MARKET PULSE: 🤯 What?! New Home Sales Surge - Are Home Prices Stabalizing?
For the week of October 3, 2022
SURPRISE! NEW HOMES SALES SURGE! 🔨
ARE PRICES LEVELING OFF IN SOUTHERN NEVADA?
“A bargain is something you don’t need at a price you can’t resist.”—Franklin P. Jones, American journalist, public relations executive, and humorist
NATIONAL MARKET UPDATE
New Home Sales jumped 28.8% in August, the largest monthly gain in more than two years. At a 0.685 million annual rate, sales are only 0.1% below a year ago and the median price was down 6.3% from the month before.
Home prices may be leveling off. Case-Shiller home prices dipped 0.2% in July, while FHFA prices of homes financed by conforming mortgages fell 0.6%, the largest monthly drops for both since 2011, though they're still well up annually.
Home prices may be leveling off. Case-Shiller home prices dipped 0.2% in July, while FHFA prices of homes financed by conforming mortgages fell 0.6%, the largest monthly drops for both since 2011, though they're still well up annually.
ECONOMIC NOTES
Core inflation rose 4.9% from a year ago in August and 0.6% on a monthly basis, according to a measure the Federal Reserve watches closely.
Personal income rose 0.3%, the same as July and in line with the estimate. Spending rose 0.4% after declining 0.2% the month before.
Headline inflation, including food and energy, also accelerated, despite a sharp drop in gasoline prices.
Initial filings for unemployment claims fell last week to their lowest level in five months last week. The drop to 193,000 was below the estimate of 215,000.
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INVERTED YIELD CURVE WATCH
30 Year Treasury Yield: 3.696% (Last week’s reading: 3.711%)
10 Year Treasury Yield: 3.637% (Last week’s reading: 3.896%)
5 Year Treasury Yield: 3.859% (Last week’s reading: 4.169%)
2 Year Treasury Yield: 4.089% (Last week’s reading: 4.33%)
LOCAL MARKET UPDATE (Southern Nevada - CLARK COUNTY)
Southern Nevada landlords are dialing back the huge rent increases they gave tenants last year amid a broader slowdown in Las Vegas’ housing market.
The typical rent in the Las Vegas-area last month was just over $1,890, up about 8 percent from a year earlier, compared with a 25 percent year-over-year rent hike in August of 2021, according to figures from listing site Zillow.
Susy Vasquez, interim executive director of the Nevada State Apartment Association, said the number of people moving here from out of state is down. She also indicated that units are sitting available longer, and that landlords appear to be offering more concessions to prospective tenants.
Compared with last year, she said, the rental market is a “totally different picture.”
For the month of September, 2022 for Single Family, Condo, Townhomes & Manufactured, there were 2,538 total sales with 685 being cash buyers, or 26.99% of all properties sold were from cash buyers.
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Clark County, NV Absorption Rate
21.52%
The current absorption rate for the Southern Nevada market the past four weeks is 21.52%, up 1.43% from last week's absorption rate. This marks an increase for the second time in the last 15 readings.
A market with an absorption rate at or above 20% is typically called a seller’s market, whereas an absorption rate below 15% signals a buyer’s market.
Each week we will update the current median price for the current month. Keep in mind the majority of sales occur at the end of the month, so official numbers will be published on the first Monday of each month.
