Lack of housing inventory continues to push prices
Available existing homes for sales dropped 7.2% in the first quarter.
Low inventory is stalling home sales while pushing up prices, according to the latest quarterly report from the National Association of Realtors.
The national median existing single-family home price in the first quarter was $245,500, up 5.7% from the first quarter of 2017 median price of $232,200. The median sales price during the fourth quarter of 2017 climbed 5.3% from the fourth quarter of 2016.
Single-family home prices also increased in 91% of measured markets, with 162 out of 178 metropolitan statistical areas showing sales price gains in the first quarter compared to a year ago. Nearly 30% of metro areas realized double-digit price increases, up from 15% in the fourth quarter of 2017.
“The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets,” said Lawrence Yun, NAR chief economist, “Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds.”
Yun says that areas with strong job markets report that consumer frustration is rising. “Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.”
Total existing-home sales, including single-family and condos, decreased 1.5% to a seasonally adjusted annual rate of 5.51 million in the first quarter from 5.59 million in the fourth quarter of 2017, and are 1.7% lower than the 5.60 million pace during the first quarter of 2017.
At the end of the first quarter, there were 1.67 million existing homes available for sale, which was 7.2% below the 1.80 million homes for sale at the end of the first quarter in 2017, the NAR reported. The average supply during the first quarter was 3.5 months – down from 3.7 months in the first quarter of last year.
Although the national family median income rose to $74,779 in the first quarter, overall affordability decreased from a year ago because of rising mortgage rates and home prices.
To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $55,732 while a 10% down payment would require an income of $52,779, and $46,932 would be needed for a 20% down payment.
“Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018,” said Yun. “Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger paychecks following this year’s tax cuts. It’s simple: homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability.”
The five most expensive housing markets in the first quarter were the San Jose, California metro area, where the median existing single-family price was $1,373,000; San Francisco-Oakland-Hayward, California, $917,000; Anaheim-Santa Ana-Irvine, California, $810,000; urban Honolulu, $775,500; and San Diego-Carlsbad, $610,000.
Tractor Supply shareholders elect healthcare exec
Denise Jackson is the chief legal officer for AMN Healthcare, the largest U.S. healthcare workforce provider.
Tractor Supply Company shareholders have elected Denise Jackson to the farm and ranch retailer’s board of directors.
Jackson has more than 17 years of leadership experience in her role as general counsel and corporate secretary of a publicly traded company and has considerable expertise in corporate governance, legal, compliance, risk management and government affairs. She currently serves as chief legal officer and corporate secretary for AMN Healthcare Services, Inc., the nation’s largest healthcare workforce solutions and staffing company.
“It is an honor to join the Tractor Supply Board of Directors during the Company’s 80thyear of operations. I look forward to contributing to the Tractor Supply team as they execute the Company’s ONETractor strategy to provide a seamless shopping experience for its customers,” Jackson said.
Shareholders also re-elected directors Cynthia Jamison, Peter Bewley, Thomas Kingsbury, Ramkumar Krishnan, George MacKenzie, Edna Morris, Mark Weikel and Gregory Sandfort, also the CEO of Tractor Supply.
Based in Brentwood, Tenn., Tractor Supply is currently celebrating its 80th year of business and operates 1,700 stores in 49 states. The company recently said it plans to open 80 stores this year.
Tough winter results in big Q2 loss for Beacon Roofing
Despite record Q2 sales, the roofing distributor reports a $72.7 million loss.
A prolonged, rough winter took its toll on Beacon Roofing Supply as the roofing and building materials distributor reported a second quarter 2018 net loss of $72.7 million, from a net loss of $9.4 million in the second quarter 2017.
For the first half of 2018, the Herndon, Va.-based company reported a net loss of $5.1 million, falling from net earnings of $11.1 million in the first 6 months of 2017.
The losses occurred despite Beacon Roofing reporting second quarter sales of $1.43 billion – a company record and a 64% increase from sales of $871 million for the second quarter a year ago. For the first 6 months of 2018, Beacon reported sales of $2.55 billion, a 36% increase from sales of $1.87 billion for the first half of 2017.
During the second quarter, residential roofing product sales increased 19.7%, non-residential roofing product sales increased 35.6% and complementary product sales increased 263.2% over the prior year. But existing markets sales, excluding acquisitions, decreased 0.1% for the quarter.
“Second quarter results fell short of our expectations, as harsh winter weather conditions limited customers available work days. The year-to-year temperature declines, particularly throughout the Midwest, Ohio Valley and South, produced one of the most significant temperature drops in the past several decades,” said Paul Isabella, president and CEO of Beacon Roofing.
“The cold weather, combined with heavier February precipitation and March snowstorms, created a difficult environment for the roofing industry,” he added.
Regardless of the weather impact, during a traditionally tough season for roofing sales, Beacon was able maintain flat organic sales year over year for the quarter. Organic sales were bolstered by strong volume from hurricane impacted areas and company efforts in passing through manufacturer price increases, Isabella said.
Beacon Roofing Supply operates 563 branches throughout 50 states in the U.S. and Canada.
At the start of 2018, Beacon finalized its acquisition of Allied Building Materials in a $2.62 billion cash deal.