Welcome to Connie Mahan Real Estate Group - your source for Sumter County real estate.
In addition to specializing in Sumter County, we also service Lake, Pasco, Hernando, Citrus, and Marion counties.
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Keeping you updated on the market!
For the week of
July 21, 2014
A Tale of Two Markets
Actually, we refer to one market – the new-home market. But we say two, because we refer to the new-home market now and the new-home market in the future.
As for the here and now, the market appears somewhat languid. New-home starts come in at 893,000 units on an annualized rate in June. This is 9.3% lower than the revised 985,000 units posted in May. As for the important single-family segment, starts come in at 575,000 units on an annualized rate, which is 9% lower than the number of units in May.
The good news is that the future new-home market appears more robust – at least that's our take from the latest Home Builder Sentiment Index .
Builder confidence for new single-family homes surpassed an important milestone in July, rising four points to a reading of 53. Anything above 50 indicates that builders are more positive than negative on the outlook for new-home activity. This is the first time since January that the index has crested above 50. This suggests we should look forward to more new-home construction and more new-home sales in coming months. Let's hope that's the case.
We say “hope” because we'd be more optimistic on a pick up in both new- and existing-home activity if we saw a pick up in purchase-mortgage activity. Unfortunately, weekly activity across the country is down, and not by an insignificant percentage. The Mortgage Bankers Association reports its purchase index fell 8% for the July 11 week, more than reversing a 4% gain in the prior week.
Of course, we offer our usual caveat: all markets are local. So, what occurs in any local market doesn't necessarily jibe with a national number. (For instance, a large slice of fewer housing starts in June was centered on the South.) Still, we would like to see more purchase activity, especially purchase activity driven by the owner-occupied buyer.
Fortunately, rates are still very favorable for anyone seeking financing. Bankrate.com's national survey has the 30-year fixed-rate conforming loan pegged at 4.3%, about where it has been for the past month. Freddie Mac's survey has the 30-year loan at 4.13%.
To be sure, mortgage rates have shown little inclination to go anywhere, but another month or two of 200,000+ monthly job gains could easily (and quickly) set rates on a path to higher ground.
Young and Apparently More Restless
A couple weeks ago, we lamented the dearth of young adults venturing out on their own. Indeed, Pew Research , a think tank, reports that nearly one in four young adults (age 25-to-34) still live with their parents, more than double the 11% who lived with their parents in 1980. We reasoned that many of these young adults have either poor job prospects or are weighted down by onerous student-loan debt.
Perhaps we over-reacted a bit. Now, it appears more of these young adults are willing to become actual adults by moving out on their own. What's more, many of them are buying a home. Trulia reports that the number of young adults age 18-to-34 who became homeowners rose 0.9% in 2013. Trulia's data contrast with Census Bureau data that show ownership fell by 0.1%.
More millennials entering the market would be the start of an important housing trend. Better yet, it would be the start of a trend with considerable staying power.
A large percentage of young adults out of the housing market is a source of large pent-up demand, which could lift overall demand for years to come. As more millennials enter the market, they will have a ripple effect that will lead to more demand for more expansive homes. As millennials become more established in their jobs, they'll naturally seek to trade up.
Living with mom and dad is comfortable, but unhealthy as an adult. Eventually everyone has to make a break. This basic fact of life bodes well for housing over the long term.
If you have questions on the local market in your area or would like to discuss your next real estate step, don't hesitate to contact us.
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Connie Mahan Real Estate Group Inc.
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