Affordability haunts home sales
Home prices are ascending, leaving many checkbooks behind.
With low inventory levels already having a dramatic impact on home sales this year, prices continue to grow even higher. And in many markets, the price tags are rapidly overtaking incomes and affordability.
The national median existing single-family home price in the second quarter was $269,000, up 5.3% from $255,400 for the second quarter of 2017, according to the National Association of Realtors (NAR). The median sales price during this year’s first quarter increased 5.7% from the first quarter of 2017.
Within 90% of the markets measured by the NAR, single-family home prices increased with 161 out of 178 metro markets demonstrating gains in the second quarter. Double-digit growth has occurred in 24, or 13%, of the markets, down from 30% in the first quarter.
According to Lawrence Yun, chief economist of the NAR, slim pickings on the market continues to add sizzle to prices.
“The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings,” Yun said. “With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers.”
Total existing-home sales, including single family and condos, decreased 1.7% to a seasonally adjusted annual rate of 5.41 million in the second quarter from 5.51 million in the first quarter, and are 2.4% lower than the 5.55 million pace during the second quarter of 2017.
“Solid economic growth, a healthy labor market and the large millennial population should be driving home sales much higher,” said Yun. “As long as economic conditions maintain current levels, there’s still a chance for sales to break out this year. However, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country.”
At the end of the second quarter, there were 1.95 million existing homes available for sale, which was 0.5% above the 1.94 million homes for sale at the end of the second quarter in 2017. The average supply during the second quarter was 4.1 months – down from 4.2 months in the second quarter of last year.
Although the national family median income rose to $75,106 in the second quarter, overall affordability decreased from a year ago because of higher mortgage rates and increasing 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 $64,239, a 10% down payment would require an income of $60,858, and $54,096 would be needed for a 20% down payment.
“The unaffordable conditions in many of the largest metro areas – especially in the West – continues to be a growing concern for many middle-class households aspiring to buy a home,” said Yun.
The tech region of San Jose, Calif. remains the hottest market around with median existing single-family price at $1.405 million. Right behind it is the San Francisco-Oakland-Hayward, Calif. region where the median price is $1.07 million. The Anaheim-Santa Ana-Irvine, Calif. is third at $830,000 per median price, outpacing urban Honolulu at $795,200 and San Diego-Carlsbad at $645,000.
The five lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio at $94,400; Cumberland, Md. at $94,900; Decatur, Ill. at $96,900; Elmira, N.Y. at $106,300; and Erie, Pa. at $121,700.
By region, total existing-home sales in the Northeast were at an annual rate of 683,000 – flat compared to the first quarter 2018 but down 8.9% from the second quarter a year ago. The median existing single-family home price in the Northeast was $288,900 in the second quarter, up 2.3% from a year ago.
In the Midwest, existing-home sales rose 1.6% in the second quarter but are 2.8% below a year ago. The median existing single-family home price in the Midwest grew 3.5% to $210,600 in the second quarter from the same quarter a year ago.
Existing-home sales in the South declined 2.7% in the second quarter but are 0.6% higher than the second quarter of 2017. The median existing single-family home price in the South was $238,500 in the second quarter, 4% percent above a year earlier.
In the West, existing-home sales in the second quarter decreased 4.1% and are 3.6% below a year ago. The median existing single-family home price in the West increased 8.3% to $403,300 in the second quarter from the second quarter of 2017.
Eye on Retail: Sears gives big boost to digital offerings
Sears Holdings Corp. is adding an array of name brands and other products sold by third-party sellers to its website.
The embattled retailer announced it is adding floor care brands Hoover, Dirt Devil and Oreck, and shoe brands Dockers, G.H. Bass & Co. and Lucky Brand to its online marketplace. The retailer is also adding precious metals, including gold, silver, platinum and palladium bullion bars, rounds and coins, as well as premium bullion products.
“Sears continues to grow the online product selection offered by third-party marketplace sellers as we develop new relationships with leading companies to participate in the sears.com ecosystem,” said Peter Lai, chief online officer for Sears.
The retailer will be adding the footwear brands via Nashville Shoe Warehouse, an authorized online retailer of select men’s and women’s national shoe brands. The company currently has about 200 products available on the Sears site, with G.H. Bass & Co and Lucky Brand being new to the site.
Irwin’s latest release is a fast one
The company points to ergonomic enhancements to its Vise-Grip Next-Gen locking pliers.
Hand tool manufacturer Irwin launched its Vise-Grip Next-Gen Fast Release Locking Pliers. The new Fast Release Locking Pliers are ergonomically designed to provide more control than ever before, the company said.
Irwin says the product is designed with the end-user in mind, providing more comfort and control than the brand’s prior version of locking pliers. The end-user will have an easier time gripping, squeezing, and releasing the locking plier because the handle span in the open position (the position most difficult to grab and operate a locking plier) is reduced by 20%.
“Irwin is continually looking to make tools that deliver, so that our end-users can deliver,” commented Matthew Grella, product manager. “We are excited about the innovations to the Vise-Grip Next-Gen Fast Release Locking Pliers product line, which were designed to provide best-in-class strength, durability and comfort to users in a variety of industries.”
The pliers are more comfortable to use because the end-user is not forced to open their hands wider than their natural span. The reduced hand span also allows the locking operation of the plier one-handed, leaving the other hand free for the end-user to support themselves on a ladder or while working under a vehicle.
Primary end-users for the Fast Release Locking Pliers include automotive mechanics, welders, contractors (especially in the metal framing industry) MRO’s, and DIYer’s. Primary uses include holding/clamping, bolt and fastener removal, automotive repairs, welding and soldering pipe.