The Story on Inventory

Limited housing inventory continued to push home prices up in 2016, but the year ended with positive news that might pull potential buyers into the market.

Home prices, including distressed sales, rose 7.1 percent from November 2015 to November 2016, according to CoreLogic, a leading provider of consumer, financial and property information. For regions struggling with limited housing inventory, Housing Starts may provide some hope.

Housing Starts Surge
December Housing Starts surged 11.3 percent from November, the Commerce Department reported. The welcome news follows a disappointing pullback in November and a nine-year high in October. For all of 2016, average monthly Housing Starts were the best since 2007. Building Permits, which signal future construction, fell short of expectations in December.

Existing Home Sales and New Home Sales followed a similar path downward in December. But the latest reports still had good news to share.

Existing Home Sales closed out 2016 as the best year in a decade, though December's numbers were below expectations. The National Association of REALTORS® reported that sales in 2016 were 5.45 million units, above the 5.25 million in 2015 and the highest since the 6.48 million in 2006.

New Home Sales fell 10.4 percent from November to December. It was the lowest level since February 2015 and down 0.4 percent from December 2015. Although the news was disappointing, data showed a near six-month supply of new homes for sale, which finally signals a healthy balance between supply and demand.

Expanded housing inventory along with expectations of higher home loan rates in 2017 could slow home price gains.

Home Loan Rates Rise but Remain Attractive
Home loan rates were able to improve slightly in the first part of January, following the post-election volatility in Stock and Bond markets at the end of 2016. Positive economic news, rising inflation and transitions under the new Trump administration may provide some headwinds for Mortgage Bonds and home loan rates in 2017, although rates are still in historically low territory.

 

 

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