Slump in existing-home sales
Existing-home sales slumped for the second consecutive month in January and experienced their largest decline on an annual basis in over three years, according to the National Association of Realtors. All major regions saw monthly and annual sales declines last month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, sank 3.2% in January to a seasonally adjusted annual rate of 5.38 million from a downwardly revised 5.56 million in December 2017. After last month’s decline, sales are 4.8% below a year ago (largest annual decline since August 2014 at 5.5 percent) and at their slowest pace since last September (5.37 million).
[Read the NAR's full report here.]
Lawrence Yun, NAR chief economist, says January’s retreat in closings highlights the housing market’s glaring inventory shortage to start 2018. “The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,” he said. “While the good news is that Realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”
The median existing-home price for all housing types in January was $240,500, up 5.8% from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.
Total housing inventory at the end of January rose 4.1% to 1.52 million existing homes available for sale, but is still 9.5% lower than a year ago (1.68 million) and has fallen year-over-year for 32 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.6 months a year ago).
“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” said Yun. “However, there’s hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”
Multifamily Production Index posts gain for Q4
There is good news for multifamily production, according to the National Association of Home Builders (NAHB).
The Multifamily Production Index (MPI), issued today by the NAHB, posted a gain of seven points to 53 in the fourth quarter of 2017.
The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums. All three components increased in the fourth quarter: low-rent units rose two points to 56, market-rate rental units climbed 11 points to 54 and for-sale units increased nine points to 49.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained even at 41, with lower numbers indicating fewer vacancies. The MVI has been fairly stable since 2013, after peaking at 70 in the second quarter of 2009.
“Multifamily developers continue to see solid demand in many parts of the country,” said Steven Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of NAHB’s Multifamily Council. “However, developers need to be careful to manage costs as prices of land, labor and some building materials continue to rise."
“The positive MPI reading is consistent with builder sentiment readings in other segments of the housing industry,” said NAHB Chief Economist Robert Dietz. "Continued job growth and increasing household formation are key drivers for the multifamily market moving forward.”
More corporate expansion at Milwaukee Tool
Milwaukee Tool is on the precipice of another expansion project at its Brookfield, Wis. headquarters.
The company has planned a new 114,500 square-foot, multi-story building that would be placed on an existing 3.5 acre lot owned by the power tool manufacturer. The move would bring the company’s global headquarter space from 190,000 square feet to a proposed total of 504,000 square feet.
In recent years Milwaukee Tool has been vibrantly expanding its Brookfield headquarters with more than 300 jobs added in 2011 and nearly 1,300 positions this year. The latest announced expansion would create another 350 positions in the next 5 years with an average annual salary of $75,000.
“We must grow or die. We are committed to delivering a world-class work environment to attract, retain, and recruit the best talent in the world.” said Steve Richman, Milwaukee Tool Group president. “This investment is necessary for Milwaukee Tool to continue to deliver disruptive innovation and deliver on our commitment to users and distribution partners in driving productivity on the jobsite.”
The City of Brookfield is proposing a Tax Increment Financing (TIF) district, which would provide $3.5 million in TIF assistance to project costs estimated at over $32 million. The Wisconsin Economic Development Corporation is also working with Milwaukee Tool on possible incentives for the project.
This past December, Milwaukee Tool announced that it was expanding operations at three Mississippi locations, investing $33.4 million and creating 660 jobs.