A M. Appraisals Blog
October 2020 Real Estate/Economic Data
November 5th, 2020 6:04 AM
Mortgage Economic Review
summarizes recent Key Economic Indicators, Data, and Events important to Mortgage and Real Estate Professionals.
Key Economic Data and Events in October 2020
US GDP increased 33.1% in the 3rd Quarter
The Labor Market continued to recover adding 661,000 new jobs in September
The Unemployment Rate fell to 7.9 from 8.4%
US Inflation is running at 1.4%
Stock and Bond Market volatility continued due to political uncertainty and an unexpected surge in Covid cases globally
The 10-Year Treasury Security Yield rose above 0.80% for the first time in 5 months
Congress failed to pass another Stimulus Package due to gridlock in Washington
Amy Coney Barrett was sworn in as the newest US Supreme Court Justice
nterest Rates and Fed Watch
Not a lot happened with the Fed or Interest Rates in October. Interest Rates rose slightly as the
10-year Treasury yield rose above 0.80% for the first time in 5 months. The Minutes from the September FOMC Meeting were released, and they noted that: the Economy, Inflation, and Labor is recovering faster than expected, household and business spending recovered due to earlier stimulus, and more Fiscal Stimulus is needed. Fed Chairman Powell and several other Fed Governors repeated their message that the Fed will keep Interest Rates low and tolerate increased Inflation until the Economy has recovered. They continued to call on Congress to pass another stimulus package - which did not happen.
Housing Market Data Released in October 2020
The Housing Market remains red hot, and it's lead by New Residential Single Family Construction. For years, Single Family New Construction lagged behind multifamily Construction. It was hindered by a lack of demand from Millennial Buyers as they favored renting over buying. Regulations and a shortage of skilled labor also contributed to the lag. Covid and Social Unrest changed that. Now Residential New Construction is a bright spot in the Economy. There is a shift from building apartments in urban areas to constructing more Single Family Detached Homes in suburban locations. This is evident in the US Homebuilder Confidence Index rising to 85 - which is the highest point on record.
Existing Home Sales
(closed deals in September) rose 9.4%
to an annual rate of 6,540,000 homes, up 21.0% in the last 12 months. The median price for all types of homes is $311,800 - up a whopping 14.8% from a year ago (that's not a typo). The median Single Family Home price is $316,200 and $272,700 for a Condo. First Time Buyers were 31%, Investors 12%, Cash Buyers 18%. Homes were on the market for an average of 21 days (record low), and 71% were on the market for less than a month. Currently, 1,470,000 homes are for sale, down 19.2% from 1,820,000 units a year ago.
New Home Sales
(signed contracts in September) fell 3.5%
to a seasonally adjusted annual rate of 959,000 homes - up 32.1% YoY. The median New Home price rose 3.5% YoY to $326,800, and the average is $405,400. There are 284,000 New Homes for sale, which is a 3.6 month supply.
Pending Home Sales Index
(signed contracts in September) fell 2.2%
to 130.0 from 132.8 up 20.2% YoY.
(issued in September) rose 5.2%
to a seasonally adjusted annual rate of 1,553,000 units - up 8.1% YoY. Single-Family Permits rose 7.8% to an annual pace of 1,119,000 homes, up 24.3% YoY.
(excavation began in September) rose 1.9%
to an annual adjusted rate of 1,415,000 units - up 11.1% YoY. Single-Family Starts rose 8.5% to 1,108,000 homes - up 22.3% in the last 12 months.
(completed in September) rose 15.3%
to an annual adjusted rate of 1,413,000 units - up 25.8% YoY. Single Family Completions rose 2.1% to 921,000 homes - up 8.1% in the last 12 months.
S&P/Case-Shiller 20 City Composite Home Price Index
in August, up 5.2% YoY.
FHFA Home Price Index
in August, now up 8.0% YoY.
Labor Market Economic Data Released in October 2020
Economy added 661,000 Jobs
in September, with the
Unemployment Rate falling to 7.9%.
The Labor Market continues to recover nicely with the number of Unemployed Workers down roughly 2.5 million from September to October. The Pandemic caused 22 million workers to become unemployed in March and April. Of those 22 million, 12 million are back to work. That's the good news. The bad news is 10 million workers are still unemployed. Unfortunately, a lot of the unemployed workers are in the Travel and Hospitality industries - airlines, restaurants, bars - which doesn't show signs of recovering any time soon.
added 661,000 new jobs during September
fell to 7.9%
in September from 8.4% in August
Labor Force Participation Rate
fell to 61.4%
during September from 61.7% in August
Average Hourly Wage
during September, up 4.7% YoY
nflation Economic Data Released in October 2020
Inflation plunged during the lockdown but is now gaining speed. This was expected - and even welcome. Inflation has always been the bogeyman when it comes to the Economy. As a student of Economics, this is the first time in my lifetime that people actually want a little Inflation. The keyword here is "a little". Too much Inflation and it becomes a problem again. The Fed's target for Inflation has been 2.0% for the past 10 years. They have repeatedly stated they are willing to "tolerate" higher Inflation for a while. How much higher and for how long? No one knows yet - not even the Fed.
