Try and make sense of the following headlines and statistics coming out the the U.S. just this past week:
~Against expectations of a 0.5% jump, pending home sales tumbled 2.5% in January - the biggest drop since Dec 2013.
~Existing-home sales increased last month and were considerably higher than the start of 2015, but price growth quickened to 8.2 percent – the largest annual gain since April 2015 (8.5 percent).
~First time buyers in high demand areas continue to encounter instances where their offer is out-bid by cash buyers or investors. First time buyers are not driving housing sales which is normally indicative of a healthy economy.
~But by 2015, small investors arrived in large numbers, and by 2016, investor purchases jumped to 37%, an all-time high going back 21 years.
~U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, a sign of growing confidence in the economy.
~Delinquency rate increased to 9.02 percent in the fourth quarter in 2016 from 8.3 percent in the third quarter. The jump, which followed the lowest delinquency rate since 1997, was driven by loans made since 2014 and early-stage delinquencies, those just 30 days past due. It's too soon to know if it is a blip or a trend, but the jolt is clearly a warning.
~(February 22, 2017) Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 17, 2017.
~According to some economists the strength of the U.S. housing market recovery is simply explained as “being driven by a strong labor market, which is boosting employment opportunities for young people and supporting household formation.” I have a feeling it's not that simple.
In summary, the U.S. is experiencing record sales and sale prices, while pending home sales are down, first time buyer ownership is down, there's been an increase mortgage delinquency rates as well as a decrease in mortgage applications but a substantial increase in investor purchases. These stats and headlines are hardly congruent with a strong and healthy housing market. There is of course a story behind all this housing news which you may want to explore further.
Which one of the stats or headlines is the bellwether for things to come? We all remember the consequences of ignoring warning signs out of the States in 2006/7. Definitely worth keeping our eyes peeled on the U.S. housing market. As we all know “things” can change very quickly.