America’s renovation boom

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Weekly housing trends —data for week ending oct. 19, 2024 link

• The median listing price remained unchanged year-over-year for the 21st consecutive week, with prices at the same level as in 2023. Sellers are adjusting prices to attract buyers, with 18.6% of listings in September featuring price cuts, up 0.9 percentage points from last year.

• New listings increased by 4.7% compared to the same week last year, rebounding from a dip caused by Hurricane Milton. However, fluctuating mortgage rates, with 84% of mortgages at or below 6%, may discourage further listings until rates drop more significantly.

• Active inventory is 28.7% higher than last year, marking 50 straight weeks of year-over-year growth, though this week's growth slowed. Despite increased inventory, homes spent eight more days on the market compared to last year as buyers await better conditions.

September home sales drop to lowest level since 2010 link

• September home sales fell 1% from August to a rate of 3.84 million units, marking the lowest level since October 2010. Sales were 3.5% lower compared to September 2023, with declines in three out of four U.S. regions, while only the West saw a slight increase.

• Inventory rose by 1.5% month-over-month to 1.39 million homes, equating to a 4.3-month supply, and showing a 23% increase from September 2023. Despite the added inventory, distressed property sales remained low, making up only 2% of all transactions.

• The median home price increased 3% year-over-year to $404,500, continuing a 15-month trend of price gains. Cash purchases accounted for 30% of sales in September, reflecting a rise from pre-COVID levels of about 20%, though investor activity slightly decreased.

Mortgage demand drops to its lowest level since July, as interest rates return to summer highs link

• Mortgage applications fell by 6.7% last week, hitting their lowest level since July as interest rates held steady at 6.52%. This marks a continued decline in demand, despite no significant movement in rates.

• Refinance applications dropped 8% week-over-week but are still 90% higher than the same time last year, when rates were much higher. House prices, however, have risen, creating challenges for potential buyers.

• Home purchase applications were 5% lower for the week, but still 3% above the same period in 2023. Buyers are waiting for the upcoming presidential election and observing loosening inventory and slowing home price growth in certain markets.

CBRE report: shifts in housing preferences signal BTR opportunity link

• The build-to-rent (BTR) sector saw a 6.6% rent growth in Q4 2022, with an impressive vacancy rate of just 4.8%, showing tight supply. This sector's revenue growth remains well above pre-Covid levels, signaling strong investor appeal.

• Migration from urban cores to suburban and secondary markets boosted demand for BTR communities, especially among those aged 35+. Rent in the BTR sector averaged $2,100 in Q4 2022, with cities like Tampa and Indianapolis outperforming other markets.

• Investment in BTR accelerated with a $24 billion transaction volume in 2021-2022, up 250% from the previous five-year average. Despite increased vacancies in the rental market, BTR's below-5% vacancy rate affords investors significant pricing power.

America’s renovation boom is leveling off—but still going strong link

• Spending on home improvements is projected to rise slightly from $472 billion to $477 billion by next quarter, marking a modest 1.2% increase. This slow growth suggests a correction after the pandemic's renovation surge.

• The pandemic saw a 10-15% boost in the renovation market as homeowners tackled both planned and unplanned projects during lockdowns. The growth rate has now reduced, but spending remains well above 2019 levels.

• A Clever Real Estate survey reveals that 63% of homeowners prefer renovating their current home over moving. Popular projects include bathroom remodels (37%), interior painting (33%), and HVAC upgrades (30%).

Texas apartment starts hit 14-year low in 3rd quarter link

• Only 4,200 apartment units broke ground across Texas in the 3rd quarter of 2024, the lowest figure since late 2010. Historically, quarterly starts have averaged 20,600 units over the last three years, showing a drastic slowdown.

• Austin alone nearly reached 7,000 new starts in the same quarter just two years ago, while now the entire state managed just a third of that volume. The last significant peak in starts was over 32,000 units in the 2nd quarter of 2022.

• Annual construction starts have steadily decreased by around 7,000 units per quarter, with the past 12 months seeing only 42,000 market-rate units statewide. This marks the lowest annual figure since 2012, significantly down from the 115,000 units started in late 2022.

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Vidit

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