Key Building Materials Prices Far Surpassed Inflation in 2016

Softwood lumber, oriented strand board, ready-mix concrete, and gypsum products all posted price changes in 2016 well above the 1.3% average for the Consumer Price Index, according to the latest Producer Price index released by the Bureau of Labor Statistics.

Oriented strand board prices surged 13.8% in 2016, while softwood lumber rose nearly 8.7%. In November, the cost of ready-mix concrete and gypsum products rose 3.5% and 5.0%, respectively, on a year-over-year basis.

In an ominous sign, the price of softwood lumber rose by 2.3% in December, which is the largest monthly increase since April 2016.

A nine-year softwood lumber agreement between the U.S. and Canada that established a system of fees and quotas on Canadian imports to the U.S. triggered in response to changes in the market price of softwood lumber expired in October 2015.

Negotiations on a new agreement have failed. U.S. lumber producers recently filed a petition with the International Trade Commission, reigniting a long-term trade battle between the two countries.

National Association of Home Builders is fighting to ensure American consumers have access to a stable, dependable, and affordable lumber supply.

For more details from this report, click here.

U.S. House Price Index - November 2016

From the Federal Housing Finance Agency:

​The Federal Housing Finance Agency House Price Index reported a 0.5 percent increase in U.S. house prices in November from the previous month. From November 2015 to November 2016, house prices were up 6.1 percent. For the nine census divisions, seasonally adjusted monthly price changes from October 2016 to November 2016 ranged from -0.2 percent in the South Atlantic division to +1.5 percent in the Pacific division. The 12-month changes were all positive, ranging from +4.7 percent in the Middle Atlantic division to +7.7 percent in the Pacific division.​

Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs in the attachment.

U.S. House Prices Rise 1.5 Percent in Third Quarter

From the Federal Housing Finance Agency:

U.S. house prices rose 1.5 percent in the third quarter of 2016 according to the Federal Housing Finance Agency House Price Index. House prices rose 6.1 percent from the third quarter of 2015 to the third quarter of 2016. The Federal Housing Finance Agency's seasonally adjusted monthly index for September was up 0.6 percent from August. The House Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The Federal Housing Finance Agency has produced a video of highlights for this quarter.

"Our data indicate that the deceleration in home price growth that we observed in late spring proved to be short-lived," said Federal Housing Finance Agency Supervisory Economist Andrew Leventis. "While price growth in select markets has cooled somewhat, for the U.S. as a whole, the third quarter showed no evidence of a widespread slowdown."

While the House Price Index rose 6.1 percent from the third quarter of 2015 to the third quarter of 2016, prices of other goods and services were nearly unchanged. The inflation-adjusted price of homes rose approximately 6.0 percent over the last year.

Significant Findings
Home prices rose in 49 states between the third quarter of 2015 and the third quarter of 2016. Delaware and the District of Columbia were the only areas not to see price increases. The top five states in annual appreciation were: 1) Florida 10.7 percent; 2) Oregon 10.4 percent; 3) Washington 10.4 percent; 4) Colorado 10.0 percent; and 5) Utah 9.5 percent.
Among the 100 most populated metropolitan areas in the U.S., annual price increases were greatest in the Tacoma-Lakewood, WA (MSAD), where prices increased by 12.9 percent. Prices were weakest in New Haven-Milford, CT, where they fell 1.7 percent.
Of the nine census divisions, the South Atlantic division experienced the strongest increase in the third quarter, posting a 1.8 percent quarterly increase and a 7.1 percent increase since the third quarter of last year. House price appreciation was weakest in the New England division, where prices rose 0.8 percent from the last quarter.


Tables and graphs showing home price statistics for metropolitan areas, states, census divisions, and the U.S. as a whole are included on the following pages.


