Builders report surprise surge, home affordability worsens and more

Housing Market Update: The Typical U.S. Home Is Selling For Just $4,000 Less Than Last Year’s All-Time High link

• Shrinking Declines: The median U.S. home-sale price is down just 0.9% year over year, the smallest decline in nearly four months. The typical U.S. home is selling for roughly $383,000, only about $4,000 less than the all-time high set last June.

• Inventory Drought: New listings fell 27% from a year earlier during the four weeks ending June 25, the biggest drop since the start of the pandemic. This has contributed to the total number of homes for sale declining 11%, the first double-digit drop in over a year.

• Buyer-Seller Mismatch: Despite high mortgage rates, homebuyers still outnumber home sellers. Pending home sales are down 15%, significantly smaller than the drop in new listings. This means buyers are snapping up inventory faster than it’s being listed, which is keeping home prices elevated.

Apartment Rents Decline YoY for First Time link

• Historic Dip: For the first time in realtor dot com's data history, there was a year-over-year rent decline for 0-2 bedroom-units. The two-bedroom properties dropped 0.5% to $1,923, $10 lower than a year ago and $47 lower than at the July 2022 peak.

• Studio Surge: Smaller apartment units saw rents increase with studios going up 2% to $1,463 year-over-year.

• One-Bedroom Climb: One-bedroom apartments also experienced a climb, increasing 0.4% to $1,628 over the same period.

BlackRock says these 5 'mega forces' are about to change how to invest link

• AI Ascendancy: BlackRock identifies artificial intelligence as a key player in future investment trends. The firm sees data-rich companies as underappreciated winners, with the potential to leverage their vast data sets to create innovative models and unlock significant value.

• Low-Carbon Leap: The transition to low-carbon economies is another mega-trend to watch. BlackRock expects this shift to occur more rapidly in developed nations, offering investors the chance to capitalize on the seismic reworking of energy systems.

• Geopolitical Jigsaw: As geopolitical relations shift from economic efficiency to national security and resilience, investors should prepare for a more fragmented world. This could spur growth in sectors like infrastructure, robotics, defense, aerospace, and cybersecurity.

Interest Rates Slow Furious Pace of Industrial Real Estate Sales link

• Rate Impact: Sales of warehouse properties have dropped significantly due to raised interest rates and the leveling out of the e-commerce boom. Industrial investment sales in the U.S. this year have reached $16.3 billion, a sharp decrease from last year's $31.2 billion in the same period.

• Stable Prices: Despite the drop in sales, industrial property prices remain relatively stable. The national average price per square foot is $129 in Q2, a slight 1.3% drop from Q2 of 2022. National rents for industrial space averaged $7.29 per square foot in May, marking a 7.4% increase year-over-year.

• Construction Continues: The national industrial vacancy rate in May increased to 4.3% due to record levels of new warehouses and other industrial buildings. Over 200 million square feet of new space opened in the first five months of 2023 alone, and a whopping 618.9 million square feet of industrial space is currently under construction.

We just hit a major milestone for the rental market: year-over-year rent growth fell to zero this month. link

• Stagnant Growth: The rental market has seen no year-over-year growth this month, a significant change from previous trends.

• Slowing Pace: The rental market's growth has slowed down over the past 1.5 years, with new leases signing for the same price as a year ago.

• Inventory Impact: The national vacancy index hit a milestone of 7.2%, matching the peak availability from the height of the pandemic.

Bad News Bears: Metrics for Office Trend Negative in 2023 link

• Work-from-home Woes: The report reveals a deceleration in office job growth and a plummeting average national sales price for office buildings. Remote work is not only increasing across geographies, but markets with the largest share of remote workers also have the highest office vacancies.

• Vacancy Vortex: Metropolitan regions with the largest number of remote workers, such as Denver/Boulder (36%), San Francisco/Oakland (35%), and Austin/Round Rock (32%), are experiencing the highest spike in office vacancies. These areas have seen vacancy rate increases of 280 basis points (San Francisco), 300 basis points (Denver), and 440 basis points (Austin) over the last 12 months.

• Price Plunge: Over the last year, the average national sales price of office buildings has fallen 22%, from $250 per square foot to $195 per square foot. Los Angeles saw the steepest decline, with the average sales price plummeting from $412 per square foot to $237 per square foot, a decline of 43%.

Mortgage demand grows, driven by sales of new homes link

• Surge in New Homes: Sales of newly built homes in May soared 12% compared with April and were 20% higher than May 2022. Builders are driving demand in part by offering incentives, like paying down mortgage rates.

• Mortgage Rates on the Rise: The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.75% from 6.73%. For jumbo loan balances, the rate rose more sharply to 6.91% from 6.80%.

• Refinancing Dips: Applications to refinance a home loan rose 3% for the week but were 32% lower than the same week one year ago. Most borrowers today have mortgages with interest rates below 4%.

Builders report surprise surge in Home Sales (is the crash over?) link

• Surprising Surge: Home builders experienced a surprising surge in home sales in May, with orders for 763,000 new homes on an annualized basis, up 10% month-over-month and nearly 20% year-over-year.

• Price Plunge: The median sale price of new homes has fallen by 16% since October 2022, a substantial drop in just an eight-month period, larger than the initial stages of the 2008 housing crash.

• Builder's Boom: Despite the overall struggling housing market, builders are winning in 2023, capitalizing on low re-sale inventory and offering big price cuts to homebuyers. However, they only represent 15% of the housing market, with the re-sale market still languishing at 2008-crash levels.