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Real Estate News

Latest Realty News from NAR

Land Market Shows Slow But Steady Growth in 2018, According 2018 RLI-NAR Land Survey

With rising interest rates and commodity prices still depressed, land sales and land prices continued to increase, although at a modest pace, during October 2017 – September 2018, according to the 2018 Land Market Survey of the REALTORS® Land Institute and the National Association of REALTORS®, an annual survey of land practitioners.

Land sales in dollar volume rose two percent during the reference period of October 2017 – September 2018 compared to the level of sales during the prior 12 months, a smaller rate of increase compared to the four percent growth during the October 2016 – September 2017.

Among types of land, residential land sales posted the highest increase at 4 percent, followed by commercial and recreational land, each growing at 3 percent.   Residential and commercial land sales rose at a modest pace compared to the pace of growth during October 2016 – September 2017.  The slower growth in residential land transactions reflects the slowdown in home sales since the second quarter of 2018 and the slower pace of price appreciation. During the same period of October 2017- September 2018, existing home sales were down by about 1 percent compared to the level during the prior 12 months, while the median sales price of existing home sales were up at a modest 4.2 percent on a year-over-year basis compared to the 5.5 percent price gain in November 2017.

Commercial land sales also rose at a modest pace, as higher interest rates exerted a downward pressure on commercial land prices to keep returns in line with rising interest rates.

Agricultural land sales rose at a slow pace of one percent, with commodity prices still depressed, with prices of cattle, livestock, and grains still below 2015 levels.

Residential and commercial land also posted the highest price appreciation. On average, residential land rose five percent during the reference period, while commercial land rose four percent, the same pace in the 2017 survey.

In addition to market conditions (rising interest rates, low commodity prices), respondents noted several issues affecting land market transactions such as getting the right appraisal/valuation for land, especially in rural areas, the lack of lender financing, and changes in zoning and local regulations that slow land development.

Among land practitioners who participated in the survey, nearly half of land sales were for recreational land (28 percent of land sales) and residential land (27 percent). Timber, agricultural non-irrigated, and ranch land transactions accounted for 10 to 12 percent each.  Commercial land transactions accounted for four percent.

Regions 7, 8,9, and 10 accounted for 70 percent of land sales among the respondents.

About the 2018 Land Market Survey

The Land Market Survey is a collaboration of the REALTOR® Land Institute (RLI) and the National Association of REALTORS® (NAR) that started in 2016.The objective of this survey is to gather information and insights about land transactions among land real estate professionals that can be used as a resource in conducting land business.

RLI sent out the survey to 1,323 RLI members and approximately 5,000 prospects who are engaged in land transactions, 809 of which responded to the survey.  NAR and RLI conducted the online survey from October 8–November 23, 2018. The 2018 survey gathers information on transactions during the reference period of October 2017–September 2018.

The annual Land Markets Survey is a tool for landowners and land real estate professionals in all sectors of the business to use for bench-marking and as an informational resource when conducting business. This year marks the sixth consecutive year that the survey has been conducted to reveal current trends and the ever-changing state of land markets within the industry; and this year’s survey had the highest participation rate ever. The Realtors® Land Institute has made the full survey results available for free to the public on their website.                                                                         

The Realtors® Land Institute, “The Voice of Land,” continually strives to maintain its status as the acknowledged leader for all matters pertaining to the land real estate profession. The Realtors® Land Institute provides the expertise, camaraderie, and valuable resources that are the foundation for all land real estate professionals to become the best in the business. For more information, visit rliland.com or call 800.441.5263.

November 2018 Housing Affordability Index

At the national level, housing affordability is down from last month and down from a year ago. Mortgage rates rose to 4.99 percent this November, up 19.1 percent compared to 4.19 percent a year ago.

