TSI
Pending homes sales in US dipped in June, latest NAR data shows
After five consecutive months of increases, pending home sales in the United States slipped in June but remained near May's level, which was the highest in over nine years, the latest data shows. Modest gains in the Northeast and West were offset by larger declines in the Midwest and South, according to the pending home sales index (PHSI) from the National Association of Realtors (NAR). The index, a forward looking indicator based on contract signings, fell 1.8% to 110.3 in June but is still 8.2% above June 2014 when it was 101.9. Despite last month's decline, the index is the third highest reading of 2015 and has now increased year on year for 10 consecutive months. Lawrence Yun, NAR chief economist, said that although pending sales decreased in June, the overall trend in recent months supports a solid pace of home sales this summer. ‘Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers' comfort level,’ he explained. ‘The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows,’ he added. According to Yun, existing home sales are up considerably compared to a year ago despite the share of first time buyers only modestly improving and he said the reason is that the boost in sales is mostly coming from pent-up sellers realizing their equity gains from recent years. ‘Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down. Unfortunately, because nearly all of these sellers are likely buying another home, there isn't a net increase in inventory,’ Yun pointed out. ‘A combination of homebuilders ramping up construction and even more home owners listing their properties on the market is needed to tame price growth and give all buyers more options,’ he added. The PHSI in the Northeast increased by 0.4% to 94.3 in June, and is now 12% above a year ago. In the Midwest the index fell by 3% to 108.1 in June, but is still 5% above June 2014. Pending home sales in the South also decreased 3% to an index of 123.5 in June but are still 7.8% above last June. The index in the West increased 0.5% in June to 104.4, and is now 10.4% above a year ago. The national median existing home price for all housing types in 2015 is expected to increase around 6.5% to $221,900, which would match the record high set in 2006. Total existing home sales this year are forecast to increase 6.6% to around 5.27 million, about 25% below the prior peak set in 2005 which was 7.08 million. Continue reading
Construction up across the UK, led by homes and office developments
Construction workloads rose across all sectors and in each part of the UK in the second quarter of 2015 according to the latest market survey from the Royal Institution of Chartered Surveyors (RICS). Some 44% more surveyors reported higher activity levels, up from 37% on the previous quarter, driven by office development and private house building. The pace of growth in Northern Ireland was slowest and at a headline level, 74% more respondents expect to see their workloads rise and respondents forecast growth of 3.8%. Over half, 51% net balance, of respondents reported higher workloads in private housing and 58% in the private commercial sector, following a 22% rise in new orders in the first quarter of the year. Activity in London and the South East appears stronger than elsewhere in the UK, so profit margins and employment expectations are higher in these parts of the UK than anywhere else with 62% more respondents expecting to take on more people over the next 12 months and 58% expecting higher profits. Financial constraints and issues with planning and regulation remain the key restraints on growth in the sector with 58% more surveyors reporting difficulties in the second quarter. In addition, 40% of respondents reported shortages of materials, but this is an improvement on the 60% who were having such difficulties through most of 2014. ‘The upturn in workloads has led to a less competitive tendering environment, particularly across public sector projects, but a lack of accessible finance is now affecting a net balance of 58% of our members and while concern over labour shortages dipped slightly, the demand for cost and project management skills rose,’ said RICS director of the built environment, Alan Muse. ‘Also typical as workloads recover is the emergence of other impediments to growth, outside of labour and finance constraints, such as planning and regulatory barriers, which could be exacerbated if cuts are made to local authority planning departments as backlogs in planning applications will have a knock-on effect to work pipelines,’ he added. Meanwhile, the latest state of the trade survey from the Federation of Master Builders (FMB) says that in the second quarter of the year it is skills shortages that are undermining activity in the small to medium construction sector despite the fact that the building industry has been booming for more than two years. ‘There can be no doubt that the building industry is booming but the skills shortage continues to loom large over our industry. Almost half of construction SMEs are struggling to recruit adequate numbers of bricklayers, with others finding it increasingly hard to hire carpenters and joiners, site managers and supervisors,’ said Brian Berry, chief executive of the FMB. ‘Looking ahead, our members are reporting that their workloads are likely to rise over the coming three months which means the shortage of skilled workers will only become more acute. It also begs the question, how much stronger would the pace of growth in… Continue reading
British farm land prices more tightly pegged to local conditions
The British farmland market is becoming more finely balanced leading to a greater range in values achieved with sale prices more tightly pegged to local supply and the number of potential buyers. Overall values increased by 0.2% during the first six months of the year, a reduced rate, according to Savills most recent review of the GB farmland market. But this conceals some localised falls in prime arable values, where there is now evidence of more price sensitive demand coupled with reduced competition between farmer and non farmer/investor buyers. Indeed, average grade 3 grassland values, which in recent years lagged way behind arable values continue to strengthen with an average uplift of 1% during the half year. Meanwhile, 5% more land was publicly marketed in compared with the first half of 2014. Almost half of the acres advertised were arable compared with around 30% in the previous four years. ‘There is evidence of some farmers, especially those without successors taking the opportunity of current record values to exit the industry,’ said Alex Lawson director of Savills farms and estates. The report also shows that non-farmer buyers overtook farmers as the principal buyers of land and the proportion of farmers buyers is now at its lowest since 2003. However, of those continuing to buy land the proportion doing so in order to expand their existing businesses is rising and now accounts for the reason behind half of all purchases. ‘There are many entrepreneurs still growing their businesses, despite current commodity prices, reflecting the longer term view they take. It also reflects the fact that many farming businesses now produce significant non-farming income which helps spread business risk,’ said Ian Bailey of Savills rural research. A breakdown of the figures shows that 85,000 acres were publicly marketed in the first half of 2015 which is 5% more than in the same period in 2014 but 1% less than the average of the same period of the previous five years. In England 13% more land was publicly marketed in the first half of 2015 at 65,500 acres compared with 57,100 acres in the same period of 2014, which is 7% more than the five year average of 60,100 acres. Supply in Scotland fell by 7% to around 18,500 acres which was very similar to 2013. Here sellers and buyers continue to be affected by uncertainty surrounding land reform, the general election result and reform of the Common Agricultural Policy. Welsh land supply has dwindled most dramatically, with only 1,900 acres for sale so far in 2015. This is less than half the area marketed in 2014 and of the average area over the past five years. ‘Almost half of the acres advertised were arable compared with around 30% in the previous four years. This shift and the regional increases in supply are, to some degree, reflected in the pressures on the arable and regional value growth noted… Continue reading
