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Housing Market Buffeted By The Coronavirus and Economic Shutdown, But The Outlook is Brighter

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Record-breaking job losses from COVID-19 led to significant Q2 weakening

Colubus, OH – June 16, 2020 (PRNewswire) Data from the latest Health of Housing Markets Report (HoHM Report) from Nationwide economics finds that housing sustainability in the U.S. has fallen to levels not seen since the depths of the Great Recession.

Across the United States, the dramatic worsening of the labor market due to COVID-19 caused the national Leading Index of Healthy Housing Markets (LIHHM) to fall sharply in the second quarter to 100.3, down by almost six points from the first quarter. This puts the LIHHM only into neutral territory, however, indicating modest concerns about housing sustainability for the national housing market into the first half of 2021. Despite the hit to housing coming from the drop in the job market in the first half of 2020, low mortgage rates and continued solid household formations should lead to a quicker improvement during the expected economic rebound.  

The HoHM report is a quarterly measure of the health of the U.S. housing market using the LIHHM, a proprietary, data-driven view of the near-term performance of housing markets for the nation as a whole and for 400 metropolitan statistical areas (MSAs) and divisions. For each MSA, the LIHHM uses local-level data to incorporate the unique characteristics of regional housing markets. The focus of the LIHHM is on the entire housing market’s health, rather than a projection of house prices or home sales.

More concern about local markets

In a sharp turn from the first quarter, the HoHM report finds only 44 of 400 MSAs are rated positively, down from 233 in the first quarter. Meanwhile, 219 of 400 housing markets in the U.S. are now in neutral territory, while 137 markets have a negative ranking, the highest number of negative rankings since the third quarter of 2010. Fortunately, 120 of these markets are negative by only one ranking (out of a possible four), indicating a slightly elevated concern about housing health in those markets. The remaining 17 negative markets have a minus two ranking, indicating a modest downturn in the housing market is likely in the near term.

“The breakdown of rankings for metropolitan areas is the weakest it’s been since 2010, with only about 10 percent of markets now rated positively,” said David W. Berson, Nationwide senior vice president and chief economist. “A quarter of all housing markets are now negative, and half are in neutral territory, showing just how widespread the impact of COVID-19 has been within local markets across the U.S.”

Mandated stay-at-home orders to flatten the infection curve of COVID-19 shut down housing markets across most of the country during the typically busy spring buying season. Existing home sales plunged by 17.8 percent for April and home builders substantially cut housing starts in anticipation of reduced homebuyer demand.

Looking forward, Nationwide economics projects a 13 percent decline for total home sales in 2020, which will be the largest drop in year-over-year sales since 2008. Despite the overall decline, signs of recovery have appeared in the second quarter.

“New home sales unexpectedly increased for April, suggesting some consumers continued to shop while on lockdown,” Berson said. “Record-low mortgage rates have also helped to buoy the housing market, and mortgage applications for purchase have surged since bottoming out in early April.”

While the housing recovery after the Great Recession was sluggish for a number of years, the HoHM report projects a much faster housing market recovery. If antivirals/therapeutics become widely available with an eventual vaccine by early next year, it is expected that the economy will expand sharply in 2021 and into 2022. If that happens, the report predicts total home sales for 2021 will rise to levels nearly on par with 2019, with house shopping behavior further boosted by low mortgage rates.

Looking at the second quarter, metropolitan areas with the highest LIHHM rankings are, in order: Waterloo-Cedar Falls, Iowa; Gettysburg, Penn.; Lancaster, Penn.; Camden, N.J.; Detroit-Dearborn-Livonia, Mich.; Abilene, Texas; Des Moines-West Des Moines, Iowa; New Bern, N.C.; Danville, Ill.; and, Tallahassee, Fla.

By contrast, metro markets that have the least positive LIHHM outlooks are: San Angelo, Texas; Kennewick-Richland, Wash.; Cheyenne, Wyo.; Odessa, Texas; Waco, Texas; Yakima, Wash.; Decatur, Ala.; Kokomo, Ind.; Longview, Texas; and, Clarksville, Tenn.-Ky.

More information about the HoHM Report, including the methodology used, can be found at blog.nationwide.com/housing. The HoHM Report is released on a quarterly basis online and in print.

About Nationwide

Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor’s. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.

Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2020

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Contact:
Kevin Kemper
(614) 249-6349
kempek1@nationwide.com 

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U.S. Housing Market Outlook Hits Lowest Point Since the Housing Bust Ended

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Economists say deteriorating affordability weighing on market growth

Columbus, OH – June 18, 2018 (PRNewswire) Recent data from Nationwide’s Health of Housing Markets Report (HoHM Report) show a further worsening of housing market sustainability. For the first time since 2010, Nationwide’s proprietary Leading Index of Healthy Housing Markets (LIHHM) does not forecast a positive outlook for the housing sector.

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LIHHM is unusual among housing market reports because it is a forward-looking measure of housing market sustainability. The dip into neutral territory hinges largely on deteriorating housing affordability as well as a sluggish pace of household growth.

“Housing affordability concerns have been building within the housing market for several years,” said David Berson, Nationwide senior vice president and chief economist. “For the first time since the recovery started, our affordability measures deteriorated enough to drop the national market outlook out of positive and into neutral territory.”

