Pending Home Sales Rebound in August

By Housing

After an unexpected decline in previous month, pending home sales rebounded in August, largely led by gains in the West.

The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI rose 1.6% from 105.6 in July to 107.3 in August, the second-highest level since 2018. On a year-over-year basis, sales were 2.5% higher than a year ago.

Regionally, all four major regions saw an increase in the PHSI from both last month and a year ago, particularly in the West. The PHSI in the West grew 3.1% from July, and was 8.0% up from a year ago.

The gain in all regions suggests that the slump in the West over recent years appears to be over and the housing market is starting to get a lift from lower mortgage rates. With Fed interest rate cuts and solid job growth, NAR expects sales will continue to rise in the coming months and into 2020. At the same time, rising demand and tight inventory will continue drive up home prices as well, making access to homeownership more difficult.

August New Home Sales Continue Rebounding

By Housing

Contracts for new, single-family home sales increased in August by 7.1% to a 713,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. The increase came off a upwardly revised July estimate, which was increased from an initial reading of 635,000 to a new estimate of 666,000. Year-over-year, the August estimate is 18.0% higher. Sales continue to grow in August supported by lower mortgage rates.

Total sales for the first eight months of 2019 (474,000) were 6.4% higher than the comparable total for 2018 (445,000). We expect the volume of new home sales to continue to expand along the current modest pace, subject to monthly volatility and supply-side cost concerns.

Inventory increased 2.5% from a year ago to a level of 326,000 single-family homes for sale in August. The current months’ supply stands at a balanced level of 5.5. However, standing inventory increased in the “Completed” construction category (81,000 units), suggesting an increase in inventory taking longer to be sold.

Median new home sales price (price of a home in the middle of the distribution) increased 7.5% in August to $328,400 compared to July and 2.2% higher from a year ago ($321,400).

For the first eight months of 2019 (and relative to the first eight months of 2018), new home sales were up 11.7% in the South, 7.8% in the West, and down 10.5% in the Midwest and 16.5% in the Northeast, due to some tax reform related effects and affordability.

August New Home Sales Post Solid Gains

By Industry News

Sales of newly built, single-family homes increased 7.1 percent to a seasonally adjusted annual rate of 713,000 units in August off a revised upward reading in July, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. On a year-to-date basis, new home sales for 2019 are 6.4 percent higher than the same period in 2018.

“With job growth continuing and lower interest rates in place, builders report rising confidence levels, and this is reflected in today’s solid sales report,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn.

“We have seen a general rebound in the housing market since spring, as sales, starts and permits have all registered gains,” said Danushka Nanayakkara-Skillington, NAHB’s AVP for Forecasting and Analysis. “However, affordability remains a factor because buyers can’t benefit from lower interest rates if they don’t have the money for a downpayment.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the August reading of 713,000 units is the number of homes that would sell if this pace continued for the next 12 months.

The inventory of new homes for sale was 326,000 in August, representing a 5.5 months’ supply. The median sales price was $328,400. The median price of a new home sale a year earlier was $321,400.

Regionally, and on a year to date basis, new home sales are 11.7 percent higher in the South and 7.8 percent higher in the West. Sales are down 16.5 percent in the Northeast and 10.5 percent in the Midwest.

Consumer Confidence Falls to 3-Month Low

By Housing

After modest decline in August, consumer confidence continued to fall in September, marking the biggest monthly decline this year.

The Consumer Confidence Index, reported by the Conference Board, slipped 9.1 points from 134.2 in August to 125.1 in September, as households are less optimistic about short-term economic outlook and recent escalation in trade tensions. The Present Situation Index decreased 7.0 points from 176.0 to 169.0, after hitting 19-year high last month, and the Expectation Situation Index dropped 10.6 points from 106.4 to 95.8, the lowest reading since January.

Both consumers’ assessment of current conditions and the short-term future weakened in September. The shares of respondents rating business conditions “good” fell by 3.6 percentage points to 37.3%, and those claiming business conditions “bad” rose by 2.8 percentage points to 12.7%. In addition to business optimism cooling, less favorable labor market conditions, following softer job growth last month, has drawn attention. The share of respondents reporting that jobs were “plentiful” decreased by 5.5 percentage points, while those saw jobs as “hard to get” declined slightly by 0.4 percentage points. The gap between these two shares has narrowed.

Though consumer confidence remains at a high level, the continued uncertainty, especially related to the recent escalation in trade and tariff may dampen consumer’s optimism about short-term outlook and result in further volatility in the index.

The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home fell to 5.2% in September. The share of respondents planning to buy a newly constructed home declined to 0.9%, and for those who planning to buy an existing home decreased to 2.7%. Despite the dimming economic outlook due to escalating trade conflicts, the Federal Reserve’s additional rate cut last week will provide a more favorable borrowing environment to home buyers.

Home Price Appreciation Unchanged in July

By Housing

In July, national home prices continued to grow at the same pace as in June. Three metro areas, including New York, Los Angeles and Washington DC, experienced home price declines for the month.

The Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices rose at a seasonally adjusted annual growth rate of 1.7% in July, unchanged from the previous month. On a year-over-year basis, the Case-Shiller U.S. National Home Price NSA Index posted a 3.2% annual gain in July, the lowest annual gain since September 2012. After fifteen straight months’ decreases, the annual growth rate remained unchanged in July.

Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 4.7% in July, following a 2.5% increase in June. On a year-over-year basis, the FHFA Home Price NSA Index rose by 5.0% in July, after an increase of 4.9% in June.

