Housing Figures: Home Prices Rise Rapidly, New Home Demand Strong
December 3, 2020
Housing Figures is our monthly round-up of the top news stories related to residential new construction spending and the latest market numbers.
New home sales and housing starts continued to perform well in their latest counts as new home demand remains strong. At the same time, home prices are seeing their greatest gain since 2014. That price growth, however, could be starting to impact buyers according to October's pending home sales for existing homes. Still, new-home pending sales continue to grow as buyers turn to new builds amidst the low supply of existing homes.
Home prices experience greatest gain since 2014. The latest S&P CoreLogic Case-Shiller index rose seven percent from September 2019 — the greatest year-over-year gain in more than six years. This increase matches reports from the Federal Housing Finance Administration stating that home prices increased 3.1 percent over the second quarter, which represents the biggest gain since at least 1991. [HousingWire]
New home sales continue a strong season. While new home sales were essentially flat in October from September, they were up almost 42 percent from October 2019. Sales of new single-family homes decreased slightly by 0.3 percent to 999,000 homes. Overall, new home sales are up 26 percent year-to-date. Regionally, new home sales were up in all regions, with highest growth in the Northeast. [NAHB Now]
Single-family starts jump (again!). Housing starts came in at a seasonally adjusted annual rate of 1.53 million in October — a 4.9 percent increase from September’s revised rate. That figure is also 14.2 percent higher than October 2019, which came in at 1.34 million. Single-family starts were 6.4 percent above September’s rate, while the rate for buildings with five units or more was 334,000. The pace for single-family starts was at its best since spring 2007. [Builder]
Study suggests there could be huge demand for new homes. A follow-up to April’s America at Home Study indicates there’s potential demand for 11 million new homes as a result of the pandemic. That figure comes from a 50 percent increase in respondents who said COVID-19 pushed their moving plans forward (which equates to 3.15 million in new home demand), in addition to more renters indicating they’re now more inclined to own a home (representing a demand for 7.6 million homes). [Builder]
Homes sell at fastest pace in more than a decade. RE/MAX reported that for the first time since 2009, homes sold faster in October than the preceding summer peak season. More than that, the number of days from listing to contract across 52 markets came in at 38 days, the fastest pace of any month in their reporting history. Additionally, October sales were the third-highest of the year so far. [RE/MAX]
Builder confidence hits another record. The NAHB/Wells Fargo Market Index rose to 90 in November, the highest since at least 1985. It rose from 85 in October and represented the third straight month of record highs. The demand for home building, as NAHB economist Robert Dietz explains, is being helped in the short-run by housing demand in the suburbs and low resale inventory. A majority of responses were received before the election was called, so any shifts in confidence will appear in December’s index. [Bloomberg]
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Existing home sales keep soaring. Record low inventory hasn’t held existing home sales back (yet), with October numbers rising for the fifth straight month. Existing home sales rose 4.3 percent from September to a seasonally adjusted annual rate of nearly 6.85 million according to NAR. On a year-over-year basis, sales were up 27 percent. The sales are successfully offsetting losses experienced in the spring. [Realtor.com]
Meanwhile, pending sales on existing homes see slight decrease. High prices could be taking their toll on buyers as pending home sales on existing homes fell 1.1 percent in October from September. However, they were still 20.2 percent higher than October 2019. NAR’s chief economist suggests scarce housing, low interest rates and strong housing demand are pushing out prospective buyers who can’t save for a down payment. [CNBC]
Pending sales for new homes show a brighter picture. Zonda’s New-Home Pending Sales Index rose 0.8 percent from September and 45.8 percent from October 2019. Pending sales on new homes rose in all 20 markets tracked in the index, with Raleigh, North Carolina, showing the most year-over-year growth at 81.7 percent. Denver and Jacksonville, Florida, also performed well with 69.3 percent and 68.4 percent year-over-year growth, respectively. [Builder]
Condo sales rise almost 23 percent. A new Redfin report shows that condo sales rose 22.7 percent in October on a year-over-year basis. That’s after seeing a 50 percent drop in sales in the spring. According to Redfin’s chief economist, millennials are taking advantage of families moving out to the suburbs for more space. Bidding wars have also been less prevalent in condo sales compared to single-family homes. In October, 36.6 percent of single-family homes sold above listing price compared to only 22.8 percent of condos. [HousingWire]