Tag: #homebuyerexperts

Fears about construction costs, supply shortages, and concern over fast rising home prices acted to deflate builder confidence this month. The National Association of Home Builders (NAHB) says the NAHB/Wells Fargo Housing Market Index (HMI), a measure of its new home builders’ sentiment about the market for newly constructed homes, fell 5 points this month to 75, the lowest it has been since June 2020. “While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some ‘new home sales,” said NAHB Chief Economist Robert Dietz. “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.“

While home prices have been posting record increases for months, it appears that rents are trying to keep up. CoreLogic says the connection is clear. The company’s Single-Family Rent Index, which analyzes single-family rent price changes nationally and across major metropolitan areas, shows rent growth in June was the highest since at least 2005, an annual gain of 7.5 percent. The increase in June 2020 was 1.4 percent. The company examines the path of single-family rents across four price tiers, and in each, the growth exceeded pre-pandemic rates for the third straight month. In the lower-priced tier of homes, those that rent for up to 75 percent of the regional median, rents increased 5.3 percent in June compared to 2.3 percent a year earlier. The lower-middle tier, with rents from 75 to 100 percent of the median, saw an annual increase of 6.4 percent against only 1.5 percent in June 2020. Higher-middle priced rents, those in the 100 to 125 percent bracket, were up 7.1 percent, up from 1.5 percent the prior June. In the higher-priced tier, those single-families with rents more than 125 percent of the median, rents jumped 9.6 percent. The gain in June 2020 was 1.2 percent.

The number of loans in forbearance dropped by 83,000 over the last week. This is on top of a 71,000 loan reduction during the first few days of August. Black Knight reminds that this type of change is typical at the beginning of each month as servicers conduct three month reviews of homeowners to determine if their forbearance plans will be extended. As of August 10, 1.74 million homeowners, 3.3 percent of those with a mortgage, remain in COVID-19 related plans, the first time the number has fallen below 1.8 million. The numbers improved for all loan types. There was a reduction of 43,000 (-7.8 percent) in loans serviced for bank portfolios and private label securities (PLS), leaving 3.9 percent of those loans in forbearance.  The number of GSE (Fannie Mae and Freddie Mac) loans fell by 15,000 and FHA and VA loans by 25,000. This leaves 1.9 percent of GSE and 5.8 percent of FHA/VA loans in forbearance.

Even though lumber prices have recently declined, the National Association of Home Builders (NAHB) says builders are facing some of the fastest increases of other building material costs in history. The latest Producer Price Index (PPI) from the Bureau of Labor Statistics (BLS) shows an 0.2 percent increase in the prices of goods used in residential construction (with the exception of food and energy costs) in July. Those costs had increased 3.0 percent in June. David Logan posted in NAHB’s Eye on Housing blog that the BLS index shows those building costs have declined only twice since December 2019 and have climbed by 19.4 percent over the past 12 months. As an aside, when food and energy are included, the index is up 22.3 percent year-over-year.