FHFA House Price Index Up 0.3% in August

 Housing prices increased 4.2% from last year nationwide, the Federal Housing Finance Agency said. Price appreciation remained modest for the 6th month.

WASHINGTON — U.S. house prices rose 0.3% in August, according to the Federal Housing Finance Agency's (FHFA) seasonally adjusted monthly House Price Index (HPI). House prices rose 4.2% from August 2023 to August 2024. The previously reported 0.1% price increase in July was revised upward to 0.2% .

For the nine census divisions, seasonally adjusted monthly price changes from July 2024 to August 2024 ranged from -0.1% in the East North Central and New England divisions to +0.9% in the West North Central division. The 12-month changes were all positive, ranging from +2.4% in the West South-Central division to +6.3% in the East North Central division.

In the South Atlantic division, which includes Florida, seasonally adjusted monthly price changes from July 2024 to August 2024 increased 0.1% with a 12-month increase of 3.7%

"House price appreciation in the United States remained modest for the sixth consecutive month," said Dr. Anju Vajja, deputy director for FHFA’s Division of Research and Statistics. "The slow but continued house price growth and the effect of locked-in interest rates led to persistent housing affordability challenges."

The FHFA HPI is a comprehensive collection of publicly available house price indexes that measure changes in single-family home values based on data that extend back to the mid-1970s from all 50 states and over 400 American cities. It incorporates tens of millions of home sales and offers insights about house price changes at the national, census division, state, metro area, county, ZIP code, and census tract levels. FHFA uses a fully transparent methodology based upon a weighted, repeat-sales statistical technique to analyze house price transaction data.

Source: FHFA

© 2024 Florida Realtors®

Pending Home Sales Advanced 7.4% in September

 Pending home sales bounced 7.4% to the highest level since March; they're up 2.6% YoY. In the South, pending home sales improved, NAR said. 

WASHINGTON — Pending home sales rose in September, according to the National Association of Realtors®. All four major regions experienced month-over-month gains in transactions. Year-over-year, the Northeast and West registered increases while sales remained steady in the Midwest and South.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – jumped 7.4% to 75.8 in September, the highest level since March (78.3). Year-over-year, pending transactions ascended 2.6%. An index of 100 is equal to the level of contract activity in 2001.

“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said NAR Chief Economist Lawrence Yun. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”

NAR economic and housing outlook

In the next two years, Yun foresees slower home price appreciation and corresponding increases in sales.

“After two years of sluggish home sales in 2023 and 2024, existing-home sales are forecasted to rise to 4.47 million in 2025 and more than 5 million in 2026,” Yun said. “During the next two years, expect a slower rate of growth in home prices that’s roughly in line with the consumer price index because of additional supply reaching the market.”

Yun predicts the median existing-home price will rise to $410,700 in 2025 and to $420,000 in 2026. The annual 30-year fixed mortgage rate will slide to 5.9% in 2025 but then move higher to 6.1% in 2026.

Pending home sales regional breakdown

The Northeast PHSI expanded 6.5% from last month to 65.6, up 3.3% from September 2023. The Midwest index surged 7.1% to 75.0 in September, identical to the previous year.

The South PHSI improved 6.7% to 89.0 in September, unchanged from a year ago. The West index rose 9.8% from the prior month to 64.0, up 12.3% from September 2023.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.

The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

© 2024 National Association of Realtors® (NAR)

Understanding Cybersecurity Risks in Real Estate

 By Brandon Rickwood and Aaron Jackson

Cybercriminals will go to great lengths to gain access to your personal and sensitive information. Be ready by having a plan to reduce risk.

NEW YORK —Your real estate firm is at risk from the growing threat of cybersecurity attacks. The days of retaining hard copies and physical files are increasingly phasing out. In an era where digital transformation is altering the industry landscape, real estate firms are becoming progressively more vulnerable to cybersecurity threats due to the sensitive information they maintain. While firms are adopting digital solutions to streamline operations, close transactions faster and improve the customer experience to ease streamlining operations, doing so also makes them prime targets for cybercriminals. As the frequency and sophistication of cyberattacks grow, real estate firms and professionals must understand the risks and implement robust security measures to protect themselves from the escalating threat of cybercrime.

Cybersecurity threats facing real estate firms

Real estate firms are particularly vulnerable to various cybersecurity threats due to the sensitive nature of the information they manage. From phishing attacks and social engineering to data breaches and ransomware, it is important to be cognizant of the most common cybersecurity threats your real estate firm may encounter.

