell said construction is hard work, the workplace may not be as comfortable outside as an indoor manufacturing facility and starting manufacturing salaries may be slightly higher. He said workers that develop construction skills — electricians, pipefitters, welders, brick masons and carpenters — can reach higher salary levels than manufacturing jobs long term.

“You can make a good living,” Caldwell said. “There are plenty of opportunities. We want to hire young kids coming out of high school and tech school.”

He said people would “rather work on an assembly line instead of in the hot and cold” but 20 years from now they can “be on a management team or own a company.”

Caldwell said there are $30 billion worth of infrastructure projects on the drawing board and “people just aren’t standing in line to be craftsmen right now. There are good, bona fide careers in the construction industry.

“There is always going to be a need to build, renovate and maintain buildings,” Caldwell said. He said Waldrop has an apprentice program “but we can’t find 18-year-old kids who want to be a part of it.”

“You have a lot more opportunity for advancement with a company like ours if you are willing to work,” he said. “In a reasonable period of time you can be a foreman or superintendent or project management.”

“We want to become a manufacturing state but say, ‘Hey, don’t forget about us.’ ” Caldwell said.

Allen Gray — a spokesman for the Carolinas chapter of Associated General Contractors, which represents 1,450 contractors and related firms in both states, said it’s “not only the baby boomers moving on but it’s the length of this recession.”

He said people who left the industry in 2008 and 2009 have gone on to other careers.

“The economy ramps back up and we’re starting to hire again,” Gray said. “We are looking to bring people back into the industry and to grow our own work force.”

He said one member company just got a contract for a job in Charlotte and is looking to hire 60 electricians. He said skilled electricians can make $25 an hour.

“First we need to focus on vocational skills in our public school system,” Gray said. “There’s a lot of money to be made in these jobs.”

S.C. Department of Commerce spokeswoman Allison Skipper said in an email that their data and other reputable sources do “not show a notion of a construction labor shortage. They mentioned that in a true shortage, the high demand would force wage rates in that sector up, which has not been the case. Plus homebuilding permits are up.”

The agency’s reports show employment in the construction industry in March had increased by 3,500 jobs in the previous 12 months.

Will Huss Jr., president and CEO at Trehel Corp., said colleges and universities are “doing a great job” delivering candidates for office and management positions. He said that during the recession many in the construction industry changed fields and the current skilled work force is aging.

“It was a huge impact on the both the architectural world, construction world and engineering world,” Huss said. What concerns me most, it’s not that there is a lack of people right now, it’s that there aren’t any new ones coming about.” He said technology has become an influence that has young people wanting to go directly into management.

“They don’t want to work their way up the old fashioned way,” Huss said. “Some of the starting positions have a higher starting wage than construction, but construction has more of an upside.”

He said the “technological industries are so attractive to young people. Construction is hard.”

Huss commended Greenville Technical College for its construction program, describing it as “incredible.”

Huss said Trehel has about 70 employees.

Greenville Tech President Keith Miller said the college’s building construction technology program has more students than last year, likely due to a partnership with the Greenville Home Builders Association.

“I don’t see a move away from that, but like any other career field when the employers start to feel the crunch” they start talking about it, Miller said.

For more information: http://www.gsabusiness.com/news/51451-contractors-brace-for-labor-shortage

FHFA House Price Index Rises for Eleventh Consecutive Quarter; U.S. House Prices Up 1.3 Percent

U.S. house prices rose 1.3 percent in the first quarter of 2014 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the eleventh consecutive quarterly price increase in the purchase-only, seasonally adjusted index.

“Although the first quarter saw relatively weak real estate transaction activity—in part due to seasonal factors—home prices continued to push higher in the first quarter,” said FHFA Principal Economist Andrew Leventis. “Modest inventories of homes available for sale likely played a significant role in driving the price increase, which was similar to appreciation in the preceding quarter.”

The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Compared with last year, house prices rose 6.6 percent from the first quarter of 2013 to the first quarter of 2014. FHFA’s seasonally adjusted monthly index for March was up 0.7 percent from February.

FHFA’s expanded-data house price index, a metric that adds transaction information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 1.4 percent over the prior quarter. Over the last year, that index is up 7.0 percent. For individual states, price changes reflected in the expanded-data measure and the traditional purchase-only HPI are compared on pages 17-19 of this report.

The seasonally adjusted, purchase-only HPI rose 6.6 percent from the first quarter of 2013 to the first quarter of 2014 while prices of other goods and services rose only 0.8 percent. The inflation-adjusted price of homes rose approximately 5.7 percent over the latest year.

Significant Findings:

• The seasonally adjusted, purchase-only HPI rose in 42 states and the District of Columbia during the first quarter of 2014 (up from 38 states during the fourth quarter of 2013). The top annual appreciation was in: 1) Nevada, 2) District of Columbia, 3) California, 4) Arizona, and 5) Florida.
• Of the nine census divisions, the Pacific division experienced the strongest increase in the first quarter, posting a 2.1 percent increase and a 13.2 percent increase since last year. House prices were weakest in the Middle Atlantic division, where prices increased 0.1 percent from the prior quarter. 
• As measured with purchase-only indexes for the 100 most populated metropolitan areas in the U.S., first quarter price increases were greatest in the Charleston-North Charleston, SC Metropolitan Statistical Area (MSA) where prices increased by 10.7 percent. Prices were weakest in the New Orleans-Metairie, LA MSA, where they fell 2.6 percent. Positive appreciation was recorded in 71 of the 100 MSAs.
• The monthly seasonally adjusted purchase-only index for the U.S. has increased for 23 of the last 24 months (November 2013 showed a decrease).
• The Pacific and Mountain census divisions—the two divisions that saw the greatest price increases between March 2012 and March 2013—saw substantive decelerations over the latest 12 months. Price appreciation was 12.4 percent between March 2013 and March 2014 in the Pacific Division, more than three percentage points below the rate for the preceding 12 months. At 9.8 percent, the last 12-month appreciation in the Mountain division was more than four percentage points below the rate in the preceding 12 months.

FHFA’s “distress-free” house price indexes have recently reported lower quarterly appreciation than FHFA’s traditional purchase-only indexes. In nine of the areas covered, the new series—which removes short sales and sales of bank-owned properties—shows lower appreciation over the last quarter than the purchase-only series. During the last year, the share of Fannie Mae and Freddie Mac mortgages financing distressed sales has fallen by at least 10 percentage points in more than half of the areas covered by the FHFA indexes.