December 1, 2017
Existing-home sales increased 2% in October to their strongest pace since earlier this summer, but continual supply shortages led to fewer closings on an annual basis for the second straight month, according to the National Association of Realtors®.
The median existing-home price for all housing types in October was $247,000, up 5.5% from October 2016 ($234,100). October’s price increase marks the 68th straight month of year-over-year gains. Even the value of Santa Claus’ house is up 6.5% year over year!
Total housing inventory at the end of October decreased 3.2% to 1.80 million existing homes available for sale, and is now 10.4% lower than a year ago and has fallen year-over-year for 29 consecutive months.
Properties typically stayed on the market for 34 days in October, which is unchanged from last month and down from 41 days a year ago. Forty-seven percent of homes sold in October were on the market for less than a month.
New home sales increased 6.2% to a seasonally adjusted annual rate of 685,000 units in October, the highest level since October 2007. New home sales, which are drawn from permits, show more than two-thirds of the new homes sold last month were either under construction or yet to be started. Buyer enthusiasm shows they are willing to commit early to secure a home in a market that still has tight inventory in many cities.
FHFA Increases Conforming Loan Limits
The FHFA’s third quarter 2017 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that house prices increased 6.8%, on average, between the third quarters of 2016 and 2017. In response, the FHFA said that the baseline maximum conforming loan limit in 2018 would increase by the same percentage – from $424,100 to $453,100.
Loan limits will also be increasing in “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. The maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit.
The new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 (which is 150% of $453,100), up from $636,150 in 2017.
View 2018 conforming loan limits by county >
5 Housing Prediction Trends for 2018 From Realtor.com®
- Inventory to start increasing: Majority of this growth will be in the mid- to upper-tier price points (homes priced above $350,000), but recovery in the starter home market likely will linger.
- Price appreciation to slow: Home prices to slow to a 3.2% growth year over year nationwide, compared to the 5.5% increase in 2017.
- Millennials to gain market share: Millennials may reach 43% of home buyers taking out a mortgage by the end of 2018, up from an estimated 40% in 2017.
- The Southern cities to lead in sales growth: Markets like Tulsa, Okla.; Little Rock, Ark.; Dallas; and Charlotte, N.C., are expected to see sales increase by 6% or more. Nationally, sales growths are predicted to grow by 2.5%.
- Tax reform wild card: Tax reform could dampen 2018 sales and price forecasts, depending on the details of the tax plan that is finally adopted.
New Homes Are Getting Smaller
Builders are responding to the needs of the entry-level market by decreasing the size of new single-family homes, according third-quarter housing data compiled by the National Association of Home Builders.
- The median square footage of a single-family home was 2,378 square feet
- The average square footage for new single-family homes declined to 2,518 square feet
Building Materials Designed From Organic Waste
A new report from the design, engineering, and business consultancy Arup identifies a dozen organic waste products that can be transformed into building materials, as well as how they can be used and where they can be sourced:
- Sugarcane can be used for internal use, floors, fiberboard, and furniture
- Rice can be used in cement, bricks, ceramic glaze, and insulation
- Hemp and Flax can be used in insulation for walls, doors, and ceilings
- Cellulose can be adapted for internal use, wall panels, and ceilings
- Sunflowers can be adapted for internal use, floors, ceilings, and walls
- Pineapple can be adapted for internal use, cladding, and furniture