National Housing Tides Indexâ„¢ Infographic – February 2018
Despite ranking 37th of 41 metro areas, the New York-Newark-Jersey City, NY-NJ-PA MSA showed the most improvement in the last year, with the areaâ€™s Housing Tides Index increasing by 7.8 points
DENVER February 14, 2018
This week marks the release of the February 2018 Housing Tides Reportâ„¢, featuring an update to the Housing Tides Indexâ„¢, an objective and sophisticated approach to quantifying and comparing the health of U.S. housing markets.
Understanding the health of a housing market and its relationship to other top markets requires an aggregated, comprehensive view of the industry. The Housing Tides Index provides a succinct monthly measure of market health across the top 41 U.S. markets. Referencing 18 market indicators ranging from unemployment rates and housing permits to rental vacancy and mortgage foreclosure rates, the Tides Index helps users understand exposure at a deeper level than is currently possible.
- Despite ranking 37th of 41 metro areas, the New York-Newark-Jersey City, NY-NJ-PA Metropolitan Statistical Area (MSA) showed the most improvement in the last year, with the areaâ€™s Housing Tides Index increasing by 7.8 points. Driving the increase were job gains that accelerated as nearly 92k jobs were added in the MSA for the year ending November 2017 and an improvement in rental affordability as new units continue to be delivered to market.
- At the other end of the spectrum, the Kansas City, MO-KS MSA showed the largest year-over-year fall in the Housing Tides Index, decreasing by 9.7 points. Our outlook for the Kansas City market has changed due to employment and household growth that has slowed to a trickle, with just 614 net jobs added to payrolls for the year ending November 2017 and annual net household growth just shy of 2,500 per latest Census survey data. Housing inventories remain low in the Kansas City MSA with just 2.3 months of supply in December, but the sharp slowdowns in job and household growth indicate that housing market participants should remain cautious.
- As a whole, the U.S. housing market remains handcuffed by low supply, as the number of homes for sale would be exhausted in just 2.6 months at the current sales pace according to data from Redfin. Just 568k homes were listed for sale in December, the lowest total since Redfin began tracking the data in 2009. The persistent housing shortage is due to a confluence of factors. A strong labor market has created robust housing demand, historically-low new construction restricts new supply, and ultra-low mortgage rates in recent years cause existing homeowners to be reluctant to sell their homes and lose the attractive mortgage rates secured through a purchase or refinance. The problem is further exacerbated by investors that purchased large numbers of homes at a discount after home values fell, converting those units to rentals.
- Despite expectations to the contrary, the U.S. rental vacancy rate ticked down to 6.9% in the fourth quarter of 2017. The rental vacancy rate had risen to 7.5% in 2017Q3 from 6.9% one year ago. Homebuilders started just 342k apartments in 2017 after breaking ground on 386k and 381k multi-family units in 2015 and 2016, respectively, so rental markets may be reaching an equilibrium between supply and demand. This notion is supported by moderation we can see in rental rates; Zillow reported that the median rent price for two-bedroom units rose just 1.3% to a rate of $1,519 per month in the year ending December 2017.
- Single-family permit approvals fell in December, totaling 29,900 in aggregate across the 41 MSAs tracked by Housing Tides. Single-family permits are down from 31,700 permit approvals in November. Multi-family housing permits increased in aggregate across the 41 Tides metro areas, up to 25,300 in December following a total of 23,400 in November. The six-month moving average fell to a rate of 25,000 MF permits per month. We expect both single- and multi-family permit totals to increase in coming months.
Please reference the attached graph to view the Ten Healthiest U.S. Housing Markets – February, 2017.
Click here to view the complete Housing Tides Index of the top 41 U.S. markets.
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About Housing Tides
Housing Tidesâ„¢ (â€œTidesâ€�) is the only monthly report that provides a comprehensive measure and aggregated understanding of the health of the U.S. housing and home building industry. Designed to take the guesswork out of the vast amount of forecasting information published about this sector, Tides is a sophisticated report that delivers city-specific, updated information when market conditions change. It is the only report that uses natural language processing and machine learning to correctly understand and synthesize large volumes of data, making it more comprehensive, balanced, and reliable than any other report of its kind. For further information, please visit housingtides.com and connect on Twitter, Facebook, and LinkedIn.
Housing Tides is proudly partnered with IBM WatsonÂ®.
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