NAR – pending home sales tumble in May for third
straight month
The ongoing supply shortages that are propping up home
prices in many metro areas caused pending home sales in
May to slump for the third consecutive month, according
to the National Association of Realtors (NAR). None of
the major regions saw an increase in contract activity
last month. The Pending Home Sales Index, a
forward-looking indicator based on contract signings,
decreased 0.8% to 108.5 in May from a downwardly
revised 109.4 in April. The index is now 1.7% below a
year ago, which marks the second straight annual
decline and the most recent since November and December
of last year. Lawrence Yun, NAR chief economist, says
it’s clear the critically low inventory levels in much
of the country somewhat sidetracked the housing market
this spring. “Monthly closings have recently been
oscillating back and forth, but this thir d consecutive
decline in contract activity implies a possible topping
off in sales,” he said. “Buyer interest is solid, but
there is just not enough supply to satisfy demand.
Prospective buyers are being sidelined by both limited
choices and home prices that are climbing too fast.”
The persistent housing shortages seen in several
markets are most severe, according to Yun, in the lower
price ranges. That’s very apparent when looking at the%
change in closings in May compared to a year ago. Sales
of homes under $100,000 last month were down 7.2% from
last year and up only 2.0% for those between $100,000
and $250,000. In higher price brackets, sales expanded
incrementally all the way up to massive increases of
26.0% for homes priced between $750,000 and $1 million
and even more for those $1 million and up (29.1%).
Weaker financial and economic confidence could also be
playing a role in the slowdown in contract activity.
NAR’s quarterly Housing Opportunities and Market
Experience (HOME) survey, released earlier this week,
found that fewer renters think it’s a good time to buy
a home, and respondents overall are less confident
about the economy and their financial situation than
earlier this year. “The lack of listings in the
affordable price range are creating lopsided conditions
in many areas where investors and repeat buyers with
larger down payments are making up a bulk of the sales
activity,” said Yun. “Meanwhile, many prospective
first-time buyers can’t catch a break. Prices are going
up and there’s intense competition for the homes
they’re financially able to purchase.” Existing-home
sales are forecast to be around 5.63 million this year,
an increase of 3.2% from 2016 (5.45 million). The
nation al median existing-home price this year is
expected to increase around 5%. In 2016, existing sales
increased 3.8% and prices rose 5.1%.”A much higher
share of homeowners compared to a year ago think now is
a good time to sell1, but until they do, sales will
likely stay flat and low inventory will keep price
growth moving swiftly,” said Yun.The PHSI in the
Northeast decreased 0.8% to 96.4 in May, but remains
3.1% above a year ago. In the Midwest the index was
104.5 in May (unchanged from April), and is 2.8% lower
than May 2016. Pending home sales in the South declined
1.2% to an index of 123.4 in May and are now 1.4% below
last May. The index in the West subsided 1.3% in May to
98.6, and is now 4.5% below a year ago.
ABC News settles ‘pink slime’ food-libel lawsuit
ABC News has settled a defamation lawsuit filed by the
maker of a processed-meat product that critics dubbed
“pink slime,” bringing to a close a high-profile legal
test of so-called food-libel laws intended to shield
the food-production industry from bogus food-safety
scares. Terms of the settlement weren’t announced. Beef
Products Inc. sued ABC News, anchor Diane Sawyer and
reporter Jim Avila in 2012 for $1.9 billion, over a
series of stories about its lean, finely textured beef
product—what critics dubbed “pink slime”—claiming it
was the victim of journalistic hit job that harmed its
business. A judge dismissed the claims against Ms.
Sawyer before the start of the jury trial, which began
earlier this month in South Dakota. Due to a South
Dakota food-libel law that triples damages against
tho se found to have knowingly lied about the safety of
a food product, ABC News was facing, potentially, $6
billion in damages. Beef Products, a family-owned South
Dakota meat processor, said in a Wednesday statement
the settlement validated that lean, finely textured
beef, made from defatted beef trimmings in a process
involving ammonium hydroxide, was safe. “While this has
not been an easy road to travel, it was necessary to
begin rectifying the harm we suffered as a result of
what we believed to be biased and baseless reporting in
2012,” Beef Products said. “Through this process, we
have again established what we all know to be true
about Lean Finely Textured Beef: it is beef, and is
safe, wholesome, and nutritious.”