Natural disasters in 2017 also played a role in lowering the market outlook to neutral. Damaged homes and displaced households raised mortgage delinquency rates in several MSAs in Florida and Texas.

“The silver lining to this unfortunate story is that this should be a temporary downturn in the impacted coastal areas of Florida and Texas,” Berson said. “We should see delinquency rates normalize in coming quarters, which will help to boost the national outlook, perhaps back into positive territory.”

On the upside, job growth and rising wages have kept demand for housing robust despite rising affordability concerns. Moreover, aside from the localized hurricane impacts, serious delinquency rates remain low and suggest a healthy consumer balance sheet for mortgage debt.

Healthy regional markets continue

Despite a neutral outlook on the national housing market, Berson says that most metro areas across the country are healthy.

“Job growth and incomes remain strong across the country, helping to maintain healthy markets on a regional level,” Berson said. “We did, however, see an uptick in the number of local housing markets that slipped from positive to neutral, but that was expected given sustained rapid price increases in those areas.

“Next quarter’s HoHM Report will be an interesting barometer of which direction the market is heading, both on a national and regional scale.”

The top 10 metro areas in the index, in order, are: Casper, Wyo.; Farmington, N.M.; Alexandria, La.; Canton-Massillon, Ohio; Springfield, Ohio; Cedar Rapids, Iowa; Montgomery Co., Pa.; Trenton, N.J.; Killeen-Temple, Texas; and, Lawrence, Kan.

The bottom 10 are: Bismarck, N.D.; Victoria, Texas; Anchorage, Alaska; Lewiston, Idaho-Wash.; Corpus Christi, Texas; Billings, Mont.; Pueblo, Colo.; San Jose-Santa Clara, Calif.; Kennewick-Richland, Wash.; and, Nassau/Suffolk Co., N.Y.

More information about the HoHM Report, including the methodology used, can be found at blog.nationwide.com/housing. The HoHM Report is released on a quarterly basis online and in print.

About Nationwide

Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.

Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company.

Contact:

Ryan Ankrom
(614) 249-5145
ryan.ankrom@nationwide.com

Jordan Fisher
(312) 240-2951
jordan.fisher@edelman.com



Homebuyers Should Expect to Have Less Choice and Pay More This Spring

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Tight inventory and rapid price gains could make finding a home harder

Columbus, OH – March 19, 2018 (PRNewswire) Finding a home to buy is getting more difficult according to the latest Nationwide Health of Housing Markets Report (HoHM Report). High demand and an ultra-low level of homes for sale is driving rapid price increases and – more importantly for prospective buyers – less time on the market.

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“As we head into spring and the traditional season when sales heat up, buyers will find that desirable homes won’t be on the market for long,” said David Berson, Nationwide senior vice president and chief economist. “Today, the average home is on the market almost half the length of time that it was six years ago. Of course, that is good news for people looking to sell their home.”

HoHM report data show that the average home was on the market – the time from listing to signing a contract – for 67 days in 2017. That time is cut in half in the nation’s hottest markets. The typical home in Denver or Colorado Springs, for instance, was only on the market for about 33-34 days in 2017.

Other notable markets with low averages are:

  • San Francisco-Redwood City, Calif. (35 days)
  • San Diego-Carlsbad, Calif. (37 days)
  • Portland, Ore. (38 days)
  • Dallas-Plano-Irving, Texas (40 days)
  • Kansas City (41 days)

“Average days on the market across the country are extraordinarily low, especially in certain hot markets,” said Berson. “When you factor in the nationwide trend of rapidly increasing prices, it’s going to be a more difficult market for homebuyers this year.”

National outlook remains positive

Despite rapid price growth and affordability concerns, Berson remains positive on the national housing market outlook.

“Household formations have offset much of the negative price impacts,” he said. “The labor market is strong, and wages are increasing. Affordability remains a concern, especially for entry-level homebuyers in today’s low-inventory conditions, but most indicators point to healthy, sustainable local markets with only a few extreme exceptions.”

Four of the top 10 metro areas in the index are in Pennsylvania, and two of the top three are in Illinois. In order, the top 10 are: Johnstown, Pa.; Carbondale-Marion, Ill.; Springfield, Ill.; Farmington, N.M.; New Bern, N.C.; Chambersburg-Waynesboro, Pa.; Pittsburgh, Pa.; Auburn-Opelika, Ala.; Harrisburg-Carlisle, Pa.; and, Erie, Pa.

Delinquency rates throughout Florida and along the gulf coast of Texas spiked in 2017 Q4, likely an aftereffect of hurricanes that hit both areas in 2017. Four Texas MSAs, including Houston, were in the bottom 10 markets.

In order, the bottom 10 are: Victoria, Texas; Rapid City, S.D.; Sherman-Denison, Texas; Beaumont-Port Arthur, Texas; Anchorage, Alaska; Houston-Sugar Land, Texas; Pueblo, Colo.; Brunswick, Ga.; Rochester, Minn.; and, Coeur d’Alene, Idaho.

More information about the HoHM Report, including the methodology used, can be found at blog.nationwide.com/housing. The HoHM Report is released on a quarterly basis online and in print.

About Nationwide
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.

Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company.

Contact:

Ryan Ankrom
(614) 249-5145
ryan.ankrom@nationwide.com

Jordan Fisher
(312) 240-2951
jordan.fisher@edelman.com