United States of America

U.S. Housing Market

China overtakes Canada as the top country of origin for foreign buyers of U.S. homes and New Jersey enters the top five states for foreign buyers, according to the 2015 Profile of International Home Buying Activity complied from data gathered from The National Association of Realtors on purchases of U.S. real estate by international clients made during the 12 months from April 2014 to March 2015.

While total unit sales from international home buyers decreased from last year, total sales dollar volume increased 13 percent. For the period of April 2014 through March 2015, total international sales were estimated at $104 billion, compared to the previous year’s estimate of $92.2 billion. This represents 8 percent of the total existing-home sales dollar volume.

In 2014, five countries accounted for 51 percent of all purchases by international buyers: China, Canada, Mexico, India and the United Kingdom. For the first time, buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India with $7.9 billion, Mexico with $4.9 billion and the U.K. with $3.8 billion.

International buyers tend to purchase more expensive properties with the average purchase price being $499,600, compared to the overall U.S. average house price of $255,600. Chinese buyers typically purchased the most expensive properties, at an average price of $831,800.

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According to a recent report by Bloomberg, home prices in 20 U.S. cities rose at a faster pace than projected in the year through March, reflecting the limited number of available properties on the market.

The S&P/Case-Shiller index of property values, released on 25 May 2015, increased 5 percent from March 2014 for a second month in a row. The median estimate of 25 economists surveyed by Bloomberg called for a 4.6 percent year-over-year advance. The report shows that nationally, prices rose 4.1 percent from March 2014.

Higher home prices along with lean inventory and limited income growth have tempered the recovery in residential real estate.

Economists’ estimates in the Bloomberg survey ranged from gains of 4.3 percent to 5.4 percent. The S&P/Case-Shiller index is based on a three-month average, which means that the March figure was also influenced by transactions in the previous months of February and January 2015.

Monthly Gain

Home prices in the 20-city index adjusted for seasonal variations increased 1 percent in March from the prior month, in line with the Bloomberg survey median of 0.9 percent.

Another report showed prices decelerated from a month earlier. Property values climbed 0.3 percent in March after a 0.6 percent advance, according to figures from the Federal Housing Finance Agency. The data are calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

All 20 cities in the index showed a year-over-year gain, led by a 10.3 percent increase in San Francisco and a 10 percent pickup in Denver, according to Case-Shiller. Prices climbed at the slowest pace, 1 percent, in both Washington and Cleveland.

The price increases accelerated in 10 cities in March from the same time in 2014. The pace of gains slowed in the rest.

Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.59 million in March from 4.35 million in February, and are now 10.9 percent above the 4.14 million pace a year ago. The median existing single-family home price was $213,500 in March, up 8.7 percent from March 2014.

S&P USA Housing Chart

Income Growth

“Home prices are currently rising more quickly than either per capita personal income or wages, narrowing the pool of future homebuyers,” David Blitzer, chairman of the S&P index committee, said in a statement. “All of this suggests that some future moderation in home price gains is likely.”

Measured against a month earlier, property prices rose in all 20 cities in March, according to the seasonally adjusted data. They jumped 2.6 percent in Detroit, while Cleveland showed the smallest gain at 0.1 percent.

A scant supply of homes for sale has helped keep property values rising as buyers bid up prices. Last month, it took about 39 days to sell a house once it came on the market, according to data from the National Association of Realtors. That’s the shortest span since the middle of 2013, said Lawrence Yun, the group’s chief economist.

Contract closings on previously owned properties unexpectedly dropped 3.3 percent to a 5.04 million annualized rate in April after a 5.21 million pace that was the strongest in almost two years, the NAR figures showed.

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