Following the release of the Labor Department’s strong July Jobs Report on Friday the most significant chatter This Week in Real Estate was the continued speculation that the Federal Reserve will increase interest rates in September. Below are a few of the highlights from the first week in August that influence our business:
* Home Prices Rose an Amazing 6.5% Annually in June. Home prices nationwide, including distressed sales, increased 6.5% in June 2015 compared with June 2014, according to the June 2015 CoreLogic Home Price Index. This change represents 40 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, increased by 1.7% in June 2015 compared to May 2015. Including distressed sales, 35 states and the District of Columbia were at or within 10% of their peak prices in June 2015. Fifteen states and the District of Columbia reached their new price peaks. Excluding distressed sales, home prices increased by 6.4% in June 2015 compared with June 2014 and increased by 1.4% month-over-month compared with May 2015. Highlights as of June 2015: including distressed sales, the five states with the highest home price appreciation were: Colorado (9.8%), Washington (8.9%), New York (8.3%), South Carolina (8%) and Nevada (8%). Excluding distressed sales, the five states with the highest home price appreciation were: Colorado (9.3%), New York (8.5%), Washington (8.3%), Oregon (8.2%) and Nevada (7.9%).
* Solid U.S. Jobs Report in July. U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that opened the door wider to a Federal Reserve interest rate increase in September. 215,000 jobs were added in July according to the Labor Department. The economy has added around 2.9 million jobs over the past 12 months. That’s down slightly from earlier this year, when the 12-month pace surpassed three million, but it is still well ahead of the 2.5 millions jobs added for the year ended July 2014. Job growth over the past three months reached its highest level since February, with an average of 235,000 jobs added per month. The unemployment rate held steady at 5.3%. A string of 16 out of 18 months over 200,000 additional jobs going into the September meeting may give the Fed the confidence it seeks to pull the trigger in September. “We view this report as easily clearing the hurdle needed to keep the Fed on track for a September rate hike. The bar for not moving is much higher,” said Rob Martin, an economist at Barclays in New York. The U.S. central bank said its policy-setting committee anticipated it would be appropriate to raise lending rates when it has seen “some further improvement” in the jobs market. It has not raised rates since 2006. Given the accumulated progress to date and the most likely near term improvements, today’s employment report brings us one step closer on the path to a September liftoff. Full story… http://blogs.wsj.com/economics/2015/08/07/the-july-jobs-report-in-12-charts/?mod=marketbeat&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Feconomics%2Ffeed+%28WSJ.com%3A+Real+Time+Economics+Blog%29
* Smallest Share of Distressed Sales Since 2007. Sales of lender-owned real estate (REO) in May represented the smallest share of home sales in nine years. CoreLogic said that the overall share of distressed properties sold during the month, including short sales as well as REO, fell to 9.9 percent. This was 1.7 percentage points lower than the April share and 2.8 percentage points lower than a year earlier. Short sales have remained fairly stable at less than 4 percent share – 3.5 percent in May – since mid-2014, but REO has fallen steadily – in May it accounted for a 6.4 percent share. At the peak of market distress in January 2009, distressed sales totaled 32.4 percent of all sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in the distressed sales share continues, it would reach that “normal” 2-percent mark in mid-2018. Full Story… http://www.mortgagenewsdaily.com/08062015_corelogic_distressed_sales.asp
* Markets Continue to Move Toward Normal. The NAHB/First American Leading Markets Index (LMI) increased one point to .92 in the second quarter of 2015. The index measures proximity to a normal economic and housing market with three components: single-family housing starts, employment and home prices. A value of 1 means the market (or country) is back to the last levels of normality. About one-fifth of the 364 metro areas have a LMI value of 1 or better meaning those markets are back to or beyond the last normal. Of the three measures of normality, house prices has recovered the most with an average score of 1.29 and the national score is 1.35 meaning prices are 35% higher than the last normal. Ninety-five percent of the markets have a house price component value of 1 or above. The employment component is very close to normal with an average across all markets of .96. Single-family housing starts remains the farthest from normal with an average score across all markets of .49 and the national component index of .46, or less than half way back to normal. Only 26 markets are fully recovered in terms of single-family permits. Full Story… http://eyeonhousing.org/2015/08/markets-continue-to-move-toward-normal/
Have a productive week!