Behind the Housing Market’s Spring Surge
The housing market is emerging from its winter doldrums: Several different measures released this morning all point to a recent pickup in the real estate market.
Sales of existing homes jumped 6.1 percent in March to a seasonally adjusted annual rate of 5.19 million — well above expectations and the best month since September 2013. “The pickup in sales is echoed in stronger mortgage applications, new home sales, and faster rising prices—all suggesting a rebound in demand as the spring selling season approaches,” UBS economists wrote Wednesday.
Related: Why the Housing Market Is About to Perk Up
The median sale price last month was $212,100, up 7.8 percent from a year earlier (compared with a 7.2 percent annual gain as of February). “It looks like the combination of limited available inventory and a decline in the share of distressed sales in the market continue to put upward pressure on prices,” J.P. Morgan economist Daniel Silver wrote.
US Existing Home Sales data by YCharts
Mortgage purchase applications, meanwhile, rose 5 percent on a seasonally adjusted basis in the week ending April 17, suggesting that the increased activity from March has also continued into April.
Related: Americans Spend More on Taxes Than on Food, Clothing and Shelter
That trend may also reflect a policy change by the Federal Housing Administration in January. “Almost immediately after the mortgage insurance premium was cut by 50 basis points, purchase applications started to climb to highs not seen since the summer of 2013,” the IHS Global Insight economists Patrick Newport and Stephanie Karol wrote Wednesday. “We expect that the rule change will support market entry among younger buyers.” First-time homebuyers played an important part in the March increase, they suggest, as they increased their purchases by 10 percent year-over-year. Investors, meanwhile, bought 9 percent fewer properties than they had in March 2014, as the charts below from UBS detail.
The housing recovery had softened in recent months, even beyond the winter’s weather-related issues, so the new data — while not yet signaling a stronger trend — is an encouraging sign for increased activity in the spring and potentially beyond. “Home sales should pick up through the rest of 2015,” Gus Faucher, senior economist at PNC Financial Services Group, wrote Wednesday. “The fundamentals for housing are solid, with average job growth (200,000+ per month), good affordability, very low mortgage rates, increasing consumer confidence, expanding access to credit, and significant pent-up demand after years of depressed sales.”
Top Reads from The Fiscal Times:
- America’s Highest Paid CEO: It’s Not Who You Think
- Car Sales Are on Pace to Do Something They Haven’t in 50 Years
- The Companies Americans Hate Dealing With the Most
Chart of the Day: Long Way to Go on Coronavirus Testing
The White House on Friday unveiled plans for a new effort to ramp up testing for Covid-19, which experts say is an essential part of limiting the spread of the virus. This chart from Vox gives a sense of just how far the U.S. has to go to catch up to other countries that are dealing with the pandemic, including South Korea, the leading virus screener with 3,692 tests per million people. The U.S., by comparison, has done about 23 tests per million people as of March 12.
After Spending $2 Billion, Air Force Bails Out on Planned Upgrades of B-2 Bombers
The Air Force has scrapped a planned upgrade of its B-2 stealth bomber fleet — even after spending $2 billion on the effort — because defense contractor Northrup Grumman didn’t have the necessary software expertise to complete the project on time and on budget, Bloomberg’s Anthony Capaccio reports, citing the Pentagon’s chief weapons buyer.
Ellen Lord, the undersecretary of defense for acquisition and sustainment, told reporters that the nearly $2 billion that had already been spent on the program wasn’t wasted because “we are still going to get upgraded electronic displays.”
Big Hurdle for Sanders’ Plan to Cancel Student Debt
Bernie Sanders wants to eliminate $1.6 trillion in student debt, to be paid for by a tax on financial transactions, but doing so won’t be easy, says Josh Mitchell of The Wall Street Journal.
The main problem for Sanders is that most Americans don’t support the plan, with 57% of respondents in a poll last fall saying they oppose the idea of canceling all student debt. And the politics are particularly thorny for Sanders as he prepares for a likely general election run, Mitchell says: “Among the strongest opponents are groups Democrats hope to peel away from President Trump: Rust Belt voters, independents, whites, men and voters in rural areas.”
Number of the Day: $7 Million
That’s how much Michael Bloomberg is spending per day in his pursuit of the Democratic presidential nomination, according to new monthly filings with the Federal Election Commission. “In January alone, Bloomberg dropped more than $220 million on his free-spending presidential campaign,” The Hill says. “That breaks down to about $7.1 million a day, $300,000 an hour or $5,000 per minute.”