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U.S. Housing Mega-Trends – Recently Posted Headlines (August – September 2016)

  • Housing affordability, which has been weakening amid rising prices, is playing into the drop in buyer traffic. Higher prices have more than canceled out the benefits of falling mortgage rates this summer. Just 62 percent of both new and existing homes sold between the beginning of April and end of June were affordable to families earning the U.S. median income of $65,700, according to the NAHB; this is down from the 65 percent in the first quarter.

  • Single family housing starts have been rising steadily (but are still well below historical norms) as a shortage of existing homes for sale is boosting the market for newly-built homes, and fueling confidence among builders right along with it.

  • Home prices are about 1 percent shy of that 2006 bubble peak with June 2016 marking 50 consecutive months of annual national home price appreciation, with prices up 33 percent from that bottom in 2012 (the percent of the median income required to buy the median household, is currently 21 percent compared to 36% in the bubble years because interest rates are super low, and has a big impact on affordability.

  • Home size is shrinking for the first time since the recession, Median single-family square floor area fell from the first to the second quarter of this year by 73 feet, according to the National Association of Home Builders (NAHB) and U.S. Census data. That may not sound like a lot, but it is a clear reversal in the trend of builders focusing on the higher-end buyer. August 2016

  • People want to stay in closer-in locations and these tend to be more expensive from a land and development standpoint and this translates into smaller square footages and more efficient designs. August 2016

  • Homeownership rates have fallen across all age groups since the housing collapse in 2009 with the overall homeownership rate projected to fall to just 60.8 percent by 2025, the lowest since the mid-1950s (average for post-war years has been 69%)

  • The millennial generation has seen the biggest drop in home ownership, in part because  mortgages are harder to get (the home ownership rate among 25–34-year-olds has fallen to just 39 percent).

  • Sales of million-dollar homes are softening across most markets in the U.S. - it's not a correction, experts caution, just something of a breather brought on by volatility in the U.S. stock market and an oversupply of luxury homes. Activity is far more robust at the entry level and middle of the market, thanks to a drop in mortgage interest rates and pent-up demand.