New single-family Columbia SC home sales were up in November. The increase was lower than anticipated, signaling a slight momentum change in the housing market. Recent Commerce Department statistics show new home sales increased 4.3% during November. This equates to a seasonally adjusted annual rate of 490,000 new homes sold. The number of homes sold in October was revised downward to 470,000 units (from previously reported estimates of slightly over 495,000 homes.)
Columbia SC Home Sales: An Analysis
New home sales comprise roughly 9.3% of the total housing market. The original forecast had been for 505,000 units in November. Despite falling short of projections, sales were up 9.1% compared to November 2014.
The increase is a positive sign to many economists who worried about a downturn in new home sales – especially in the wake of a recently reported drop in the resale of single family homes. According to the National Association of Realtors, previously owned home sales decreased 10.5% during November. The drop was blamed in large measure to the new disclosure regulations that caused delays in loan closings.
When a contract is signed to purchase a new home, that sale is immediately counted in the reported data. Those sales, therefore, were not affected by the new lending disclosure rules. Mortgage insiders say the new rules have added more time to the loan closing process.
December's existing Columbia SC home sales will be reported soon, and experts say a rebound is expected. The higher numbers are anticipated because of a tightening employment market which is slowly but surely increasing wages.
New home inventory increased to 232,000 in November, a rise of nearly 2.2% – the biggest jump in nearly six years. Still, the supply of new homes is down 50% compared to the housing boom levels. And, despite homebuilders across the country gearing up for new construction fueled by the promise of higher sales prices, inventory is still a concerning factor.
Economists say using November's recent sales trend, the current supply of houses would take 5.7 months to sell. In October, the supply was projected to take 5.8 months to sell. Contributing to the slight slowdown is the rise in the median sales price of a new home of .8% compared to this time last year. The median home price is $305,000.
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Columbia SC home sales in May were greater than in any other May since 2008, while home prices continued to rise. Sales are on a four-month trend in which they were higher than both the previous month and the same month in the previous year.
Many positive factors are contributing to a strong housing market this year. Job growth and wages are slowly improving, while rents are increasing rapidly and mortgages are becoming much more accessible. When these factors are coupled with continuing low interest rates, the result is a growing number of consumers with the confidence to buy or sell a home.
Completed transactions in May were 8.9 percent higher than in April and 3.5 percent higher than May 2014. The median sales price of homes sold has risen for 40 consecutive months.
Prices Increasing Along With Columbia SC Home Sales
Columbia SC home prices also continued to increase. In May, the median price was 7.8 percent above the price seen last year. The average month-over-month increase for the first five months of 2015 has been 3.6 percent.
Looking beyond the Columbia SC area, thirty-eight metro areas across the country reported higher sales on a year-over-year basis, with 11 reporting double digit increases in May.
The average days on market, or the number of days between when a home is first listed in an MLS and a sales contract is signed for all homes sold in May dropped seven days from April to 64, and two days below the average of 66 in last year.
The inventory of homes for sale increased by 0.4 percent from April, the first time back-to-back monthly increases occurred since May and June 2014. As home sales continue to grow, the months' supply of inventory in May was 3.6 on a scale where six months indicates a market balanced equally between buyers and sellers.
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Existing Columbia SC home sales are expected to finish the year at their highest level since 2006 according to the National Association of Realtors’ economic forecast forum revealed at its 2015 Legislative Meetings & Trade Expo.
However, accelerating price growth and rising mortgage rates have the potential to change the expected finish.
In the most recent existing-homes sales report, sales surged to their highest annual rate in 18 months, showing a promising beginning to the spring homebuying season.
Nationwide, total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 6.1% to a seasonally adjusted annual rate of 5.19 million in March from 4.89 million in February — the highest annual rate since September 2013 (also 5.19 million).
What's Driving Columbia SC Home Sales?
Sustained job growth and interest rates below 4% have been the catalyst behind the improvement in Columbia SC home sales where supply needs to increase measurably to meet the pent-up demand for buying.
Unlike the existing Columbia SC home sales market, demand for single-family new home construction remains weak, and the homebuilding industry is acting accordingly by focusing on multifamily rental housing. New home construction for first-time buyers is about half of the long-term average and the reason is simple: the decline in homeownership and marriage rates among young adults. Things are not projected to return to normal levels for the building market until at least 2017.
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In our Columbia SC Real Estate News for May 2015:
Pending Columbia SC Home Sales Up
Pending Columbia SC home sales were up in March, even though the low supply of available homes for sale is still a concern.
The National Association of Realtors said this week that its seasonally adjusted pending home sales index rose 1.1 percent to 108.6 last month. The index has climbed 11.1 percent over the past 12 months after having dipped in 2014.
Overall, figures suggest strengthening demand from would-be buyers, even though there are relatively few new listings on the market and sales prices are rising at a faster rate than wages.
NAR says new home construction needs to increase and more existing homes need to come to market. Traditional buyers continue to replace investors paying cash. The association says that indicates this year’s activity is being driven by more long-term homeowners.