Other Price Indexes

Most statistics in the quarterly house price index report reference price changes computed by Federal Housing Finance Agency's basic "purchase-only" House Price Index. In some cases, however, the reported statistics reference alternative price measures. The Federal Housing Finance Agency publishes – and makes available for download – three additional house price indexes beyond the basic "purchase-only" series. Although they use the same general methodology, the three alternatives rely on slightly different datasets as follows:
"Distress-Free" house price index. Sales of bank-owned properties and short sales are removed from the purchase-only dataset prior to estimation of the index.
"Expanded-Data" house price index. Sales price information sourced from county recorder offices and from Federal Housing Agency-backed mortgages are added to the purchase-only data sample. This index is used annually to adjust the maximum conforming loan limits, which dictate the dollar amount of loans that can be acquired by Fannie Mae and Freddie Mac.
"All-Transactions" house price index. Appraisal values from refinance mortgages are added to the purchase-only data sample.

Data constraints preclude the production of all types of indexes for every geographic area, but multiple index types are generally available. For individual states, for instance, three types of indexes are available. The various indexes tend to correlate closely over the long-term, but short-term differences can be significant.

Release of New Experimental County Indexes

Beginning with this release, Federal Housing Finance Agency is publishing a set of experimental annual house price indexes for counties across the country from 1975-2015. The indexes are constructed using the typical "repeat-transactions" methodology Federal Housing Finance Agency already uses. Unlike Federal Housing Finance Agency's other price indexes, however, the county indexes are annual price measures, meaning that a single index value is produced for each year. The county indexes complement a set of previously released five-digit ZIP code measures, and may be valuable to analysts seeking data on localized home price movements.

Background

Federal Housing Finance Agency's House Price Index tracks changes in average home prices by analyzing changes in home values for the individual properties. The underlying "repeat-transactions" methodology constructs index estimates by statistically evaluating price appreciation (or depreciation) for homes with multiple values over time. The purchase-only House Price Index uses sales price information from Fannie Mae- and Freddie Mac-purchased and Enterprise-guaranteed mortgages originated over the past 41 years. The purchase-only House Price Index is estimated with more than seven million repeat transactions. A video shows the basic methodology behind the Federal Housing Finance Agency House Price Index.

FHFA House Price Index Up 0.7 Percent in August

From the Federal Housing Finance Agency:

U.S. house prices rose in August, up 0.7 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency monthly House Price Index. The previously reported 0.5 percent increase in July remained unchanged.

The Federal Housing Finance Agency monthly House Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From August 2015 to August 2016, house prices were up 6.4 percent.

For the nine census divisions, seasonally adjusted monthly price changes from July 2016 to August 2016 ranged from no change in the West North Central division to +1.2 percent in the New England division. The 12-month changes were all positive, ranging from +3.3 percent in the Middle Atlantic division to +7.9 percent in the Pacific division.

Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Complete historical downloadable data and House Price Index release dates for 2016 and 2017 are available on the House Price Index page.

For detailed information on the House Price Index, see House Price Index Frequently Asked Questions (FAQ). The next House Price Index report will be released November 23, 2016 and will include monthly data through September 2016 and quarterly data for the third quarter of 2016.

U.S. House Prices Rise 1.3 Percent in First Quarter; 19 Consecutive Quarterly Increases

From the Federal Housing Finance Agency:
      U.S. house prices rose 1.3 percent in the first quarter of 2016 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the nineteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index. House prices rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016. This is the fourth consecutive year in which prices grew more than 5 percent. Federal Housing Finance Agency's seasonally adjusted monthly index for March was up 0.7 percent from February. The House Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Federal Housing Finance Agency has produced a video of highlights for this quarter.

"While the overall appreciation rate was robust in the first quarter, home price appreciation was somewhat less widespread than in recent quarters," said Federal Housing Finance Agency Supervisory Economist Andrew Leventis. "Twelve states and the District of Columbia saw price declines in the quarter—the most areas to see price depreciation since the fourth quarter of 2013. Although most declines were modest, such declines are notable given the pervasive and extraordinary appreciation we have been observing for many years."