Phishing attacks

"Phishing" remains one of the most prevalent threats facing real estate professionals and firms. Cybercriminals use deceptive emails or messages to trick individuals into divulging sensitive information such as login credentials and/or financial information. It is increasingly common to receive emails or messages from attackers posing as "trusted colleagues" or "trusted clients" asking for immediate action on an urgent matter.

Social engineering

Similar to "phishing" attempts, social engineering tactics involve manipulating individuals into divulging confidential information. In the real estate industry, attackers might impersonate clients or colleagues through phone calls, emails, or other forms of communication to establish trust and gain access to sensitive data or financial resources.

Data breaches and ransomware

Data breaches are also a common occurrence where unauthorized parties access confidential information, such as personal identification details, financial records, and/or transaction histories. Additionally, ransomware attacks that hold firms' encrypted data hostage are rapidly becoming an ever-present threat. There were nearly 318 million ransomware attacks in 2023 alone, and researchers estimate that such attacks will increase to one attack every two seconds by the year 2031.1 Real estate firms maintaining a significant amount of sensitive data are prime targets for such attacks.

Given the present threats and future predictions, it is critical for your real estate firm to prioritize this threat. Cybercriminals will go to inexhaustible lengths to gain unauthorized access to your personal and sensitive information. You must be ready for the attack.

How cybersecurity attacks impact real estate transactions

Cybersecurity threats pose a broad risk to real estate transactions, with significant implications for a real estate firm's financial stability, reputation, and legal compliance.

Financial repercussions can be catastrophic as firms grapple with the costs of ransoms, data breach remediation, potential regulatory fines, legal fees and lost business opportunities. Such attacks can be economically devastating to large firms and catastrophic to smaller firms.

The exposure of sensitive and secure information can result in severe legal consequences, class action lawsuits, data loss, compliance issues, and financial fraud to name a few. Ransomware incidents stifle operations, resulting in significant financial losses and downtime. On September 12, 2023, MGM Resorts confirmed that it suffered a ransomware attack that forced the shut-down of several operational systems, which amounted to $100M in losses according to SEC filings.2

Beyond the immediate monetary losses, a cybersecurity incident can also damage a firm's reputation, as trust and reliance are essential in real estate dealings. Clients provide personal and financial records throughout the real property transaction, which flow through financial and broker institutions to complete the deals. Any breach of client data and/or disruption of services can lead to negative publicity, delayed transaction processing, a decline in clientele, and/or the refusal of lenders and financial institutions to work with the breached firm. In this environment, prioritizing cybersecurity is not just a technical necessity but a critical component of maintaining financial health, client trust, and regulatory adherence.

Best practices for enhancing cybersecurity in real estate

Considering the cybersecurity threats posed to real estate firms and their customers, it is important to highlight the mitigation strategies that real estate firms and individuals should apply to avoid such threats. As the most practical strategy, educating employees about the best cybersecurity practices is essential. Recommendations include the following:

• Educating employees is vital to maintaining sound cybersecurity. Firms should conduct regular training sessions with employees and agents to help them understand how to: 1) safely operate online, 2) identify and avoid cyber threats, and 3) handle and secure sensitive information.
• Using encrypted communication methods and strong multi-factor authentication measures for sharing information can also help protect against unauthorized access and add an extra layer of security for attackers attempting to gain such access.
• Ensuring regular software updates, routinely backing up data and establishing recovery plans further address vulnerabilities that may be exploited by attackers.
• Developing and enforcing clear policies along with executing robust security protocols are also important to combat any existing risks and can defend against future threats.

In conjunction with these best practices, it is vital to ensure the firm's readiness by establishing a robust incident response plan to execute in the event of any cyberattack.

Conclusion

As real estate firms continue to embrace digital solutions, the importance of cybersecurity cannot be overstated. By understanding the threats and implementing best practices, firms can protect their operations, safeguard client information, and maintain their reputation in an increasingly digital world. Caution, awareness, and proactive measures are key to traversing the complex landscape of cybersecurity in real estate.

© Mondaq Ltd, 2024

Home Equity Gains Level Off, Remain Strong

 Almost half of mortgaged homeowners remain equity-rich, according to ATTOM. The portion of owners seriously underwater still close to five-year low.

IRVINE, Calif. – The property analytics firm ATTOM’s third quarter 2024 U.S. Home Equity & Underwater Report shows that 48.3% of mortgaged residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.

That level was down from a recent peak of 49.2% hit in the second quarter of 2024. However, it was still up from 47.4% a year earlier and remained historically high, reflecting one of the enduring effects of a housing market boom around the nation that has lasted more than a decade.

