FEBRUARY 2021 SEES A GAIN IN SINGLE-FAMILY PERMITS

 

The first two months of 2021 not only saw a strong housing market but 164,901 single-family permits issued year-to-date (YTD). The report shows that there is a 16.6% increase over February 2020.

Permits for residential single-family and multi-family 12 months change February 2021 year-to-date is different throughout each U.S. region. Single-family permits and multi-family permits increased in all four regions in February. For single-family Midwest had an increase of 24%, in the Northeast a 20.1% increase, the South had a 16.2% increase and the West came in last with a 13.6% increase. Multi-family saw the biggest increase in the West at 22%, next the South with an 18.4% increase, Northeast at 17.5% and the Midwest saw the lowest at only a 5.4% increase.

The District of Columbia saw the biggest increase in single-family permits issued YTD from February 2020 to February 2021 at 308.3%. Vermont saw a decline in single-family permits of 17.7%. The ten states that issued the highest number of single-family permits accounted for 63.8% of the total. Forty-four states and the District of Columbia had an increase in single-family permits between February 2020 YTD and February 2021 YTD.

Multi-family permits issued across the country in February 2021 YTD reached 83,110 which was 17.7% more than the reported 70,635 in February 2020. Thirty-six states and the District of Columbia had an increase while 14 states had a decline. The highest increase was seen in New Mexico with a 714.3% increase and Nebraska saw a huge decline of 66.9%. The ten states that had the highest number issued accounted for 66.4% of the total.

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THERE ARE TONS OF FINANCIAL BENEFITS IN HOMEOWNERSHIP

According to a survey done by Fannie Mae, homeownership is highly rated by consumers. In fact, they continue to see homes as a safe, high potential investment.  The Fannie Mae Q4 2020 National Housing Survey reported that consumers believe it is just as safe to invest in a home as savings and money market accounts.

The survey found that consumers relayed that the top four financial benefits of homeownership were a better chance of saving for retirement, the best investment plan, the chance to be better off financially and the chance to build up wealth. Of these four benefits, 88% of consumers felt it gave a better chance of saving for retirement, 87% felt it was the best investment plan, 85% felt it gave them a chance to be better off financially and 85% believe homeownership presented them a chance to build up wealth.

Consumers’ opinions are right on the money so to speak. The Federal Reserve’s Survey of Consumer Finances revealed that owning a home is a “clear financial benefit.” In the survey, it was reported that those who owned a home vs renting had a forty times higher net worth. As the housing market grows stronger, the gap between renters’ and homeowners’ net worth grows farther apart. Corelogic reported that the equity in homeownership grew by $26,300 over the last year which widened this gap even further.

Keeping Current Matters released data showing the gap in the net worth in every income category between homeowners and renters. For a homeowner making under $26,000 their net worth is $103,000 but a renter’s net worth is only reported at 1,000, homeowner’s making $26,000 – $46,000 their net worth is $140,000 and a renter making the same income net worth is $6,000, homeowners making $46,000 – $74,000 have a net worth of $190,000 while renters only have $11,000, homeowners making $74,000 – $127,000 have a net worth of $261,000 and renters only $34,000, homeowners making $127,000 – $192,000 have a net worth of $433,000 while renters making the same income have a net worth of $117,000 and homeowners making over $192,000 have a net worth of $1.66M while renters only $705,000.

Homeownership is a solid financial investment opportunity but should you choose to purchase a home, the best thing to do is use a local real estate professional. A Realtor can help you take the next steps towards homeownership.

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STRONG BUYER DEMAND BUILDS UP BUILDER CONFIDENCE

 

The latest National Home Builders Association/Wells Fargo Housing Market Index (HMI) reported that builder confidence increased in April 2021. For newly-built single-family homes, builder confidence was at an 83 in April.

The NAHB/Wells Fargo HMI surveys builders’ views on how the current single-family home sales and sales expectations for the next six months. The builder's rate as good, fair or poor. When asked about the traffic seen of prospective buyers, they rate it as high to very high, average or low to very low. Once the data is collected,  scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Today’s market is seeing an 88 for current sales conditions even with the high lumber prices and supply chain problems. For the traffic of prospective buyers, there was a three-point gain to 75. As for the different regions the Northeast was at 86 points, the South at 83 points, the West at 90 points and the Midwest came in at 78 points.

“Despite strong buyer traffic, builders continue to face challenges to add much-needed housing supply to the market,” said NAHB Chairman Chuck Fowke. “The supply chain for residential construction is tight, particularly regarding the cost and availability of lumber, appliances, and other building materials. Though builders are seeking to keep home prices affordable in a market in need of more inventory, policymakers must find ways to increase the supply of building materials as the economy runs hot in 2021.”

“While mortgage interest rates have trended higher since February and home prices continue to outstrip inflation, housing demand appears to be unwavering for now as buyer traffic reached its highest level since November,” said NAHB Chief Economist Robert Dietz. “NAHB’s forecast is for ongoing growth in single-family construction in 2021, albeit at a lower growth rate than realized in 2020.”

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NINETY PERCENT OF NEW HOME SALES IN Q1 2021 WERE BACKED BY CONVENTIONAL AND FHA MORTGAGES

The recent Quarterly Sales by Price and Financing, published by the U.S. Census Bureau, was analyzed by the National Association of Home Builders and found that conventional loans financed the largest share of new home sales since 2018.

Conventional loans in Q1 2021 were reported at 71.6%, FHA came in at 19.3%, VA loans at 5.3% and cash new home sales were 4.1%. As far as the percentage points increase from Q1 2020, conventional loans rose 2.1 percentage points and FHA-backed sales were up 1.6 percentage points. Unfortunately, VA loans decreased 2.1 percentage points and cash sales dipped 0.9 percentage points.

The four-quarter moving average (MA) of the share of new home sales backed by FHA has increased over the past two and a half years from 12.2% to 18.9%. Conventional loans however have seen a 4.4 percentage points decrease during the same period.
Even with a small increase, interest rates are still at historically low levels. The stock market returns topping 20% from Q1 2020 to Q1 2021 have played important roles in the large increase in the number conventional loan and cash purchases relative to sales financed through the FHA and VA.

Now is a great time to purchase a home with low interest rates and in turn a great time to also sell. The national median sales price for a new home reported was $347,500 and those homes sold back by financing were $386,600.
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