6 West Hawaii Real Estate | August 31, 2018
MLS Statistics Pending sales back up after eruption
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Kona Condos Listed Under $1 Million - Pending
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July housing starts up a slight 0.9 percent as tariffs bite
U.S. housing starts ticked up
just 0.9 percent in July, a
sign that higher construction
costs might be weighing
on homebuilders.
The Commerce Department said
Thursday that housing starts last
month rose to a seasonally adjusted
annual rate of 1.17 million, not nearly
enough to reverse the steep 12.9
percent plunge seen in June as rising
lumber, land and labor costs appeared
to constrain new construction.
Lumber prices have shot up by about
$7,000 per home since the start of
2017, largely due to tariffs on Canadian
softwood lumber by the Trump
administration, according to the National
Association of Home Builders.
“It looks like U.S. homebuilders are
fi nding it increasingly diffi cult to get
into the groove,” said Jennifer Lee, a senior
economist at BMO Capital Markets.
Still, housing starts have risen 6.2
percent year-to-date. Solid job growth
and a dearth of existing homes for
sales have increased demand for new
properties.
Prices are also a factor for would-be
buyers, who are facing higher mortgage
rates this year. The average interest
on a 30-year, fi xed-rate mortgage was
4.53 percent this week, up from 3.89
percent a year ago, according to the
mortgage company Freddie Mac.
Ground breaking fell last month
in the two priciest regional markets:
the West and Northeast. But starts
increased in the more affordable markets
of the Midwest and South.
These regional differences caused
Stephen Stanley, chief economist at Amherst
Pierpont Securities, to suggest that
weather might be a source of the slowdown.
The West is coping with wildfi res
and heat waves, while the Northeast
dealt with severe rainfalls, he said.
Building permits, an indicator of
future construction, rose 1.5 percent
in July.
But Robert Dietz, chief economist
for the National Association of Home
Builders, noted on Twitter that there
has been a sharp increase in singlefamily
homes being authorized but
never started, which indicates that
projects are being delayed because of
higher building materials costs.
Real estate sales have a leading indicator
in pending sales, sales that are in escrow with
contracts. The pending sales dropped during the
volcano eruption for a few months but are on their
way back up.
House pendings dipped in June as you can see
in the graph and are still slightly below ‘normal’ in
July. However, normal might not be possible given
that there are only 19 fee simple houses available in
Kona under $500,000 as of this writing. Typically,
a couple can buy a house making a combined income
of $100,000 around that amount but once we
have so little available we start to lose them and at
times they turn into condo buyers, but not always.
Condo pendings are still up over previous years
after falling from recent highs during the months of
the volcano eruption. However, condos as well as
houses, go through cyclical periods. You can see
the trends in the graphs and if you look closely, you
can see the peaks during the high tourism months
of January – April, this increase is tied to our winter
guests buying properties. Then it falls off for a while
in the summer months and gradually builds up in
the winter months.
Look for steady sales in August, although the
state stopped allowing sales to record during
Hurricane Lane and this could create some timing
issues with closings…stayed tuned!