Much the same pattern emerged during the third quarter for the portion of home mortgages that were seriously underwater. Just 2.5% of mortgaged homes fell into that category, with combined estimated balances of loans secured by properties that are at least 25% more than those properties’ estimated market values. That was slightly worse than the 2.4% recorded in the prior quarter and the same is in the third quarter of 2023.

“Homeowner equity typically mirrors home-price trends, and the third quarter of this year followed that pattern. Equity remained elevated as the value of residential properties has surged consistently over the years. However, it held steady this quarter, reflecting the cooling of earlier sharp price increases,” said Rob Barber, CEO for ATTOM. “Despite the flat pattern, home equity keeps providing a significant boost to the economy in the form of financial leverage that tens of millions of households can use to finance major purchases or investments.”

He added that “we can expect to see small movements up or down over the coming months as the housing market moves into its annual slow season.”

The latest equity pattern comes as the market remains strong throughout most of the nation but also faces a mix of forces that could either keep it going upward or flatten it out.

Equity-rich shares of mortgages dip quarterly but remain up annually in majority of states

The portion of mortgaged homes that were equity-rich during the third quarter of 2024, 48.3%, remained far above the 26.5% level recorded in early 2020. Although it decreased in 28 of the 50 U.S. states from the second quarter to the third quarter of 2024, typically by less than two percentage points, it continued to be up annually in 37 states.

Annual increases generally tilted more toward low- and mid-priced markets around the country, concentrated in the Midwest and Northeast regions. The increases were led by Vermont (portion of mortgaged homes considered equity-rich increased from 79.8% in the third quarter of 2023 to 86.4% in the third quarter of 2024), West Virginia (up from 30.5% to 37%), Connecticut (up from 41.5% to 47.7%), New Jersey (up from 45.9% to 52% ) and Rhode Island (up from 54.7% to 60.6%).

At the other end of the scale, equity-rich levels declined more often in western states, led by Utah (down, year over year, from 56.8% to 52.4%), Arizona (down from 54.3% to 50%), Colorado (down from 51.1% to 48%), Washington (down from 56.7% to 54.6%) and Oregon (down from 52.7% to 50.8%).

Seriously underwater mortgage levels change by small amounts in most states

The portion of mortgaged homes considered seriously underwater across the U.S. barely changed during the third quarter. It stood at one in 40, which was up slightly from one in 42 during the second quarter but the same as a year earlier – and well below the ratio of one in 15 recorded in 2020.

The rate worsened quarterly in 30 states, though it was still better annually in 24.

The biggest annual improvements in seriously underwater mortgages came in Wyoming (share of mortgaged homes that were seriously underwater down from 5.9% in the third quarter of 2023 to 2.4% in the third quarter of 2024), West Virginia (down from 4.6% to 3.8%), Louisiana (down from 10.8% to 10.1%), Illinois (down from 4.4% to 4.1%) and New Jersey (down from 1.9% to 1.6%).

On the flip side, the largest year-over-year increases in the percentage of seriously underwater homes during the third quarter of 2024 were in Kansas (up from 2.6% to 4.4%), Utah (up from 1.8% to 2.4%), South Dakota (up from 2.6% to 3.1%), Missouri (up from 3.9% to 4.3%) and Colorado (up from 1.7% to 2%).

High-end markets clustered in Northeast and West continue to benefit from best equity-rich rates

The 10 states with the highest levels of equity-rich mortgaged properties around the U.S. during the third quarter of 2024 again were in the Northeast or West regions. Those with the largest portions were Vermont (86.4% of mortgaged homes were equity-rich), Maine (62.2%), New Hampshire (61.1%), Rhode Island (60.6%) and Montana (60.5%).

Nine of the 10 states with the lowest percentages of equity-rich properties during the third quarter of 2024 were in the Midwest or South. The smallest portions were in Louisiana (21.1% of mortgaged homes were equity-rich), Alaska (31.9%), North Dakota (33.2%), Maryland (33.2%) and Illinois (34%).

Among 107 metropolitan statistical areas around the nation with a population of at least 500,000, upscale markets where median home values surpassed $450,000 topped the list of places with the highest portion of mortgaged properties that were equity-rich during the third quarter. 

They were led by San Jose, CA (68.7% equity-rich, with a third-quarter median home price of $1.5 million); Portland, ME (64.6%, with a median price of $520,000); San Diego, CA (64.1%, with a median price of $885,000); Los Angeles, CA (63.9%, with a median price of $949,375) and Buffalo, NY (63.7%, with a median price of $268,000).