  • Housing affordability declined from a year ago in November moving the index down 10.6 percent from 161.0 to 144.0. The median sales price for a single family home sold in November in the US was $260,500 up 5.0 percent from a year ago.
  • Nationally, mortgage rates were up 80 basis point from one year ago (one percentage point equals 100 basis points).
  • The payment as a percentage of income was up from last month at 17.4 percent this November and up from 15.5 percent from a year ago. Regionally, the West has the highest payment at 23.8 percent of income. The Northeast had the second highest payment at 17.1 percent followed by the South at 16.8 percent. The Midwest had the lowest payment as a percentage of income at 13.7 percent.

  • Regionally, the Northeast recorded the biggest increase in home prices at 8.2 percent. The South had an increase of 3.8 percent while the West had a gain of 2.4 percent. The Midwest had the smallest growth in price of 1.6 percent.
  • Regionally, all four regions saw a decline in affordability from a year ago. The Northeast had the biggest drop in affordability of 14.4 percent. The South had a decline of 9.3 percent followed by the Midwest that fell 9.2 percent. The West had the smallest drop of 7.2 percent.
  • On a monthly basis, affordability is down from last month in all of the four regions. The Northeast region had the decline of 5.5 percent. The South had a decline of 2.0 percent followed by the Midwest with a dip of 1.8 percent. The West had the smallest dip in affordability of 0.7 percent.
  • Despite month-to-month changes, the most affordable region was the Midwest, with an index value of 181.9. The least affordable region remained the West where the index was 105.0. For comparison, the index was 148.8 in the South, and 146.4 in the Northeast.

  • Mortgage applications are currently up while credit availability is down. Rates are higher this month but are still historically low. Home prices are up 5.0 percent while median family incomes that are growing 3.0 percent. The job market is steady. More inventory is welcome on the lower end of the market whereas there is more supply of inventory for high priced homes.
  • What does housing affordability look like in your market? View the full data release here.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.

Throwback Thursday: First-Time Homebuyers Then and Now

In 1981 when NAR first started tracking the data, the average age of a first-time homebuyer was 29.  They made up 44 percent of all homebuyers.  Sixty-eight percent of first-time buyers were married couples, 12 percent were single female and 13 percent were single male (seven percent were other).

In contrast, in 2018, the average age of a first-time homebuyer was 46 and they accounted for 33 percent of all homebuyers.  Fifty-four percent were married couples, 18 percent were single female, 10 percent were single male, and 16 percent were unmarried couples (two percent were other).

In 1989, first-time buyers largely rented an apartment before they bought their home at 80 percent, and 15 percent lived with parents, relatives, or friends.  In 2018, the share of first-time buyers that lived in an apartment before they bought their home slipped to 71 percent while the share of those that had been living with parents, relatives, or friends previous to buying rose to 23 percent.

Planning to Buy a Home in 2019?

Mortgage rates are starting off 2019 at very good levels. In fact, mortgage rates declined, starting the new year with the 30-year fixed rate mortgage dipping to 4.5 percent last week from 5 percent a month ago, according to mortgage finance provider Freddie Mac[1]. After a year of gradual increases, mortgage rates are declining. Stock market volatility, global trade worries and the government shutdown are pushing rates down to their lowest levels since August.

But how do mortgage rates affect homebuyers? Fixed-rate mortgages are amortized over the life of the loan. That means that at the beginning of the loan term, most of the mortgage payment goes toward paying off interest. Over time, a larger percentage of the monthly payment is applied to the loan’s principal balance. Thus, when interest rates are low, homeownership is more affordable. If less is spent on interest, homebuyers may be able to afford a larger loan. However, higher rates increase the long-term cost of owning a house.

NAR calculated the monthly payment based on the mortgage rate in the first week of January (4.5 percent) and the rate (5.0 percent) that was previously expected. Nationwide, it is estimated that the monthly payment at 4.5 percent rate is $1,208, while a higher rate of 5.0 percent increases the monthly payments by $72 to $1,280.

The effect of the mortgage rates varies from location to location. In high-end areas, homebuyers are expected to benefit more from lower rates than homebuyers in other areas. For instance, in the San Jose-Sunnyvale-Santa Clara, CA metro area, comparing the monthly payment at 4.5 percent and 5 percent rates, homebuyers pay $353 less every month for their payment at a 4.5 percent rate. However, at the low-end areas, in Youngstown-Warren-Boardman, OH-PA, the monthly payment at 4.5 percent rate is $26 less compared to the payment at 5 percent rate.