While the purchase-only House Price Index rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016, prices of other goods and services were nearly unchanged. The inflation-adjusted price of homes rose approximately 5.6 percent over the latest year.

Significant Findings
Home prices rose in every state between the first quarter of 2015 and the first quarter of 2016. The top five states in annual appreciation were: 1) Oregon 11.8 percent; 2) Florida 11.2 percent; 3) Washington 10.9 percent; 4) Nevada 9.4 percent; and 5) Colorado 9.0 percent.

Among the 100 most populated metropolitan areas in the U.S., annual price increases were greatest in the West Palm Beach-Boca Raton-Delray Beach, FL (MSAD), where prices increased by 16.7 percent. Prices were weakest in El Paso, TX, where they fell 2.8 percent.

Of the nine census divisions, the Pacific division experienced the strongest increase in the first quarter, posting a 1.9 percent quarterly increase and an 8.1 percent increase since the first quarter of last year. House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.6 percent from the last quarter.

Tables and graphs showing home price statistics for metropolitan areas, states, census divisions, and the U.S. as a whole are included on the following pages.

Other Price Indexes
Most statistics in the quarterly house price index report reference price changes computed by Federal Housing Finance Agency's basic "purchase-only" House Price Index. In some cases, however, the reported statistics reference alternative price measures. Federal Housing Finance Agency publishes – and makes available for download – three additional home price indexes beyond the basic "purchase-only" series. Although they use the same general methodology, the three alternatives rely on slightly different datasets as follows:

• "Distress-Free" house price indexes. Sales of bank-owned properties and short sales are removed from the purchase-only dataset prior to estimation of the indexes.
• "Expanded-Data" house price indexes. Sales price information sourced from county recorder offices and from FHA-backed mortgages are added to the purchase-only data sample. This index is used annually to adjust the maximum conforming loan limits, which constrain the size of loans that can be acquired by Fannie Mae and Freddie Mac.
• "All-Transactions" house price indexes. Appraisal values from refinance mortgages are added to the purchase-only data sample.

Data constraints preclude the production of all types of indexes for every geographic area, but multiple index types are generally available. For individual states, for instance, three types of indexes are available. The various indexes tend to correlate closely over the long-term, but short-term differences can be significant.

Release of New Experimental Indexes
With this quarter's release, Federal Housing Finance Agency is publishing a set of experimental annual house price indexes for five-digit ZIP codes across the country from 1975―2015.​ The indexes are constructed using the typical "repeat-transactions" methodology. Unlike Federal Housing Finance Agency's other price indexes, however, the five-digit ZIP code measures are annual price measures, meaning that a single index value is produced for each year. As discussed in FHFA Working Paper 16-01, the new indexes may be valuable to analysts seeking data on localized home price movements. More information about these measures is provided in a "Technical Note" in this report on page 23.

Background
Federal Housing Finance Agency's House Price Index tracks changes in average home prices by analyzing changes in home values for the individual properties. The underlying "repeat-transactions" methodology constructs index estimates by statistically evaluating price appreciation (or depreciation) for homes with multiple values over time. The purchase-only House Price Index uses sales price information from Fannie Mae- and Freddie Mac-purchased and Enterprise-guaranteed mortgages originated over the past 41 years. The purchase-only House Price Index is estimated with over seven million repeat-transactions.

Note

• The next monthly index (including data through April 2016) will be released June 22, 2016.
• The next quarterly House Price Index report, which will include data for the second quarter of 2016, will be released August 24, 2016.
• Future House Price Index release dates for 2016 are available at http://www.fhfa.gov/hpi.

Federal Housing Finance Agency House Price Index Up 0.5% in January

From the Federal Housing Finance Agency:

U.S. house prices rose in January, up 0.5 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency monthly House Price Index. The previously reported 0.4 percent increase in December was revised upward to reflect a 0.5 percent increase.

The Federal Housing Finance Agency monthly House Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. From January 2015 to January 2016, house prices were up 6.0 percent.

For the nine census divisions, seasonally adjusted monthly price changes from December 2015 to January 2016 ranged from -1.0 percent in the Middle Atlantic division to +1.7 percent in the South Atlantic division. The 12-month changes were all positive, ranging from +1.7 percent in the Middle Atlantic division to +8.9 percent in the South Atlantic division.

Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Complete historical data are available on the Downloadable House Price Index Data page.

For detailed information on the monthly House Price Index, see House Price Index Frequently Asked Questions. The next House Price Index report will be released April 21, 2016 and will include monthly data through February 2016.

Federal Housing Finance Agency has published House Price Index release dates for 2016, which can be found on the House Price Index Release dates page.

NAHB publishes survey on the cost of constructing a single family home

Every home builders gets the question.  So does their HBA.  "How much per square foot does is cost to build a house?"  The answer is in a report by NAHB: $80 per square foot plus the cost of the land, and other non-construction expenses.

According to NAHB's report, the average price of a new single-family home in 2011 was $310,619, down from $377,624 in 2009.  The cost of construction accounted for 60 percent of the final sales price, and the cost of the finished lot accounted for 22 percent of the final sale price.  The average size of a new single-family home in 2011 was 2,311, down from 2,716 in 2009.

Think home builders are making a lot of money building homes?  The average profit per house was 6.8 percent of the final sales price in 2011.

Read the entire report at Eye One Housing by clicking here.

NAHB: Student Loan Debt Crisis Linked to Lower Home Values

New analysis of government data by the National Association of Home Builders (NAHB) reveals a connection between rising student loan debt and the onset of the housing slump, and offers yet another example of how lower home values have hurt millions of middle class households and threatens the fragile economic recovery.

“The rising student loan debt problem is another consequence of the housing downturn,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “As more and more parents face tighter budget restraints as a result of lower home values, this is forcing an increasing number of students to take out loans for tuition, essentially shifting some of the burden of paying for college from parents to students.”

The link between rising student loan debt and the start of the housing crisis comes on the heels of a recent report from the Federal Reserve showing that U.S. household wealth plunged nearly 40 percent from 2007 to 2010 as a result of declining home values.
“Together, these findings should serve as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward to restore the balance sheets of tens of millions of home owning families, create jobs and spur economic growth,” said Rutenberg.

To get housing back on track and provide the foundation for a long-lasting economic recovery, Rutenberg called on leaders in Washington to provide access to mortgage credit for qualified borrowers; demonstrate their support for the mortgage interest deduction; support affordable downpayments for home buyers; enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values; and establish a strong housing finance system that retains a federal backstop to ensure that standard 30-year fixed-rate loans and adjustable rate mortgages remain readily available for working class households.

“Young Americans need to have the ability to pay for college in order to prepare for the jobs of the future,” said Rutenberg. “Homeownership has historically generated a thriving middle class by creating wealth and helping families to cover higher education costs. Hard-working American families and the economy will continue to struggle until we get housing back on track.”

Realtors: housing prices continue to rise in the Upstate

According to a report by the Greater Greenville Association of Realtors, the price of all homes sold in the first quarter of 2012 rose 4 percent from $137,200 in the first quarter of 2011 to $142,700 in the first quarter of 2012.

Jack Hough: Why U.S. house prices won't recover

An article by Jack Hough at marketwatch.com opines that when taking into account the rate of inflation, U.S. house prices are at 1895 levels and will not return to pre-2008 levels.  He also reports that housing is still a good investment historically.

"But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels.

"That’s because the natural rate of price appreciation for houses is zero after inflation. Prices will eventually stop falling. They’ll resume rising. But over the long term, they’re unlikely to resume rising faster than inflation.

"That’s why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal."

Read the complete report by Jack Hough at marketwatch.com by clicking here.

The case against Case-Shiller

by Michael Dey, Executive Vice President, Home Builders Association of Greenville

While the FHFA House Price Index was reported up .3 percent in February, the Case-Shiller Index, which measures just the top 10 and top 20 housing markets in the country, was down.  According to Forbes, the Case-Shiller Index fell .8 percent from January to February.

The difference between the two indexes is considerable.  The FHFA House Price Index is a measure of all housing markets in the country based on mortgage activity backed by Fannie Mae and Freddie Mac.  The Case-Shiller Index measures just the top 10 and top 20 housing markets in the country.  Case-Shiller tracks repeat home sales over time.  FHFA is indexed to the contract mortgage amounts.

And therein lies the problem with the Case-Shiller Index; it measures just the largest housing markets, which is not a reflection of the whole country.  Most markets in the country don't come anywhere close to the 50,000 housing starts each year that were commonplace in markets like Atlanta.  And most housing markets did not experience the massive over building that occurred in many of the top housing markets, primarily because the smaller markets did not have the capacity to build on the scale that is possible in the largest markets.

Even more interesting is the fact that Robert Shiller, one of the founders of the Case-Shiller Index, was quoted by Reuters this week that the housing market will remain weak for a generation because suburban areas have lost their appeal to "walkable cities," the result of high gas prices.  Gas prices may be a factor if you live 30 miles from work in suburban Atlanta, but compact markets like Greenville will not be impacted by gas prices in the same way that a sprawling top 20 market is impacted.

Also consider that many of the top housing markets are in states that have been shedding population and jobs since long before the recession.  Much of that population and jobs have relocated to smaller markets in Southern and coastal states.

The continued reliance on data from the top 10 or 20 markets in the country as a barometer for the whole housing market provides a false sense of what is happening in the rest of the country.  For example, in Greenville building activity is up 60 percent in the last year.  And bear this in mind: just like the Case-Shiller Index provides an incomplete measure of housing today, it also provided an incomplete measure of housing seven years ago when those top 20 markets were red hot.  Could reliance on incomplete data have contributed to the overheated housing market of the recent past.  Is incomplete data contributing to the current overbearing regulation of housing activity today, particularly in smaller prospering markets like Greenville?

Federal regulators, banks, Congress, the White House, and the media would be better served to evaluate housing market-by-market, rather than rely on an index that is limited to just 20 out of the 270 markets in the nation.  Even though Case-Shiller says it measures 75 percent of the housing activity in the country, it still only measures 7 percent of the individual housing markets.

FHFA: U.S. House Prices Rise 0.2 Percent in Third Quarter 2011

U.S. house prices rose in the third quarter of 2011 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI, calculated using home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages, was 0.2 percent higher on a seasonally adjusted basis in the third quarter than in the second quarter. On an unadjusted basis, prices rose 0.7 percent during the quarter. Over the past year, seasonally adjusted home prices fell 3.7 percent from the third quarter of 2010 to the third quarter of 2011.

FHFA’s seasonally adjusted monthly index for September was up 0.9 percent from its August value. On a not-seasonally adjusted basis, prices were up 0.7 percent during the August to September period. Every census division but the East South Central division showed increases over the same period.

“In most regions of the country, third-quarter home values were relatively stable, even in some areas that experienced sharp price declines in preceding quarters,” said FHFA Principal Economist Andrew Leventis. “While most housing markets still face stiff headwinds, the fact that some beleaguered states—such as Idaho, Florida and Utah—saw quarterly price increases is a positive development.”

While the national, purchase-only house price index fell 3.7 percent from the third quarter of 2010 to the third quarter of 2011, prices of other goods and services rose 4.8 percent over the same period. Accordingly, the inflation-adjusted price of homes fell approximately 8.1 percent over the latest year.

FHFA’s all-transactions house price index, which includes data from mortgages used for both home purchases and refinancings, increased 0.9 percent in the latest quarter but is down 4.3 percent over the four-quarter period.

