Rising Home Purchases Means Bigger Spending on Remodeling, Appliances and Furnishings

 According to the data found in the Consumer Expenditure Survey (CES) data from the Bureau of Labor Statistics (BLS), the National Association of Home Builders says that new home buyers and existing home buyers spend thousands of dollars or more on in the first year of owning a home on appliances, furnishings and remodeling. This estimate is derived from the pre-pandemic (2017 - 2019) data collected.

NAHB's report found that during the first year after the purchase of a new construction home, a homeowner will spend on average over $9,250 on their home over a non-moving home owner, and those that purchased an existing home spent around $5,240 over non-moving homeowners. This shows that a home purchase causes an increase in spending. These expenditures are mostly on things like appliances, furnishings, and remodeling.

New home buyers also spend a lot more on property alterations and repairs.  A typical new home buyer is estimated to spend almost twice as much on these projects ($9,288) compared to a similar household that stays put in a house they already own. When looking closer, the study showed that these expenses were from building outdoor features such as a pool, patio, fences, and landscaping.

When someone moves into a new home, they also want to have some new furnishings. This also triggers bigger spending. It is estimated that a new home buyer spends around $3,000 or more on furnishings during the first year of owning a home and $1,870 on appliances.

If a new home buyer purchases an older home, this price can go up even more. It is estimated that they tend to spend around $5,238 more on remodeling, furnishings and appliances. The majority of the spending is on property repairs, alterations and remodeling projects. Homeowners that do not move will spend around $4,282 in a year on home projects while those that buy existing homes will spend around $7,400 during the first year after closing. The data shows that home buying does spark additional spending.

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High Demand in Housing Is Having a Direct Effect on the Market

 The pandemic has changed the way people view their homes. From the stay-at-home orders to the scare of spreading the virus, the home is everyone’s safe haven. Luckily today’s technology has enabled many Americans to work from home. More and more people are reassessing what they want in a home such as a home office, flex space and outdoor living space.

The housing market is booming in fact, home sales are higher than they were before the pandemic. The

existing and new home sales are the highest level we have seen in over a decade. With the increase in home sales, comes an increase in the demand for building materials and labor.

Lumber has been in very high demand during recent months. Not only are builders building new homes but many homeowners are remodeling their current homes. Home offices and remote work locations have also spiked the demand for this hot commodity. The November 2020 Random Length Lumber contract shows a low set during the height of COVID in April at 277 but then in August lumber was set at 820.

The copper market has also been greatly affected by the booming housing market. Looking at the September 2020 copper futures contract, we witness a low set on March 19 at 1.99, followed by a big move up to 3.08 by September 15. Copper is also valuable to the technology industry where it is used for building servers, semiconductors and switches.

Currently, sales of single-family homes are up 24% from the spring, existing condominiums and co-ops are up 32%. Lumber and copper numbers are a great way to measure and predict the direction the housing industry will go, knowing which markets are directly affected by the growing demand for single-family units can be important for every trader and investor.

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June Home Sales Hit A Record-Setting Rebound

Even though the housing market was severely impacted by the COVID-19 pandemic, it is rebounding at record speeds. According to the latest National Association of Realtors (NAR) Existing Home Sales Report, June marked a record-setting rebound in home sales. NAR reported a 20.7% jump in home sales from May to a seasonally-adjusted annual rate of 4.72 million in June.

“Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic…Each of the four major regions achieved month-over-month growth,” reports the National Association of Realtors.

Lawrence Yun, Chief Economist for NAR says this is a major boost for the housing market and the U.S. economy as a whole. He goes on to explain the sales recovery is strong because buyers are back in the market purchasing the properties they have been eyeing during the country’s shut-down.

The low mortgage rates and increase job gains will keep this revitalization going for many months ahead. Mortgage rates are at an all-time low at under 3% for the first time. Everyone wants to take advantage of the rates while they are so low. Low inventory and a massive amount of buyers have increased home prices because of bidding wars. In June the median existing-home price for all types of housing was $295,300 which was up 3.5% from this time last year. This marks the 100 straight months of year-over-year gains.

The housing industry is leading the economy to recovery. This is the right time to purchase a home and a Realtor can take you step by step through the home buying process.

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Lower Mortgage Rates Encourages Gains In Existing Home Sales

New home sales are on the rise but the existing home sales are keeping up. According to the National Association of Realtors (NAR) total existing home sales reported a seasonally adjusted annual rate of 5.42 million.

The NAR reported that on a year-over-year basis, existing home sales were 0.6% up than a year ago which included single-family homes, townhomes, condominiums and co-ops. This is the first year-over-year gain in almost a year and a half.

Homes stayed on the market 29 days in July 2019 with 51% of homes on the market selling in less than a month. All-cash sales composed 19% of transactions up from June 2019. Median sale price of

existing homes in July was up 4.3% from a year ago at $280,000 and existing condominium/co-op prices were up 2.5% with a median price of $254,300.

