Housing Markets Continue Slow Climb Back to Normal

Markets in 54 out of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today. The index’s nationwide score of .86 indicates that, based on current permits, prices and employment data, the nationwide market is running at 86 percent of normal economic and housing activity.

In the Upstate, Greenville ranks 150 among the nation's housing markets.  It's overall score is .87, or 87 percent of normal and better than the national average.  Holding our market back is permits, which are 55 percent recovered.  However, prices are 114 percent of normal, an indication that demand is now exceeding supply.  Employment is at 92 percent of normal.

Spartanburg is ranked 181 with a score of .84.  Permits also are 55 percent recovered, and housing prices have just exceeded normal.  Employment is at 93 percent of normal.

Anderson is not ranked because housing price data is not currently available.  However, permits in Anderson are at 42 percent of normal and employment is at 91 percent of normal.

Click here to view data on all 350 housing markets.

The LMI figures for November showed that 55 housing markets were operating at or above their last normal levels and the nationwide market was operating at 85 percent of normal growth.

LMI data for the two months were released simultaneously because of the delay in collecting data during the partial government shutdown in October.

“This index shows that most housing markets across the nation are continuing a slow, gradual climb back to normal levels,” said Chairman Rick Judson, a home builder from Charlotte, N.C. “Policymakers must guard against actions that could impede or even reverse the modest gains of the past year.”

Noting that smaller metros accounted for most of the 54 markets on the current LMI that are at or above normal levels, Chief Economist David Crowe said that “smaller markets are leading the way, particularly where energy is the primary economic driver. Nearly half of the markets in the top 54 are in the energy states of Texas, Louisiana, North Dakota, Wyoming and Montana.”

“The fact that more than 125 markets on this month’s LMI are showing activity levels of at least 90 percent of previous norms bodes well for a continuing housing recovery in 2014,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

Baton Rouge, La., tops the list of major metros on the LMI, with a score of 1.42 – or 42 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Oklahoma City, Austin and Houston, Texas, as well as Pittsburgh – all of whose LMI scores indicate that their market activity now exceeds previous norms.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning that their markets are now at double their strength prior to the recession. Also at the top of the list of smaller metros are Casper, Wyo.; Bismarck, N.D.; and Grand Forks, N.D., respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

Editor’s Note: In calculating the LMI, employment data from the Bureau of Labor Statistics, house price appreciation data from Freddie Mac and single-family housing permits from the U.S. Census Bureau were used. The LMI is published on the fourth working day of each month, unless that day falls on a Friday -- in which case, it is released on the following Monday.

For historical information and charts, please go to nahb.org/lmi.

Your HBA opposes proposed tax accounting rule

Your Home Builders Association has taken a position in opposition to a proposed tax accounting rule change, proposed in the U.S. Senate, that would negatively impact home builders whose contracts extend across two tax years.  Read the full report and description of the rule, present and proposed, at Eye on Housing by clicking here.

Help! Your HBA needs you.

We need your help in reaching our goal to finish renovations on Martha’s home. Martha is making great strides in recovering from a gunshot wound that left her paralyzed from the waist down and will be returning home from a rehabilitation facility in time for Christmas. Please consider a cash contribution to the Martha Childress Housing Fund as the extent of the remodels is quite expensive, including the need for an elevator. Many have already donated their time and resources to work on the home, here are several pictures of work already completed.

 

All proceeds not spent on her housing needs will be donated to a fund for her ongoing health needs. Checks can be made payable to HBA of Greenville Attn: Martha Childress Fund, 5 Creekside Park Court Ste. A, Greenville, SC 29615.

If you have any questions, please contact the HBA office at cyanes@hbaofgreenville.com or 

(864) 254-0133.

Home Building not dominated by large builders

Did you know that the top 10 public builders have just a 25 percent share of home building, and falling?  According to the National Association of Home Builders, the top 10 public builder market share over the last three years was:

• 2010: 26.3 percent
• 2011: 24.6 percent
• 2012: 24.1 percent

Read a detailed report of the structure of the home building industry at Housing Economics by clicking here.