, up 1.4% in the last 12 months
(ex-food & energy) rose 0.2%
, up 1.7% in the last 12 months
rose 0.4 %
, up 0.4% in the last 12 months
(ex-food & energy) rose 0.4%
, up 1.2% in the last 12 months
GDP Economic Data Released in October 2020
The 1st Estimate of
3rd Quarter 2020 US GDP
showed the Economy grew at a 33.1% annualized rate
- better than Economists' expectations and a new record. This follows the disastrous 2nd Quarter when the US GDP fell by a historic 31.4%. If we look at GDP data from 2019, the US Economy was producing $21.7 trillion dollars of goods and services on December 31, 2019. By June 30, 2020, GDP had dropped to $19.5T due to the Pandemic. However, by September 30, 2020, GDP bounced back to $21.2T. Doing some simple math, (21.7 - 21.2 = 0.5) means the US Economy lost half a trillion dollars in GDP since Covid hit. That works out to only a 2.3% reduction in GDP since pre-Covid. Many of the world's other major Economies are experiencing similar bounces. EU GDP stormed back, surging 12.7% - that's 4.7% less than their December 2019 peak. German GDP is up 8.2%, French GDP up 18.2%, Spanish GDP up 16.7%. Chinese GDP clocked in at 4.9% YoY in the 3rd Quarter.
Consumer Economic Data Released in October 2020
Retail Sales surged 1.9% (13.5% for the Quarter) as the American Consumer has demonstrated remarkable resilience. Consumer Resilience can, in part, be attributed to the Cares Act and generous Government benefits it provided like mortgage forbearance, enhanced unemployment benefits, and stimulus checks. Thanks to the Government's efforts (and the inability of Consumers to spend money on things like recreation, entertainment, and travel), many people have saved a lot of money and accumulated a nice "cushion". Will they spend some of that cushion during the upcoming Holiday Shopping Season? It will be interesting to watch the Consumer Data roll in over the next few months.
during September, now up 5.4% in the last 12 months
Consumer Confidence Index
fell to 100.9
in September from 101.3 the previous month
Consumer Sentiment Index
(U of M ) rose to 81.8
from 80.4 the previous month
Energy, International, and Things You May Have Missed
rose above $44 during October but dropped below $36 per barrel by Halloween. The resurgence of Covid cases, travel restrictions, and stay-at-home orders depressed oil demand.
WTI Crude (West Texas Intermediate) is trading around $36/barrel.
North Sea Brent Crude is trading around $38/barrel.
British PM Boris Johnson said the UK is getting ready for a Hard Brexit on Jan 21, 2021.
Rents in the world's business centers: New York, London, Toronto, Sydney, etc, plunged as young renters no longer see a need to pay a premium for an apartment in those cities.
China threatened to hold US citizens hostage if the US does not release Chinese citizens arrested for espionage.
New Student enrollment in US colleges dropped 16% this fall.
Mortgage Economic Review
is a succinct summary of key Economic Indicators and Economic Data that influence the Mortgage and Real Estate Industries
. It is written for Mortgage Professionals that need to stay current on Economic Information but don't have hours to research and analyze Economic Data.
The content in this newsletter has been created by an independent third party for use by Mortgage and Real Estate Professionals only and not for use by Consumers. The material provided is for informational and educational purposes only and should not be construed as investment, legal, financial, or mortgage advice. The information is gathered from sources believed to be credible, some is opinion based and editorial in nature.
Posted by Ashley Martin on November 5th, 2020 6:04 AM
Post a Comment
Subscribe to this blog
Leave a Comment
Characters from the image above:
Subscribe To My Blog
Characters from the image above:
1st Quarter 2021 Mortgage Economic Review
October 2020 Real Estate/Economic Data
2020 Mid-Year National/International Economic Update
November 2019 Data for the Columbia, SC, USA Region
JULY 2019 MARKET REPORT - COLUMBIA, SC MARKET
2016 YEAR END STATISTICS
Columbia MLS 1 Year Market Activity (September 2015 - September 2016)
Lexington County Statistics - October 2015
OCTOBER 2014 SC REAL ESTATE STATISTICS
2013 Columbia, SC Real Estate Market Report
2012 Columbia, SC Market Home Sales Report
January 2012 Columbia, SC Market Home Sales Report
2011 Columbia, SC Market Home Sales Report
How do foreclosures affect the value of your home?
IS IT TIME TO REFINANCE?
When and Why to Get an Appraisal
2010 and the Real Estate Market
January 2014 (1)
February 2012 (1)
December 2011 (1)
April 2011 (1)
September 2010 (1)
May 2010 (1)
February 2010 (1)
January 2010 (1)
June 2008 (1)
January 2008 (1)
MARKET REPORT (1)
Mortgage Economic Review (1)
My Favorite Blogs:
Sites That Link to This Blog: