Manage episode 289320875 series 1248803
In this Real Estate News Brief for the week ending April 3rd, 2021... an economic update from Fannie Mae, a surge in consumer optimism, and the return of the cicadas.
We begin with economic news from this past week, and an updated economic forecast by Fannie Mae. The mortgage guarantee enterprise is expecting real GDP growth to hit 8.4% in the second quarter of this year, and 6.6% for the full year. It is anticipating the GDP to settle down a bit in 2022. Currently, risks to the economic recovery are viewed as neutral. That includes the future path of COVID-19 and its variants, the easing of social restrictions, and whether consumers will start spending more money from their personal savings. The housing market is expected to remain resilient with purchases hitting $1.82 trillion this year. That’s up from $1.61 trillion last year. Rising interest rates are not expected to have much of an impact. Fannie Mae’s chief economist Doug Duncan says: “While we forecast some continued upward movement, mortgage rates remain historically low, as they are still .8 percentage points below the 2019 average.” (1)
There was a spike in first-time unemployment claims last week, but economists are expecting numbers to go down soon, as the economy strengthens. The government says that state claims jumped to 719,000. Combined with claims for federal benefits, the total was “less” than one million. That figure fell below one million two weeks ago for the first time since the pandemic began. (2)
The March report on job growth shows a surprising surge in new positions. It says that companies created more than 900,000 new jobs with the largest percentage in the leisure and hospitality industry. But there were also a lot of new jobs for the government and the construction industry. MarketWatch says that job growth easily exceeded Wall Street expectations.
The official unemployment rate is now down to 6%, but that figure doesn’t include about 4 million people who lost their jobs during the pandemic, and left the workforce. (3)
Pending home sales were down by a significant amount in February due to the lack of existing home inventory along with higher interest rates and homes prices. The National Association of Realtors says pending home sales were down 10.6%. They fell in all parts of the country, but they were down the most in the South with a 13% drop. (4)
Chief economist for Realtor.com, Danielle Hale, expects that home price growth will settle down as more sellers put their homes on the market this spring. But prices have already jumped quite a bit. According to the S&P CoreLogic Case-Shiller national price index, they were up 11.2% year-over-year in January. Phoenix has the highest price appreciation at 15.8%. (5)
We will need to see a lot of new sellers to help slow that price growth, and meet demand. Realtor.com’s Monthly Housing Trends Report shows there are 52% fewer homes on the market this year than there were last year. And the national median home price is up 15.6% to $370,000 in March, which is an all-time high. (6)
The lack of existing homes is pushing many first-time buyers into the new home market. According to the National Association of Home Builders, new home buyers account for 43% of sales. That’s up from 32% in 2018. (7)
Construction spending dipped in February, mostly because of severe weather in many parts of the country. The Commerce Department says it slipped .8%. It’s still up 5.3%, however, compared to a year ago. And it’s expected to bounce back rapidly this spring. (8)
Consumer confidence is surging. It hit a one-year high of 109.7 in March. That’s up from 90.4 in February. The Conference Board survey was done as people received $1,400 stimulus checks and more people were vaccinated. (9)
Mortgage rates didn’t move much this last week. Freddie Mac says the average 30-year fixed-rate mortgage was only up one basis point to 3.18%. The 15-year didn’t budge and remains at 2.45%. (10)
In other news making headlines...
Eviction Moratorium Extended
The CDC extended the national eviction moratorium another three months. It now ends on June 30th. The moratorium has been challenged by several states and local governments because it has left many landlords without rent payments to pay their own bills.
Landlords do have access to some amount of rental assistance from relief packages passed by Congress. The National Association of Realtors helped make that happen, but NAR’S chief advocacy officer, Shannon McGahn says: “Our focus now turns to ensuring there is not just enough funding but also a smooth implementation of rental assistance while the various challenges to eviction bans work their way through the courts.” (11)
The Cicadas Are Coming
It’s been 17 years since the last invasion of a bug called the cicada. If you’re familiar with them, you probably know that they are expected to emerge from their underground hiding place this spring.
They are grass hopper-like bugs that shed their skin, and leave behind mounds of their sloughed-off exterior in the yards that they occupy. They are also very loud, and can be heard as far away as a half a mile.
States expecting this kind of invasion are located in the central east coast region, up through New York, New Jersey, and Pennsylvania then west toward the north central states.
You’ll find links to all these stories on the podcast player page for this episode at www.NewsForInvestors.com
7 - https://www.worldpropertyjournal.com/real-estate-news/united-states/tampa-real-estate-news/real-estate-news-national-association-of-home-builders-wells-fargo-housing-market-index-march-2021-first-time-home-buyer-data-nahb-reports-covid-impac-12449.php