NAHB – builders confident as market primed to expand in
2018
Builder confidence in the market for newly-built
single-family homes increased five points to a level of
74 in December on the National Association of Home
Builders/Wells Fargo Housing Market Index (HMI) after a
downwardly revised November reading. This was the
highest report since July 1999, over 18 years ago.
“Housing market conditions are improving partially
because of new policies aimed at providing regulatory
relief to the business community,” said NAHB Chairman
Granger MacDonald, a home builder and developer from
Kerrville, Texas. “The HMI measure of home buyer
traffic rose eight points, showing that demand for
housing is on the rise,” said NAHB Chief Economist
Robert Dietz. “With low unemployment rates, favorable
demographics and a tight supply of existing home
inventory, we can expect continu ed upward movement of
the single-family construction sector next year.”
Derived from a monthly survey that NAHB has been
conducting for 30 years, the NAHB/Wells Fargo Housing
Market Index gauges builder perceptions of current
single-family home sales and sales expectations for the
next six months as “good,” “fair” or “poor.” The survey
also asks builders to rate traffic of prospective
buyers as “high to very high,” “average” or “low to
very low.” Scores for each component are then used to
calculate a seasonally adjusted index where any number
over 50 indicates that more builders view conditions as
good than poor. All three HMI components registered
gains in December. The component measuring buyer
traffic jumped eight points to 58, the index gauging
current sales conditions rose four points to 81 and the
index charting s ales expectations in the next six
months increased three points to 79. Looking at the
three-month moving averages for regional HMI scores,
the Midwest climbed six points to 69, the South rose
three points to 72, the West increased two points to 79
and Northeast inched up a single point to 54.
Wall Street poised for record on tax bill hopes
Wall Street’s main indexes hit new highs on Monday as
the long-awaited tax overhaul plan looked set for
legislation and buoyed by a flurry of year-end
corporate dealmaking that has topped $11 billion so
far. More US Republicans Senators on Sunday threw their
weight behind the tax bill they expect Congress to pass
this week. A Senate vote is set for Tuesday and
President Donald Trump is expected to sign the bill
into law by the end of the week.US stocks have enjoyed
a near year-long rally, of late powered by increasing
expectations of the promised tax overhaul, which aims
to lower corporate taxes to 21% from 35%, coming to
fruition. The benchmark S&P 500 has gained 19.5% so far
in 2017, set for its best year since 2013, as investors
bet that lower taxes could boost corporate profits and
trigger share buybacks and higher dividend payouts.
“The market is going to continue its rally based on the
belief that we’re going to see the Congress pass tax
reform,” said Robert Pavlik, Chief Investment
Strategist at SlateStone Wealth in New York. “People
are a bit weary about how long the rally will last, but
earnings continue to grow, (the) tax package should
help and the economy is doing well,” Pavlik said. “I‘m
very positive about the overall market. Lower corporate
taxes could also trigger cash repatriation, which
market analysts say could be used for merger and
acquisitions. On Monday, investors were treated to a
flood of deals.
CoreLogic – home price winners and losers
Since the US began recovering from the home-price bust
in 2006, economists have used the peak-to-current
change in prices as a measure of recovery in markets.
However, the peak-to-current change hyper-focuses on
economic losses for those who bought at the peak. What
about consumers who bought homes while prices were at
the bottom of the cycle? If someone was lucky enough to
buy as a market hit bottom and began to recover, they
have seen large home-price gains. Our view of home
price changes shows the peak-to-trough and
peak-to-current changes in the CoreLogic Home Price
Index (HPI) for the US, the four states with the
largest peak-to-current declines, and the four states
with the largest peak-to-current gains. In the states
where the HPI has passed the pre-crisis peak, the peak
used to calculate the numbers in Figure 1 is the
pre-crisis peak. The U S HPI peaked in 2006, and
returned to the 2006 peak in September 2017. Nevada
has the largest peak-to-current decline of any state,
and had the largest peak-to-trough decrease at 60%. On
the other end, North Dakota had a shallow
peak-to-trough decline, and has risen 47% above the
prior peak seen in 2008. A different view of the HPI
illustrates the depths of the most notable state-level
price declines and the subsequent upward trajectory in
those states, including the peak-to-trough and
trough-to-current HPI changes for the US and the seven
states that had larger peak-to-trough declines than the
US For the nation, from the 2006 peak to the 2011
trough, the loss was 33%, but from the 2011 trough to
September 2017 the gain was 50%. The most extreme drop
in the HPI was in Nevada, but prices in that state have
gained 89% since hitting bottom in 2012. For reference,
we can compare the gains in the HPI to gains in the
stock market. The S&P 500 fell 51% from peak to trough,
but has gained 229% from the trough through September
2017. The large price gains since the home-price bottom
translate into large amounts of home equity gained by
homeowners, improving their balance sheets. As shown in
the CoreLogic Homeowner Equity Report, in the 12 months
ending in September 2017, the average homeowner gained
nearly $15,000 in equity. Only seven states had equity
gains over the past year, but California and Nevada
stand out with the largest gains at $37,000 and
$23,000, respectively.
Average US gas price drops 3 cents to $2.51 for regular
The average price of a gallon of regular-grade gasoline
dropped 3 cents nationally over the past two weeks to
$2.51. Industry analyst Trilby Lundberg of the Lundberg
Survey said Sunday that further declines are likely
because US gas supplies are flush. The current gas
price is 25 cents above where it was a year ago. Gas in
San Francisco was the highest in the contiguous United
States at an average of $3.22 a gallon. The lowest was
in Jackson, Mississippi, at $2.14 a gallon. The US
average diesel price is $2.88, holding steady from two
weeks ago.