Pending Columbia SC home sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale, meaning that the gains should appear in April and May sales numbers.
With pending Columbia SC home sales up, greater buying activity has yet to bring more sellers into the market, with a mere 4.6 month supply of homes on the market. Economists consider a standard market to have at least a 6 month supply of homes for sale.
Right now, new homes are coming onto the market at about half of historic norms, creating a supply-and-demand mismatch that keeps younger households on the sidelines.
Building more new homes would help boost supply, but home construction has been weak. Developers are focused increasingly on building apartments and more expensive homes for wealthier buyers.
One factor pushing up prices is a steady decline in so-called "distressed" sales, which include foreclosures and short sales. Short sales occur when the seller owes more on a home mortgage than the house is worth. Both usually sell at steep discounts to traditional Columbia SC home sales.
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Lowest Home Ownership Rate in 20+ Years
While Columbia SC home sales continue to rise, the home ownership rate in the U.S. has fallen below 64 percent for the first time in over 20 years.
The U.S. Census Bureau announced that the seasonally adjusted 63.8 percent rate in the first quarter of 2015 is far below the 69 percent rate just 10 years ago – a time when homebuying may have been the easiest for Americans.
As investors continue to buy single-family homes to feed rental demand, and first-time buyers remain unable to afford rising prices, U.S. homeownership is taking a big hit.
Rentership has increased dramatically since the financial crisis and Great Recession, and continues to do so as the economy improves and more young people move out of their parents' homes into rental apartments. Many of them straddle jobs while managing student loan debt or other expenses, finding it impossible or extremely challenging to come up with a down payment in the current seller's market.
With millions of properties still underwater — those homes worth less than owners owe for their mortgage — there is still a stigma attached to owning a home in the wake of the 2007-2008 housing market meltdown and foreclosure crisis.
However, longer-term trends seem to be pushing homeownership rates back to "normal" levels, according to Sam Khater, deputy chief economist at CoreLogic.
In the mid-1990s pro-homeownership policies led to an expansion in mortgage credit and the homeownership rate peaked in 2004 at 69 percent. Homeownership rates are back to roughly their long-term trend between the 1960s and 1990s.
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Columbia SC Housing Market Could Face Problems
With pending Columbia SC home sales up and not a lot of new inventory coming on the market to help slow that down, and the home ownership rate now at it's lowest level in over 20 years, could there be trouble brewing in the housing industry?
The future of the Columbia SC housing market depends on jobs, and people earning enough to buy houses. But experts at a recent forum are predicting problems due to income levels. Until incomes improve across the board and hurdles to credit access are eased, it is expected that the Columbia SC housing market will continue to perform below capacity.
Some of the nation's top economists meeting at a forum at the National Association of REALTORS®' Washington, D.C., office last week all echoed the same sentiment.
Households could be trying to save more because of the "unique uncertainty" in people today. There's a general tendency now for people to want to save more, because they're afraid. They're afraid for their jobs. What do you do? You don't spend money lavishly; you try to accumulate some. But they don't succeed.
Economists at the forum said today's Columbia SC housing market represents just a partial recovery from the severe downturn that hit the country about seven years ago, but they differed on how much of a role overly tight credit is playing in the slow return to a full recovery.
The problem today doesn't seem to be a credit issue. It's more of a demand issue. Borrowers have less money now after millions went into foreclosure. We're facing a whole new ball game in the Columbia SC housing market, and it's anyone's guess if the lower income problem will be overcome soon enough to save the industry.
Columbia SC home sales continue to increase as more and more homes come on the market, a sign of strength in housing as the Spring home buying season swings into high gear.
Columbia SC home sales have been constrained by a shortage of properties on the market, which has pushed up home prices and limited choices for potential buyers.
Columbia SC Home Sales Rising With Nation
The National Association of Realtors said just recently that existing home sales increased 6.1 percent to an annual rate of 5.19 million units, the highest level since September 2013. The percent increase was the largest since December 2010.
Economists polled by Reuters had forecast home resales rising to only a 5.03 million-unit pace last month.
The report was another indication that the economy is regaining some momentum after hitting a speed bump at the start of the year. But data on retail sales, housing starts and manufacturing suggest the rebound in second-quarter growth will probably be insufficient to convince the Federal Reserve to start raising interest rates in June.
The outlook for housing is favorable against the backdrop of a strengthening labor market.
The Mortgage Bankers Association said applications for loans to purchase homes increased 5 percent last week to the highest level since June 2013. It was the fourth time in five weeks that purchase applications rose.
At March's sales pace, it would take 4.6 months to clear houses from the market, down from 4.7 months in February. A supply of six months is viewed as a healthy balance between supply and demand.
With supply still tight, the median price for a previously owned home increased 7.8 percent from a year ago.
That was the largest percentage gain since February 2014 and suggested that the pace of home price increases, which had been slowing after double-digit growth for much of 2013, appears to be re-accelerating.
First-time buyers accounted for 30 percent of transactions last month, well below the 40 to 45 percent share that economists and realtors say is required for a strong housing recovery.
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