New Member Reception- TONIGHT!!

Join us for a New Member Orientation sponsored by Piedmont Natural Gas. Learn about the HBA of Greenville and meet other members as well as Board members. 

The New Member Orientation will be held at the HBA office (5 Creekside Park Court, Suite A, Greenville, SC). Please RSVP by Wednesday, December 3 by emailing info@hbaofgreenville.com or by calling the HBA office at (864) 254-0133.

We hope to see you there!

FHFA Index Shows Mortgage Interest Rates Decrease in October

National data show interest rates on mortgages interrupted their upward trend. Contract mortgage interest rates decreased 0.04 percent from September to October, 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 4.32 percent for loans closed in late October. The index is calculated using FHFA’s Monthly Interest Rate Survey. The contract rate on the composite of all mortgage loans was 4.32 percent, down 4 basis points from 4.36 in September.

Interest rates are typically locked in 30-45 days before a loan is closed. Consequently, October data reflect market rates from mid-to-late September. The effective interest rate was 4.49 percent, down 2 basis points from 4.51 percent in September. 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 4.58 in October, a decrease of 5 basis points. The average loan amount for all loans was $269,000 in October down $1,100 from $270,100 in August.

U.S. House Prices Rose 2.0 Percent in Third Quarter 2013

Upward momentum in U.S. house prices remained strong in the third quarter, as prices rose 2.0 percent from the previous quarter, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the ninth consecutive quarterly price increase in the purchase-only, seasonally adjusted index and it marks the first time since 2009 that the national house price level is higher than it was five years ago.

“Overall, the housing market experienced another strong quarter, but price appreciation in the latter part of the quarter was relatively subdued,” said FHFA Principal Economist Andrew Leventis. “Price increases in August and September of 0.4 and 0.3 percent, respectively, were notably below appreciation rates observed earlier this year and in late 2012.”

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 8.4 percent from the third quarter of 2012 to the third quarter of 2013. FHFA’s seasonally adjusted monthly index for September was up 0.3 percent from August.

FHFA’s expanded-data house price index, a metric introduced in August 2011 that adds transaction information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 2.2 percent over the latest quarter. Over the last four quarters, that index is up 8.8 percent. For individual states, price changes reflected in the expanded-data measure and the traditional purchase-only HPI are compared on pages 21-23 of this report.

The seasonally adjusted, purchase-only HPI rose 8.4 percent from the third quarter of 2012 to the third quarter of 2013 while prices of other goods and services rose only 1.2 percent. The inflation-adjusted price of homes rose approximately 7.2 percent over the latest year.

Significant Findings:

• The seasonally adjusted, purchase-only HPI rose in 48 states and in the District of Columbia during the third quarter. Top 5 in annual appreciation: 1) Nevada 2) California 3) Arizona 4) Florida and 5) Washington.
• Of the nine census divisions, the Pacific division experienced the strongest increase in the latest quarter, posting a 4.2 percent increase and a 19.2 percent increase since last year. House prices were weakest in the East South Central division, where prices increased 0.8 percent from the prior quarter.
• As measured with purchase-only indexes for the 100 most populated metropolitan areas in the U.S., third quarter price increases were greatest in the Stockton-Lodi, CA Metropolitan Statistical Area (MSA) where prices increased by 8.3 percent. Prices were weakest in the Virginia-Beach-Norfolk-Newport News, VA-NC MSA, where they fell 2.2 percent.
• Over the past year, only 1 MSA —Winston-Salem, NC — had a negative appreciation rate and 11 of the 20 MSAs with the highest appreciation rates were in California.
• The monthly seasonally adjusted purchase-only index for the U.S. has increased for the last 20 consecutive months.

Click here to read the complete report at FHFA.gov.