Sales by regions saw an increase, except for the Northeast and West, for existing homes sales in July 2019. Existing home sales in the Midwest grew 0.8% and in the South existing homes rose to 2.7%.
NAR has encouraged the market to add more inventory which is a good sign. The falling mortgage rates, July 2019 at 3.77%, and lower home prices are a big plus.

“We are optimistic that the latter part of this year and the early months of 2020, at least, will see a significant upturn in sales. That, in turn, will boost construction activity in due course,” wrote Ian Shepherdson, founder and chief economist of Pantheon Macroeconomics, in a research note.


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Home Sales Increase Nationally During May

For the first time in two months, the year-over-year increases in existing home sales increased during the month of May, according to the National Association of Realtors (NAR). The exact number of home sales was 5.34 million, increasing existing home sales by 2.5%. Part of this increase is due to supply. For many months, it’s been a seller’s market because the number of homes for sale has not been able to meet the demand of home buyers on a national level.

The number of homes for sale increased from April, 2019, to May, 2019, from 1.83 million units to 1.92 million units in May. The types of homes included were single-family homes, townhomes, condominiums, and co-ops. There was also a year-over-year increase in the number of homes available for sale from 2018, which saw 1.87 million units available to May, 2019, which had 1.92 million units, which is a 4.3-month supply for potential home buyers.

Home buyers are eager to pick up homes as soon as they come on the market, which has been great for sellers and Realtors alike. The average amount of time that an existing home stayed on the market before going under contract was 26 days, and that actually accounted for 53% of homes under contract. This statistic is kind of unusual because average home prices are up in 2019 – by 4.8%, averaging $277,700 for resales.

All statistics were made on a national level, but specifically in the Southern region, resale sales were up 1.8%, and home sales also increased by 1.3% in the Southern region. Locally, homes for sale have been “flying” off the market, so if you are in the market for a home for sale or are considering buying a new home for sale, Contact Ron Lee Homes for your next new home purchase! Call 985-626-7619 or Email Info@RonLeeHomes.com.

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Spring Uptick For Housing Market

Spring always brings warm weather, sunshine and an upbeat attitude. The home market started off slow for the beginning of 2019, but analyst believe there will be a rise in home sales Spring 2019.

The beginning of the year wasn’t what the National Association of Realtors hoped for. Pending home sales did jump 4.6% this January, however sales were 2.3% lower than a year ago. January marked the 13th straight month of year-over-year declines.

The pending home-sales index (the NAR’s tracking system that records home contract signings) did go up in January to 103.2.  Analysts believe the reopening of the partial government shutdown caused

the boost from the nearly five-year low it saw in December of 2018. In the Northeast pending sales increased 1.6%, in the Midwest 2.8%, only 0.3% in the West and 8.9% in the South. The market should see the home sales from these pending contracts right around Springtime. Contracts usually stay pending on average for about 45 days until they close.

“February existing home sales should now rebound handily and with new home sales likely to head higher too, given the rising trend in mortgage demand, the gloomy housing narrative in markets and the media is set to change quite dramatically over the next few months. The market is not rolling over, and it is not a harbinger of recession in the broader economy,” said Ian Shepherdson, chief economist for Pantheon Macro.


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Supply & Demand Drives Home Pricing

One of the key factors to success in any kind of business is supply and demand. The National Association of Realtors (NAR) agrees that this principle has boosted home pricing in the current housing market. NAR’s chief economist Lawrence Yun believes the housing market is still going strong because of the lack of inventory even though data shows a modest growth rate reduction.
Yun states,”…with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent – and in many markets at a rate well above income growth.”
In the second quarter of last year the peak existing single-family home price was $229,400, this year however, the second quarter single-family home price has risen 4.9% with a median single-family home price of $240,700.

According to NAR findings, new construction cannot keep up with the demand for new homes.  In the second quarter this year 40% of the listings sold over their listing price. “Many listings in a majority of markets – and especially those in lower price ranges — had multiple offers and went under contract quickly because of severely inadequate supply,” Yun added.

This coupled with low mortgage rates have many potential home buyers wanting to purchase a new home now.  In the Northeast region there was a 7.6% increase in existing homes sales and the median home price increased to $273,600. The Midwest, though not as high of an increase, was 10.4% in total existing-home sales with a median price of $191,300. The West came in next with a 1.4% increase in total existing-home sales with a median home price of $345,500.  The South came in last with a 0.3% increase with a median home price of $214,900.

Whether you are in the market to sell a home or purchase a home, now is the right time.  The housing market is holding strong and is a great investment for your money.  Locally in St. Tammany Parish, Ron Lee Homes, a new home builder in Covington, Louisiana, is building new homes for sale as well as completely custom homes designed completely from your vision of how you would like your new home to be.  We have been keeping a steady pace of new construction for the past 2 years, and we are constantly meeting with new custom home buyers as well as buyers who are looking for homes to buy immediately.  If you are interested in building or buying a new home, Contact Us at 985-626-7619 or E-mail Info@RonLeeHomes.com.


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