Real Estate Information Archive

It’s Still Mostly Good

We thought that new-home sales would post a bit higher than they did. After all, home-builder sentiment has been on the rise and is at a multi-year high. What’s more, July saw a 12.4% surge in new-home sales to 654,000 units on an annualized rate.

Unfortunately, the momentum proved unsustainable, at least for August. New-home sales posted at 609,000 units on an annualized rate for the month. This is obviously quite a bit lower than July’s sales, and quite a bit lower than our expectations.

But taking a glass-half-full view, we see that August sales really aren’t all the disappointing, because the long-term trend remains up. Year over year, new-home sales are up 20.6%. Year to date, sales are up 13.3% compared to the same year-ago period.

New-home buyers are at least seeing more affordability. Prices have fallen in recent months, which points to builder discounting. The median price, at $284,000, is down 3.1% on the month and down 5.4% on the year. In addition to discounting, there are signs that more lower-priced new homes are hitting the market. This is an obvious positive for drawing more younger first-time buyers into the market.

Housing – new-housing activity, in particular – has been the one persistent and dependable growth engine in the U.S. economy. Paradoxically, housing’s strength could be another reason the Federal Reserve continues to postpone an interest-rate increase. The Fed doesn’t want to risk stalling the one engine that’s firing on all cylinders. Then again, if the U.S. economy is as strong as some of the Fed officials believe, then the housing engine should be able to endure higher interest rates without stalling.

As for the economy, it’s growing, but hardly at a gangbuster pace. Second-quarter gross domestic product (GDP) was revised up this week to 1.4% on an annualized rate.  From a historical perspective, 1.4% annual growth is just “okay.” The good news is that the economy saw an uptick in nonresidential investment and consumer spending. Whether that’s enough to turn Fed sentiment more hawkish on interest rates remains to be seen.

 Information provided by Jessica Regan.

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When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Rates Rise on Strong Employment Numbers

Perhaps we shouldn’t have asked how low rates could go last week. When such a question comes to mind, the answer is usually self-evident. In this case, mortgage rates were unlikely to go lower; they were likely to go higher instead.

We thought they could go higher. The imbroglio over the Brexit vote was already dying down. It wouldn’t take much positive economic news to get things moving, and that includes interest rates.

We received a positive piece of economic news last Friday. The employment numbers for June came in much stronger than anyone expected. Payrolls were up a whopping 287,000 for the month. This was a welcomed turnaround compared to the dismal 38,000 payroll increase in May. Somewhat paradoxically, the unemployment rate also rose, by two-tenths of a percent to 4.9%. This is actually good news. It reflects an increase in labor participation and a decrease in the number of discouraged workers.

Interest rates were given an additional boost when officials at the Bank of England surprised financial markets by holding off cutting interest rates. Analysts expected the BoE to cut rates because of uncertainty and an expected economic slowdown as a result of the Brexit vote. BoE officials said that they would give it another month to assess Brexit’s economic impact.

Financial markets were receptive to the BoE’s actions and outlook. It’s becoming clearer that the Brexit vote will be less damaging to the U.K. economy than initially predicted, hence the delay in cutting interest rates. At the same time, BoE officials said that monetary policy will remain accommodating to financial markets.

Good news generally manifests in higher interest rates. Good news motivates investors to sell haven investments, like U.S. Treasury securities and precious metals, and buy riskier investments, like stocks.  Over the past week, the yield on the 10-year U.S. Treasury note has risen 15 basis points. Stocks are again trading near an all-time high.

Mortgage rates, most notably those on the 30-year fixed-rate loan, also moved decisively higher. This is no surprise. As the yield on the 10-year Treasury note goes, so goes the yield on mortgage-backed securities, and so goes mortgage lending rates.  

For the immediate future, there is no great impending concern to weigh on financial markets. Therefore, we wouldn’t be surprised to see lending rates trend a bit higher.

To be sure, someone is always worried about some possible impending doom somewhere. That’s always the case. But if you were to ask us where mortgage rates will be this time next week, we’d say either flat to slightly higher.  For now, everything looks calm and steady (relatively speaking). Rates rarely move lower when things are calm and steady.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Housing Leads the Economy

Housing matters to the economy, and it matters in a big way. National Association of Home Builder (NAHB) data tell us that residential investment – new construction and remodeling – averages roughly 5% of gross domestic product (GDP) annually. To put a dollar amount to the percentage, we’re talking roughly $875 billion annually.

Housing continues to pull its economic weight. Housing starts came in strong for February, rising 5.2% month over month to 1.178 million units when annualized. Single-family starts were especially robust, rising 7.2%.

That said, at least a few commentators were down on permits, a useful gauge for estimating future activity.  Permits were down 3.1% in February. The loss, though, was concentrated on multi-family starts. Single-family starts were actually up 0.4%. Year over year, growth in single-family permits has been healthy, up 6.3%. This suggests that new-home activity should remain elevated heading into the spring season.

So the news on new-home activity is good, but it’s not great. If we had one complaint, it would be the dearth of new-home construction for the starter end of market.

NAR data show that inventory for homes priced below $250,000 dropped 8.2% in January compared to a year earlier. When supply falls, prices usually rise, such are the laws of economics. Trulia data show that starter-home buyers on average need to devote 38%, up from 32% four years ago, of income to housing costs. These first-time buyers, mostly millennials, are housing’s largest segment.

If we could make one wish for this year, it would be a ramp-up in housing starts. Even at the current level, annual starts still run roughly 300,000 below historical norms. More starts all around would be nice, but more starts geared toward the starter-home market would be even nicer.

Who knows, maybe we will get our wish. Builders remain optimistic, particularly with regards to present and future sales. The Wells Fargo/NAHB Sentiment Index posted at 65 for present sales and 61 for future sales this month. A reading above 50 is positive. Sentiment on buyer traffic, which has been weak, is finally picking up, posting at 43, four points higher than the previous month. More buyer traffic could be what’s needed to kick-start lower-priced home construction.

Mortgage activity also continues to point to elevated housing activity. Despite mortgage rates rising in recent weeks, the Mortgage Bankers Association’s unadjusted Purchase Index was up 1% for the week. It’s up 33% compared to the same year-ago period.

Recent housing data, combined with recent positive economic data and financial market activity, suggest there’s good reason for optimism heading into the spring and summer months.

Information provided by Jessica Regan.

Search all Harrisburg PA homes for sale.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.