Final September Median Prices
Single Family
$450,000 (No change)
(Unchanged from August of $450,000)
Condo
$230,000 (-$2000)
(Down from August of $232,000)
Townhouse
$320,000 (-$5,000)
(Down from August of $325,000)
After last weeks small dip in available inventory, this week shows a slight rise in inventory. It appears that inventory is leveling off around the 11,200-11,300 level. The past 27 of 28 weeks have seen an increase of available inventory. Chart below shows total available inventory to total weekly closed sales. (Last updated October 3, 2022)
As of October 3, 2022, there are currently active (%’s versus 4 weeks ago):
8,481 Single Family Homes (+94) +1.12%
1,118 Condos (-11) -1.57%
800 Townhouses (+27) +3.49%
324 Manufactured Homes (+18) +5.88%
447 High Rise Units (+11) +2.52%
86 Multiple Dwellings (-3) -3.37%
2,668 Parcels of Land (+105) +4.10%
3,286 Rentals On Market (+228) +7.46%
Past Seven Days Market Watch (%’s versus 1 week ago):
976 New Listings (-1) -0.10%
246 Back On Market (+33) +15.50%
77 Price Increases (-9) -10.47%
1,777 Price Decreases (-122) -5.93%
653 Accepted an Offer (-111) -14.53%
777 Sold (+232) +42.57%
318 Expired (+210) +194.0%
532 Taken Off Market (-14) -2.55%
74* properties are coming soon (+10) +15.63%
This week, there are 14 more active residential resale properties on the market compared to one week ago for a total of 11,256 (+15), an increase of 0.13%.
*Properties coming soon do not indicate all of the upcoming properties. These are listing that are entered into the MLS prior to list date.
FEATURED LISTING
45 MALEENA MESA #1811
HENDERSON, NV 89074
$275,000
POTENTIAL CAP RATE
$275,000 Purchase Price
$1,750/Est. Mo. Rent
- $195/Mo. HOA
- $697/Annual Taxes
- $400/Annual Insurance
$17,563 EST. NOI / $275,000
= 6.39% CAP RATE
REVIEW OF LAST WEEK
RECESSION FEARS MOUNT... Stocks ended September at their lowest levels since 2020, booking their third straight quarterly loss, as investors feared that Fed rate hikes to tame inflation would drive the economy into recession.
Fueling the fears: the Core PCE Prices inflation index (excluding food and energy), jumped 0.6% in August; plus, initial jobless claims were the lowest since May, showing the economy and inflation aren't slowing much.
Consumer spending isn't slowing either, up 8.2% year-over-year. Inflation worries put University of Michigan Consumer Sentiment down at 58.6, versus 72.8 a year ago. At least New Home Sales rebounded nicely.
The week ended with the Dow down 2.9%, to 28,726; the S&P 500 down 2.9%, to 3,586; and the Nasdaq down 2.7%, to 10,576.
Bonds also headed south, with the 30-year UMBS 5.5% down 0.19, to $99.12. Lower bond prices mean higher rates, and the national average 30-year fixed mortgage rate rose again in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… Realtor.com reports, “today’s shoppers have more than 5 homes to consider for every 4 they had at this time a year ago.” This “will favor persistent and informed buyers who are ready to purchase.”
THIS WEEK’S FORECAST
CONSTRUCTION SPENDING, MANUFACTURING, SERVICES, JOBS ALL SLIP... August Construction Spending is forecast down overall, but we'll see how the residential part fares. ISM Manufacturing and Non-Manufacturing Indexes are also expected to dip for September, but stay in expansion territory. Nonfarm Payrolls should be off in September too, while the Unemployment Rate holds.
If you’re trying to decide whether to rent or buy a home, consider the advantages homeownership offers.
Buying a home can help you escape the cycle of rising rents, it’s a powerful wealth-building tool, and it’s typically considered a good hedge against inflation.
If you’re ready to take advantage of the benefits of homeownership, let’s connect to explore your options.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. Sentiment is waning, but another three-quarter percent rate hike is expected in November, followed by a half percent bump in December, and a quarter percent increase in February. Note: In the lower chart a 60.0% probability of change is a 60.0% probability the rate will rise. Current rate is 3.00%-3.25%.
AFTER FOMC MEETING ON: CONSENSUS
Nov 2 3.75%-4.00%
Dec 14 4.25%-4.50%
Feb 1 4.50%-4.75%
Probability of change from current policy:
AFTER FOMC MEETING ON: CONSENSUS
Nov 2 60.0%
Dec 14 57.3%
Feb 1 51.7%