In addition to tracking home price changes nationwide, S&P also reported home price indexes across 20 metro areas. In July, local home prices varied and their annual growth rates ranged from -4.9% to 7.4%. Among the 20 metro areas, eleven metro areas exceeded the national average of 1.7%. San Diego, Seattle and Charlotte had the highest home price appreciation and experienced the acceleration in home price growth in July. San Diego led the way with a 7.4% increase, followed by Seattle with a 6.3% increase and Charlotte with a 6.2% increase.

Home prices in three metro areas declined in July. They were New York (-4.9%), Los Angeles (-4.5%) and Washington DC (-0.7%). It is the fifth consecutive month that New York experienced negative home price appreciation in 2019.

Why Provide a Green Homeowner Manual?

By Home Innovation

Homes today are complex – they involve systems within systems, integrated technologies, and dozens of “pieces” or components that homeowners rely on every day. Each home component – including systems, appliances, finishes, and more – has its own make, model, serial number, user manual, warranty information, and more.

A homeowners’ manual is the key to maintaining and understanding all of these components. It is a compilation of information to help homeowners quickly and easily find the information to operate and maintain their homes properly. With green homes this is particularly important as the efficiency and effectiveness of all the various elements that make the home “green” are very interrelated and cannot be overlooked. Homeowner education and documentation via a homeowners’ manual is a requirement of home certification to the National Green Building Standard™ (NGBS), but beyond that, it’s just good business!

Responses from NAHB and Guild Quality’s recent survey, “Homeowner’s Perspective: The Value of a Green Home,” illustrated that homeowners would like more education from their builders. Owners of Green Certified homes specifically requested education to “understand how to operate and maximize the benefits of the green-related features in their home.” Taking adequate, timely care of a home is extremely beneficial in the long run and a homeowners’ manual helps homeowners – your clients – protect their most significant and important investment.

What Should a Homeowner Manual Include?

A homeowners’ manual is an easy way to guide your clients to useful product information, common maintenance solutions, and homeowner education. It should also provide general green living tips, resources, and additional information.

The NGBS includes Homeowner Education/Maintenance elements as a way to ensure that homeowners are able to maintain and enjoy the long-term benefits from their homes’ green features. For a home to be NGBS Green Certified, the homeowners/maintenance manual must include all the mandatory items and obtain enough optional points to meet the Chapter 10 point threshold.

Where to Start: Inventory Home Components

A good starting point for your homeowners’ manual is the inventory of all of the major components and systems of the home. Each appliance or feature comes with a copious amount of information: a manual (or two); identifying numbers for the product; warranty information; and information on how to properly care for each component.

Ideally, this type of information should all be well organized and easily accessible. Logical ways to organize it may be by room or by system type. A simple spreadsheet, table, or list which references the item and physical location within the home, brand/manufacturer name, model name and number, and serial number is the most basic format.

Examples of home components to include are:

  • HVAC filters
  • thermostat operation and programming
  • lighting controls
  • appliances and settings
  • water heater settings
  • fan controls

Targeted Resources

Provide the homeowner advice, guidance, and resources for home care and research. This may include tips on how to save money on repairs, utilities, and replacements and help to reduce the total cost of homeownership. The key in this section is to make the information practical, easy to find and use.

Home-Related Resources

Homeowners often need references or other resources to conduct their own maintenance and improvements within the home. They can look to their neighbors, friends, or colleagues for these things, or they can rely on information you’ve provided them – and brag about how helpful their builder is to their neighbors, friends, and colleagues! These resources may include a diagram of the safety valves and controls in the home, local service providers for maintenance and service, frost-protected shallow foundation maintenance (where applicable), and photo records of the home’s framing with utilities. Be sure to include your/your business’s contact information in this information.

Guide to Maintenance Solutions

A narrative explaining the importance of maintenance and operation in retaining the attributes of a green-built building is the starting point for maintenance information. Maintenance checklists provide a baseline for homeowners on when to perform various maintenance tasks, as well as provide a guideline for what tasks are DIY versus those that may require calling a professional. Checklists may be organized as seasonal or annual, and you can either us a publicly available template or one you create. Your company may have a maintenance handbook that would be appropriate to include in this section of the manual as well. Other information you want to include: humidity maintenance how to’s; instructions for inspecting the building for termite infestation; maintenance of rainwater diverting systems (gutters and downspouts); and stormwater management.

Green Options & Landscaping

The exterior of homes and the landscaping around them often provide many opportunities for “greening up” practices and products. Options include understanding common hazardous materials used around the home and instructions for proper handling and disposal; information on organic pest control, fertilizers, deicers, and cleaning products; and information on native and/or low-water landscape materials.

Assembly, Presentation & Education

The intent of a homeowners’ manual is to deliver useful and timely information to homeowners – that’s a constant. How this information is delivered is more variable. Information may be delivered in a hard-copy printed version or in some digital/online format. Either way, the information should be organized and categorized for quick and easy access.

Homeowner education is typically conducted upon the walk-through of the house and can be easily reinforced with use of a homeowners’ manual. Good education and a comprehensive homeowners’ manual may even reduce call-backs, especially concerning the most common homeowner questions and concerns. Remember, homeowner education is an invaluable opportunity for you to showcase the quality of the green or high-performance home you have built, and your level of customer service.

You may wish to provide education and training on additional items as well. Your homeowners’ manual will offer your clients a lasting reminder of the care with which you built and presented their home.