The visualization below allows you to see how much the monthly payment changes at 4.5 and 5.0 percent rates for 178 metro areas:

We also calculated the monthly mortgage payment for 3,119 counties and county-equivalents in the United States. Please visit the following web page to see the monthly mortgage payment at the county level.

Thus, homebuyers can still benefit from lower rates. Although the average rate on the 30-year fixed rate sat just below 4 percent for a year in 2016, homebuyers should bear in mind that, back in 1982, the rate was over 17 percent for more than a year. Moreover, historically[2], the average mortgage rate is 8 percent. Therefore, rates are still historically low. Looking ahead, NAR is forecasting the 30-year fixed rate mortgage to average 4.9 percent for 2019 and 5.2 percent for 2020, respectively.

See below how the 30-year fixed mortgage rate has been trending since 1971:


[1] Primary Mortgage Market Survey, Freddie Mac.

[2] Between 1971 and 2019.

Seasonality in the Housing Market

Every year, transactions and prices tend to be above-trend in the summer while activity typically slows down in the winter. Seasonality plays an important role in the housing market since it has an impact on the housing demand and supply. In this post, we exclusively look at the (raw) non-seasonally adjusted numbers for existing home sales and prices to compute the extent of seasonality across the United States.

Since 1999, the National Association of REALTORS® has been releasing the existing home sales activity and prices each month. The statistics are accompanied by announcements which indicate the prior month’s activity:

“Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.9 percent from October to a seasonally adjusted rate of 5.22 million in November.”

These headline figures are seasonally adjusted figures and are reported in the news.  However, using the example above, this was not the actual number of sales in November but the number of sales after adjusting for seasonality. For everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been.

NAR releases both the seasonally and non-seasonally adjusted estimates. Let’s take a closer look at the non-seasonally adjusted figures. The visualization below allows you to see the number of sales and level of prices for the last 19 years.

Both sales activity and prices follow the same trend. The number of home sales increases significantly in the spring season. Specifically, sales activity between February and March typically increases by 34 percent while prices rise by 3 percent. Sales continue moving upward in the following months, but it is interesting to see that the busiest home selling months are May, June, July and August. The average number of transactions during this four-month period is 2.1 million and accounts for 40 percent of the annual sales volume. Among these four months, June is typically the peak month of home selling activity.

In contrast, the slowest months of selling activity are November, December, January and February. When we compare the sales in the peak season with the activity in the slow season, we see that the total number of sales in the slow season accounts for 68 percent on average of the total activity in the peak season. For instance, the total sales volume was 2.2 million during May 2017 – Aug. 2017 while the number of sales was 1.5 million during Nov. 2017 – Feb. 2018. Among these four months, January is typically the slowest month of home selling activity.

Demand and mobility are highest in the summer, as the data on existing home sales indicate. It seems that homebuyers tend to move in the summer, and especially for renters who buy, they are even more likely to move at that time. For households with school-aged kids, the reasons of moving in the summer are obvious—it is a traditional time to move to new school districts. Nevertheless, while mobility trends are self-reinforcing, we see that households without kids tend to move in the summer as well.

Regional Seasonality

However, the seasonality of a market varies from location to location. It is very interesting to see that selling activity in Midwest and Northeast gets much busier in the peak season than in any other region in the United States. For instance, in the Midwest, sales in the slow season account for 60 percent of the sales in the peak season compared to 71 percent in the West. In 2009, all regions experienced the highest effects of seasonality. For example, in the Northeast region, sales in the slow season were half of the sales in the peak season. The visualization below compares the sales activity between these two periods for all four regions.

Thus, the housing activity early in the year provides clues about the rest of the year. If the activity in the slow, winter months is higher than last year’s activity, then this should suggest that existing home sales activity might be busier during the peak season as well.


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