The leader in the South was Knoxville, TN (60.7%, with a median price of $345,949) while the Midwest was led again by Grand Rapids, MI (55%, with a median price of $327,520).

Metro areas with the lowest percentages of equity-rich properties in the third quarter of 2024 remained mostly in lower-priced markets of the South and Midwest. The smallest levels were in Baton Rouge, LA (15.8% of mortgaged homes were equity-rich, with a third-quarter median home price of $223,564); New Orleans, LA (26.9%, with a median price of $242,900); Little Rock, AR (30.1%, with a median price of $215,844); Virginia Beach, VA (30.2%, with a median price of $330,000) and Jackson, MS (30.2%, with a median price of $285,407).

The portion of mortgaged homes considered equity rich decreased from the second to the third quarter of 2024 in 80 of the 107 metro areas with sufficient data (75%) but was still up from the third quarter of 2023 to the same period of 2024 in 70 of those markets (66%). 

Midwest and South still have highest seriously underwater mortgage rates

The Midwest and South regions had 19 of the 20 states with the highest shares of mortgages that were seriously underwater in the third quarter of this year. The top five were Louisiana (10.1% seriously underwater), Mississippi (7.2%), Kentucky (5.5%), Arkansas (5.4%) and Iowa (5.2%).

The smallest shares were in Vermont (0.7%  seriously underwater), Rhode Island (0.9%), New Hampshire (1%), Massachusetts (1.1%) and California (1.4%).

Among different regions, one of every 29 mortgaged homes was seriously underwater in the Midwest, one of every 37 in the South, one of every 50 in the Northeast and one of every 61 in the West.

Among 107 metropolitan statistical areas with a population greater than 500,000, those with the largest shares of mortgages that were seriously underwater in the third quarter of 2024 were Baton Rouge, LA (11.1%); New Orleans, LA (7.4%); Jackson, MS (6.6%); Kansas City, MO (5.5%) and Little Rock, AR (5.2%).

The portion of mortgages that were seriously underwater increased quarterly in 80, or 75%, of the metro areas in the U.S. with enough data to analyze. They were up, year over year, in 61%  of the metro areas analyzed.

Report methodology

The ATTOM U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and amount of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data collected and licensed by ATTOM nationwide for more than 155 million U.S. properties. The ATTOM Home Equity and Underwater report has been updated and modified to better reflect a housing market focused on the traditional home buying process. ATTOM found that markets where investors were more prominent, they would offset the loan to value ratio due to sales involving multiple properties with a single jumbo loan encompassing all of the properties. Therefore, going forward such activity is now excluded from the reports in order to provide traditional consumer home purchase and loan activity.

Source: ATTOM

© 2024 Florida Realtors®

Florida Tax Revenue Tops Projection

 The state’s general revenue collections in Aug. totaled $3.6 billion, 4.3% higher than expected, thanks to a boost from sales taxes and earnings on investments.

TALLAHASSEE, Fla. – State general-revenue collections in August were 4.3% higher than projected, according to state officials. With a boost from sales taxes and earnings on investments, Florida had net general revenue during the month of $3.639 billion, $149.5 million more than anticipated when a panel of economists revised projections on Aug. 14.

A report posted online Tuesday by the Legislature’s Office of Economic & Demographic Research showed sales taxes accounted for $2.892 billion of the August revenue, $60 million higher than expected.

Earnings on investments totaled $169.9 million, which was $84 million more than anticipated.

General revenue is closely watched because it plays a major role in funding education, health and prison programs. The economists meet periodically during the year to update projections, which are used by lawmakers in negotiating an annual state budget.

© 2024 The News Service of Florida. All rights reserved.

Florida Consumer Sentiment Continues to Climb

 Increasing optimism is largely driven by positive views on the national economy over the next year. Consumer sentiment should improve overall in the months ahead.

GAINESVILLE, Fla. – Consumer sentiment among Floridians rose for the fourth consecutive month in September to 78.3 points, up 1.6 points from a revised figure of 76.7 in August. At the same time, national consumer sentiment also rose over 2 points for the second straight month.

Floridians' increasing optimism in September is primarily driven by their positive views on the nation's economy over the next year, reflecting the current economic trends. Although overall price levels won't return to where they were a couple of years ago, annual inflation continued to decline, with the Consumer Price Index (CPI) falling to 2.5% and the Personal Consumption Expenditure (PCE) Price Index – the Fed's preferred measure – dropping to 2.2% in August.