MBA – mortgage applications decrease in latest MBA
weekly survey
Mortgage applications decreased 6.2% from one week
earlier, according to data from the Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications Survey
for the week ending June 23, 2017. The Market Composite
Index, a measure of mortgage loan application volume,
decreased 6.2% on a seasonally adjusted basis from one
week earlier. On an unadjusted basis, the Index
decreased 7% compared with the previous week. The
Refinance Index decreased 9% from the previous week.
The seasonally adjusted Purchase Index decreased 4%
from one week earlier. The unadjusted Purchase Index
decreased 5% compared with the previous week and was 8%
higher than the same week one year ago. The refinance
share of mortgage activity decreased to 45.6% of total
applications from 46.6% the previous week. The
adjustable-rate mortgage (ARM) share of acti vity
decreased to 7.0% of total applications. The FHA share
of total applications increased to 10.3% from 10.1% the
week prior. The VA share of total applications
decreased to 10.3% from 10.4% the week prior. The USDA
share of total applications remained unchanged at 0.7%
from the week prior.
Dow surges more than 100 points as bank shares jump
US equities traded higher on Wednesday as bank stocks
led the charge. The Dow Jones industrial average jumped
137 points with Goldman Sachs and Disney contributing
the most gains.The S&P 500 advanced 0.7% with
financials rising 1.3% to lead advancers. The SPDR S&P
Bank exchange-traded fund (KBE), which tracks large
banks, spiked 1.7% higher as investors braced for the
release of the Federal Reserve’s stress test results.
Analysts expect several big banks to come out of the
test with substantial increases in return to
shareholders — potentially using cash reserves to pay
out more than 100% of their profits. As a result,
higher figures would also reflect banks’ confidence in
their own financial health. Shares of JPMorgan Chase
and Goldman Sachs both climbed about 1%. Stocks also
jumped after the European Central Bank tried to walk back remarks made by ECB President Mario Draghi a day
earlier. A source familiar with Draghi’s knowledge told
Reuters that Draghi intended to signal tolerance for a
period of weaker inflation, not an imminent policy
tightening. Draghi said Tuesday “the threat of deflation
is gone and reflationary forces are at play,” sending
the euro to a one-year high against the dollar. The
currency pulled back from those levels on Wednesday
following Reuters’ report.
WSJ – labor shortage squeezes real-estate developers
About two-thirds of the contractors who are struggling
with the labor shortages gripping the construction
industry say it has become a challenge to finish jobs
on time, according to a new survey. More than one-third
of contractors said they are being forced to turn work
down and 58% said they are putting in higher bids, said
the survey sponsored by USG Corp. USG 2.80% and the US
Chamber of Commerce. Three-quarters of those who said
they are having difficulty finding skilled labor said
they are simply asking their employees to work harder.
“Basically they’re just making people work harder as a
way to cope,” said Steve Jones, senior director of
Dodge Data & Analytics, which was the research partner
of USG and the Chamber on the project. The survey was
conducted as part of the development of a new economic
indicator launche d earlier this month named the USG +
US Chamber of Commerce Commercial Construction Index.
It was designed to gauge such trends as backlogs,
revenue projections, access to financing and labor
issues. Two-thirds of the contractors surveyed
predicted there would be more workers in the next six
months. But 61% of the respondents reported problems
finding skilled laborers in such trades as concrete,
interior finishes, masonry, electrical and plumbing.
“There is reason for concern in the lack of qualified
talent,” said Tom Donohue, chief executive of the
Chamber in a written statement.
Industry officials are warning that labor shortages
will become more acute if the Trump administration
moves ahead with its plan to spend $1 trillion on
infrastructure. “We couldn’t absorb $1 trillion worth
of brand new work,” said Mr. Jones. “We’re already
strapped just dealing with the work we already
have.”Labor shortages are partly due to the increasing
number of construction projects moving forward. During
the first four months of this year, construction
spending amounted to $359.5 billion, 5.8% more than the
same period in 2016, according to the US Census Bureau.
Also, tens of thousands of workers left the building
trades during the economic downturn. Even before it
hit, the construction workforce was aging, Mr. Jones
said. “You had an aging workforce in an industry that
doesn’t lend itself to long careers because it’s hard,
physical w ork and then you lose a whole bunch of
people,” he said. The USG and Chamber survey asked four
questions on coping strategies to the 61% of
respondents who said they’re having difficulty finding
skilled labor.