Significant Findings:

• The seasonally adjusted purchase-only HPI declined in the third quarter in 21 states and the District of Columbia
• Of the nine census divisions, the West North Central division experienced the strongest price gains in the latest quarter, posting a 1.5 percent price increase. Prices were weakest in the Pacific census division, where prices fell 0.5 percent.
• As measured with purchase-only indexes for the 25 most populated metropolitan areas in the U.S., four-quarter price declines were greatest in the Phoenix-Mesa- Glendale, AZ area. That area saw price declines of 10.6 percent between the third quarters of 2010 and 2011. Prices held up best in the Warren-Troy-Farmington Hills, MI metropolitan division, where prices rose 4.0 percent over that period.

Highlights

This quarter’s Highlights article has two sections. The first section compares recent price trends reported in the purchase-only HPI against price changes computed for the “expandeddata” HPI. The latter, which was described in detail in the 2011Q2 HPI release, is estimated using data from FHA-endorsed mortgages as well as licensed information from county recorder offices. Both indexes show a 0.2 percent price gain in the latest quarter.

The second section analyzes the impact of the recent boom in commodities prices on home values. States and counties with significant mining and oil extraction industries generally experienced more stable house prices than other areas.

Background

FHFA’s purchase-only and all-transactions HPI track average house price changes in repeat sales or refinancings on the same single-family properties. The purchase-only index is based on more than 6 million repeat sales transactions, while the all-transactions index includes more than 43 million repeat transactions. Both indexes are based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 36 years.

FHFA analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which form the nation’s largest database of conventional, conforming mortgage transactions. The conforming loan limit for mortgages purchased since the beginning of 2006 has been $417,000. Pursuant to the terms of various short-term congressional initiatives, loan limits for mortgages originated between July 1, 2007 and Sept. 30, 2011 were as high as $729,750 in certain high-cost areas in the contiguous United States. Mortgages originated after Sept. 30, 2011 are no longer subject to the terms of those initiatives and, under the formula established by the Housing and Economic Recovery Act of 2008, the highest loan limit for one-unit properties in the contiguous U.S. has fallen to $625,500.

You can review the entire report at FHFA.ORG by clicking here.

Greenville makes list of 10 cities that avoided the housing bust

According to a report in housingzone.com and CNBC, Greenville South Carolina is one of 10 cities that avoided the housing bust. The report points to lower unemployment and foreclosures than the rest of the country.

"Of course this is something we have known all along," said Michael Dey, Executive Vice President of the Home Builders Association of Greenville. "All real estate is local and Greenville has little in common with the larger markets that tend to drive stories of a national housing crisis," Dey said.

A key measure, according to CNBC, is average home prices. According to the report, Greenville's average home prices have fallen just 2.9 percent since the peak of the housing market.

Read the report at Housingzone.com by clicking here.

Read the report at CNBC.com by clicking here.

HUD Secretary says prices are at the bottom

U.S. Department of Housing and Urban Development Secretary Shaun Donovan says, "it's very unlikely that we will see a significant further decline" in housing prices. Donovan was quoted in an appearance on CNN. "The real question is when will we start to see sustainable increases. Some think it will be as early as the end of this summer or this fall.'

According to Donovan, home sales have increased in six out of the past nine months and the number of property owners in default is declining. "Housing prices will begin rising as the number of foreclosures declines. In the long run, it’s a good time to buy. It’s so affordable today compared to where it’s been for generations."

Read the entire story at Bloomberg.com by clicking here.

2011 Seen as the Turning Point for Home Prices

According to a survey of economists and housing experts conducted by MacroMarkets and published by Inman News Service, 2011 is expected to be the turning point for housing prices nationally. The poll found that the 100 housing experts expect housing prices to hit bottom sometime in 2011 and remain stable through 2015. Read more at Inman News by clicking here.