July 1, 2021
* Existing-Home Sales Experience Slight Skid of 0.9% in May. Existing-home sales decreased for a fourth straight month in May, according to the National Association of Realtors. However, each of the four areas again registered double-digit year-over-year gains. Total existing-home sales dropped 0.9% from April to a seasonally-adjusted annual rate of 5.80 million in May. Sales in total climbed year-over-year, up 44.6% from a year ago (4.01 million in May 2020). “Home sales fell moderately in May and are now approaching pre-pandemic activity,” said Lawrence Yun, NAR’s chief economist. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market. Properties typically remained on the market for 17 days in May, unchanged from April and down from 26 days in May 2020. Eighty-nine percent of the homes sold in May 2021 were on the market for less than a month. “The market’s outlook, however, is encouraging,” Yun continued. “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.” Existing-home sales in the West fell 4.1%, recording an annual rate of 1,180,000 in May, a 61.6% climb from a year ago. The median price in the West was $505,600, up 24.3% from May 2020.
* Mortgage Applications Rise Again, Despite Rates Jump. For the second week in a row, mortgage applications increased – this time, up 2.1% for the week ending June 18, 2021, per the latest report from the Mortgage Bankers Association. The 30-year fixed mortgage rate also rose to 3.18% – the highest level in a month, according to the MBA. Purchase activity was higher for the third straight week, according to Joel Kan, MBA’s vice president of economic and industry forecasting. “Despite the jump in rates, refinances also increased for the second consecutive week, pushed higher by a 4% bump in conventional refinance applications,” Kan said.
* What is Really Happening With Lumber Pricing? When it comes to pricing, it’s important to distinguish between demand for lumber and the supply chain for lumber products. While rising demand played a substantial role increasing prices, disruptions to supply chains have also been a key contributor. Considering all things involved, directly or indirectly, including the pandemic, the disruptions to supply chains, the increase in demand, and the general uncertainty of the markets all played a role in pricing. There is no one trigger to zero in on when it comes to why the cost of lumber has escalated but rather the contribution of many factors operating all at once. With the facts presented, many things contribute to price increases across the nation; however, there is one common factor embedded in all: COVID-19. It is now evident with the availability of vaccinations and subsequent COVID-19 cases declining, prices of building materials and other commodities are slowly falling. This is a firm indication that the increase in lumber prices will not be a permanent fixture for the U.S. or world markets.