Moreover, while the labor market has cooled, it remains stable, with the U.S. unemployment rate slightly declining to 4.2% and Florida's rate holding at 3.3% in August, both at historically low levels. Considering the progress on inflation, the Federal Reserve announced a 0.5 percentage point cut in interest rates in mid-September, which will ripple through the economy, reducing borrowing costs for consumers and businesses.

“The decrease in interest rates should boost discretionary spending, encourage business expansion through increased investment and hiring, and further enhance confidence among Floridians,”  said Hector Sandoval, director of the Economic Analysis Program at UF's Bureau of Economic and Business Research.

Among the five components that make up the index, four increased and one decreased.

Floridians' opinions about current economic conditions were mixed. Opinions of personal financial situations now compared with a year ago decreased 1 point from 59.5 to 58.5. However, these views varied across sociodemographic groups with men and people with an annual income under $50,000 expressing more favorable views. In contrast, opinions as to whether now is a good time to buy a major household item like an appliance rose 1.3 points from 59.6 to 60.9. Again, opinions were divided, but in this case, people 60 and older, as well as people with annual income over $50,000, reported negative views.

The three components related to Floridians' anticipation about future economic conditions were positive. Expectations of personal finances a year from now increased 1.1 points from 92.6 to 93.7. Outlooks for U.S. economic conditions over the next year saw the largest increase this month, rising 4.4 points from 83.7 to 88.1. These expectations of the national economy are at their highest level in four years. Similarly, expectations of U.S. economic conditions over the next five years rose 2.1 points from 88.3 to 90.4. Despite this growing optimism, these positive trends varied by demographics. Men reported pessimistic views across all three components, while people 60 and older, as well as people with an annual income over $50,000, also expressed negative views regarding their future personal financial situation.

Hurricane Helene made landfall as a Category 4 storm in the Big Bend region on September 27, causing significant property damage and economic losses. “While the full impact on the state's economy is still being assessed, it is unlikely to have lasting effects on Florida's overall economy. However, it will affect consumer confidence among Floridians, though such impacts are typically short-lived,” said Sandoval.

“Looking ahead, we anticipate that consumer confidence will be impacted by the effects of Hurricane Helene in the coming month, likely leading to a decline among Floridians. However, as interest rate cuts begin to ripple through the economy and further reductions are announced later this year, we expect consumer sentiment to improve overall in the months ahead,” Sandoval added.

Conducted August 1 to September 29, the UF study reflects the responses of 254 individuals who were reached on cellphones and 296 individuals reached through an online panel, a total of 550 individuals, representing a demographic cross section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2, the highest is 150.

Source: University of Florida

© 2024 Florida Realtors®

U.S. Annual Home Price Growth Inches up in August

 Year over year, U.S. single-family home prices rose to 3.9% in August, the lowest rate of growth recorded since last July.

IRVINE, Calif. – Home price growth moved up to nearly 4% year over year in August, though gains are projected to fall to less than 1% by next spring, according to the CoreLogic Home Price Index (HPI) and HPI Forecast for August 2024.

Mortgage rates dropped to the lowest level in nearly two years the last week of September, according to Freddie Mac, but weakening consumer confidence over the job market and uncertainty around the November election could be keeping price growth expectations muted.

“While mortgage rates have dropped in recent weeks, August home sales were by still-high rates in July and August, which lowered affordability,” said Dr. Selma Hepp, Chief Economist for CoreLogic.

“The combined impact of high prices and high mortgage rates kept a lid on price growth, with annual gains falling to the lowest level in a year and the monthly gain falling well below what is typically observed in August. Price gains in August were driven by areas in the Northeast but brought down by softening markets in Texas and Florida.“

Top takeaways:

• U.S. single-family home prices (including distressed sales) increased by 3.9% year over year in August 2024 compared with August 2023. On a month-over-month basis, home prices decreased by 1% compared with July 2024.
• In August, the annual appreciation of detached properties (4.2%) was 4 percentage points higher than that of attached properties (-0.2%).
• CoreLogic’s forecast shows annual U.S. home price gains relaxing to 2.3% in August 2025.
• Miami posted the highest year-over-year home price increase of the country’s 10 highlighted metro areas in August, at 8.9%. Chicago saw the next-highest gain at 6.8%.
• Among states, South Dakota ranked first for annual appreciation in August (up by 10%), followed by New Jersey (up by 9.5%). Hawaii was the only state to record a year-over-year home price loss (-0.1).

Source: CoreLogic

© 2024 Florida Realtors®