The Final Housing Index of 2016 Shows Continued Improvement
The last Cal-Culator published in 2016 conveys good news: Atlanta’s residential real estate housing index has increased again by 0.2. The index now sits at 7.9 thanks to increases in construction spending, home sales and home prices, though inventory continues to hinder the nation’s growth.
Housing professionals now have another reason to celebrate this holiday season: existing home sales saw the highest annualized pace in nearly a decade, according to the National Association of Realtors. Total existing-home sales grew 2 percent month-over-month in October and 5.9 percent year-over-year. All major regions saw monthly and annual sales increases.
“October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” said NAR Chief Economist Lawrence Yun. “Buyers are having more success lately despite low inventory and prices that continue to swiftly rise above incomes.”
The median existing-home price for all housing types in the U.S. was up 6 percent to $219,000. The increase marks the 56th consecutive month of year-over-year gains, according to the NAR.
Despite the good news released by the NAR about many aspects of the housing industry, total housing inventory declined 0.5 percent in October and is now 4.3 percent lower than one year ago, marking 17 months of decline and a continual hindrance to the Atlanta housing industry.
Private residential construction spending increased by 1.6 percent between September and October and rose 5.7 percent year-to-date, according to the Associated General Contractors. Spending on multifamily residential construction increased by 2.8 percent for the month and 17.8 percent year-to-date, while single-family spending also climbed 2.8 percent for the month and rose 5.1 percent year-to-date.
The AGC remains optimistic about the coming year, citing opportunities with the President-elect and new possible legislation.
“Reforming the tax code should encourage new private-sector investments in construction while less red tape and more reasonable health care costs will free up capital for contractors to hire more workers and acquire more equipment,” said Stephen E. Sandherr, the association’s chief executive officer. “The President-elect’s pro-growth agenda, combined with possible new investments in public infrastructure, could make 2017 a very good year for the construction industry.”
The NAR also conveyed optimism in regards to changes in the labor market and economy affecting the housing industry.
“The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall,” said Yun.
The next Cal-Culator will be released on January 10 and will reflect December 2016 data as well as offer a glimpse into what we can expect in the housing industry for 2017.