Despite Housing Shortages, Contract Signings Climb – Industry Outlook

By May 17, 2021Industry Outlook

Newly Built Homes Make Up 26% of Inventory – According to a national analysis of real estate data from Redfin, it’s a good time to work in a new-home niche as new-home construction becomes more attractive to home shoppers since the pandemic. The number of existing homes for sale has dropped to historic lows while builders are ramping up production. More than a quarter, 25.7% of single-family homes for sale during the first quarter were new-construction homes. “Building homes has become more attractive and profitable during the pandemic due to record-low mortgage rates and red-hot homebuyer demand,” says Taylor Marr, Redfin’s lead economist. “At the same time, many homeowners have opted to stay put and refinance or remodel their existing homes instead of selling them, allowing new-construction homes to take up a larger portion of the market.” Meanwhile, the number of existing homes for sale fell about 28% in March compared to a year ago, according to the National Association of REALTORS®.

Source and link to the full article: “Newly Built Homes Make Up 26% of All Single-Family Homes for Sale—A Record High,” Redfin (April 30, 2021)

Soaring Lumber Prices Add $36K to Average New-Home Price– Based on new housing data from the National Association of Home Builders, buyers who purchase newly constructed homes are paying more not only because of intense competition in the market but also surging lumber prices. Record-breaking growth for the cost of lumber is pressing on builders’ budgets and prompting them to pass along price increases to buyers. The increase in lumber prices over the past year has added $35,872 to the price of an average new single-family home and $12,966 to the price of an average new multifamily home. The latter translates to an extra $119 per month in rent for apartment dwellers. Some builders report slowing production due to the rising building costs. Still, single-family housing starts jumped 41% in March compared to a year earlier, according to U.S. Census Bureau data. More than a quarter of single-family homes that were on the market in the first quarter of this year were new construction, the highest share on record, according to Redfin research.

Source and link to the full article: “Soaring Lumber Prices Add $36,000 to the Cost of a New Home, and a Fierce Land Grab Is Only Making It Worse,” CNBC (April 30, 2021) and “Higher Lumber Costs Add More Than $35K to New Home Prices, $119 to Monthly Rent,” National Association of Home Builders’ Eye on Housing blog (April 28, 2021)

More Than a Third of Owners Regret Not Refinancing Earlier – According to a new LendingTree survey of 1,210 homeowners, a large share of owners may have missed out on the refinance frenzy last year. More than a third or 36% of homeowners who missed the 2020 refinance wave say they regret not taking advantage of the lowest mortgage rates ever. Many may have missed out due to a lack of knowledge about the refinancing process, falsely assuming they had to work with their original lender to refinance or could only refinance their mortgage once. Eleven percent of homeowners said they have no clue what their current mortgage rate is and whether refinancing makes sense for them. Millennial homeowners were the most likely to refinance their mortgages during the COVID-19 pandemic, according to the LendingTree study. Forty-two percent of millennials, 18% of Gen Xers, and 10% of baby boomers have refinanced their mortgage within the last year.

Source and link to the full article: “More Than 4 in 10 Millennials Refinanced Over Past Year, Almost Double the Overall Average,” LendingTree (April 20, 2021)

Despite Housing Shortages, Contract Signings Climb – Based on the National Association of REALTORS® recent report, pending home sales climbed in March, following two months of declines that were mostly blamed on a lack of homes for sale. Home buyer demand remains high, but inventory constraints continue to push on sales potential. NAR’s Pending Home Sales Index, a forward-looking indicator of homes sales based on contract signings, increased 1.9% in March and posted a 23.3% year-over-year gain. Part of that double-digit annual increase is due to a comparison to March 2020, when COVID-19 pandemic lockdowns began. Still, “the increase in pending sales transactions for the month of March is indicative of high housing demand,” says Lawrence Yun, NAR’s chief economist. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”

Source and link to the full article: National Association of REALTORS®

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