Eye on the Economy


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A biweekly review of the housing economy.

Published in: Economy & Finance
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Eye on the Economy

  1. 1. Eye on the Economy New Home Sales Disappoint in June August 6, 2014 eyeonhousing.org
  2. 2. Rates on New Home Loans 2 •Average effective mortgage rate for new home sales rose •Current effective rate for new homes is slightly higher than the average for existing homes •Read more here
  3. 3. New Home Sales 3 •Market share of cash sales for new homes increased • Higher than 2002-2003 average •Market share of FHA-backed new home sales declined •Read more here
  4. 4. Construction Spending 4 •Residential construction spending up year-over-year •Dollar volume pace of home building and remodeling down for last two months •Improvement spending is down negligibly year-over-year •Read more here
  5. 5. Housing Prices 5 •House price growth remains above rate of inflation •S&P/Case-Shiller 20-City Composite index eased to 9.3% in May •FHFA Purchase-Only house price index increased 5.6% •Read more here
  6. 6. Housing Prices Cont. 6 •18 metro areas exhibited slower rates of growth •49 economist panel: Median forecast in the FHFA index for July 2014 was 4.7% • Read more here
  7. 7. Pending Home Sales Index 7 •PHSI fell 1.1% for the month • Ends three month growth streak • June was down 7.3% year-over-year •Read more here
  8. 8. Existing Home Sales 8 •Existing home sales had a 2.6% monthly increase in June •Existing sales passed the 5 million mark • First time since October 2013 •Read more here
  9. 9. Remodelers’ Confidence 9 •Remodeling Market Index rose three points in Q2 of 2014 •Two out of three index components improved •Indicators of future activity improved in Q2 of 2014 •Read more here
  10. 10. Homeownership Rate 10 •Housing demand from newly formed households favors rental-markets over for-sale •Homeownership rate fell to 64.8% •Read more here
  11. 11. The Employment Situation for July 11 •Payroll employment increased by 209,000 for the month •Unemployment rose 0.1% • Due to an addition of 329,000 into the labor force •Read more here
  12. 12. GDP & FOMC 12 •GDP Growth was up 4% •Q2 experienced growth for exports and inventory investment •NAHB is forecasting 1.7% overall GDP growth for the year •Read more here
  13. 13. GDP & FOMC 13 •Federal Reserve monetary policy committee agreed that Q1 GDP decline was due to transitory factors •Indicated willingness to keep federal funds rate at the current low level •Winding down asset purchase program •Read more here
  14. 14. Affordability Pyramid 14 •For a $1,000 increase in median new home price, more than 206,000 households would be priced our of the new home market •87 million households can afford a home price higher than $100k • 22.8 million can afford a new home priced at $175k •Read more here
  15. 15. Apartment Buildings Benefit from Sustainability 15 •Analysis of the relationship between multifamily housing and mortgage default for apartment owners •Less likely if: • Within a mile of open space • In a neighborhood with significant retail presence • Accessible to transit • Meets certain affordability thresholds •Read more here