Sales fell in the Northeast, West and the densely populated South, but rose in the Midwest. Economists polled by Reuters had forecast sales rebounding 2.0% to a rate of 6.09 million units in April.
Home resales, which account for the bulk of U.S. home sales, surged 33.9% on a year-on-year basis. The annual increase was, however, distorted by the plunge in sales in April 2020, when the economy was reeling from mandatory shutdowns of non-essential businesses to slow the first wave of COVID-19 cases.
The housing market is being driven by demand for bigger and more expensive accommodations after the COVID-19 pandemic forced millions of Americans to work from home and take classes remotely. But the virus has disrupted labor supply at saw mills and ports, causing shortages of lumber and other raw materials.
That is limiting builders’ ability to ramp up construction of new homes, keeping in place an inventory shortage that is boosting prices and threatening to sideline first-time homebuyers from the market. The government reported this week that homebuilding tumbled in April.
There is cautious optimism that the reopening of the economy, facilitated by the vaccination of more than a third of the population and massive fiscal stimulus, could encourage more homeowners to put houses on the market. Some elderly Americans likely delayed downsizing because of the pandemic.
The median existing house price shot up 19.1% from a year ago to $341,600 in April.
Economists do not believe another housing bubble is developing, noting that the surge is being mostly driven by a mismatch between supply and demand, rather poor lending practices, which triggered the 2008 global financial crisis.
There were 1.16 million previously owned homes on the market in April, down 20.5% from a year ago. At April’s sales pace, it would take 2.4 months to exhaust the current inventory, down from 2.4 months a year ago.
A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
First-time buyers accounted for 31% of sales in April.
SAN DIEGO: Buoyed by a large budget surplus and swimming in federal pandemic recovery money, California Gov. Gavin Newsom on Tuesday proposed $12 billion to get more people experiencing homelessness off the streets and into homes of their own.
Newsom’s proposal includes $8.75 billion over two years to create an estimated 46,000 housing units, expanding on a program he launched last year to convert motels and other properties into housing. Nearly half the money would go toward housing in places where people with mental health and other behavioral issues can get services onsite.
Newsom also proposed spending $3.5 billion on rental subsidies, new housing and shelter with the aim of ending family homelessness within five years. It would help families with minors avoid losing their homes in the first place or help them get sheltered without spending days, weeks or months on a waitlist.
“As governor I actually want to get something done. I don’t want to talk about this for a decade,” Newsom said in a news conference at a former San Diego Residence Inn that has been converted into housing for 177 previously homeless people.
“What’s happening on our streets and sidewalks is unacceptable,” he said.
The Democratic governor, who faces a recall election this year, seized on the twin issues of homelessness and housing affordability early on in his first term as governor. The nation’s most populous state has an estimated 161,000 people experiencing homelessness, more than any other state. Advocates say they can’t house people quickly enough with a shortage of units and high rents.
The largest concentration of homelessness is in Los Angeles, where Mayor Eric Garcetti last month vowed to spend nearly $1 billion to move some of the 61,000 homeless people in Los Angeles County off the streets. Rows of tents, cardboard shelters, battered RVs and makeshift plywood structures have now expanded beyond the notorious Skid Row throughout the nation’s second-most populous city.
During the pandemic, Newsom launched projects “Roomkey” and “Homekey” using federal money to house homeless residents in hotels and helping cities, counties and other local entities buy and convert motels and other buildings into housing. Newsom officials said $800 million spent on the Homekey program created 6,000 more housing units, providing shelter for 8,200 people.
One of them is Lindsey Prescott, who made an unplanned appearance at Newsom’s news conference after her 18-month-old daughter Mia waved at the governor when he arrived at a converted Residence Inn operated by Father Joe’s Villages.
Prescott said she was homeless for five years, struggling with addiction after her mother died, and lost her daughter to foster care. She said she got Mia back in May after she stopped using drugs and was selected to move into the former hotel.
“I feel normal,” said Prescott, as Mia darted around an interior patio next to a tennis court. “I’m a mom. I have my daughter. She has her crib next to my bed. I go to the grocery store. I cook.”
Prescott expects to stay at the converted hotel for two years, then move to an apartment or house. There is no limit to how long people can stay at Father Joe’s, and some may choose to live permanently.
Nan Roman, president and CEO of the National Alliance to End Homelessness, called Newsom’s hotel and motel programs gamechangers that took advantage of the pandemic to make real changes. A topsy-turvy real estate market and the federal government throwing money at local governments makes it an ideal time to expand housing, she said, but lots of coordination is needed on things such as rental subsidies and ongoing care to make sure people don’t end up back on the streets.
Advocates cheered the governor’s proposal. But they voiced concerns about California’s decades-old resistance to building new homes: politics, long-term funding issues, neighborhood opposition and political jockeying.
“If we couple it with actually taking steps to close our affordable housing gap, it could be good,” said Dr. Margot Kushel, director of the Center for Vulnerable Populations at the University of California, San Francisco. “The people who are homeless right now do need a response today, and not five years from now.”
Focusing on homelessness could prove politically helpful for Newsom in the recall campaign. Republican challengers, including John Cox and former San Diego Mayor Kevin Faulconer, issued statements calling Newsom ineffective.
If Newsom’s plan wins support from the state Legislature, its implementation would depend heavily on the willingness of local governments and communities to go along, which is often a significant barrier.
“Every community group that you go to demands that you solve the problem of homelessness, and then in the exact same meeting they’ll demand you don’t solve it anywhere near them,” said San Diego County Supervisor Nathan Fletcher, a fellow Democrat who appeared with Newsom.
The governor’s proposal is part of a $100 billion pandemic recovery plan Newsom is rolling out this week, thanks to an astounding $76 billion budget surplus and $27 billion in new funding from the federal government’s coronavirus spending bill.
A new state database shows that nearly 250,000 people sought housing services in 2020. Of that number, 117,000 people are still waiting for help while nearly 92,000 people found housing.
The Federal Housing Finance Agency on Wednesday announced a new refinance option for certain low-income borrowers, helping them take advantage of low interest rates and save money each month.
“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by refinancing,” said FHFA Director Mark Calabria.
“This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”
To qualify, borrowers must have a Fannie Mae or Freddie Mac backed loan, for a single family home that they reside in. Their income must be at or below 80% of the median income for their area. And their loan needs to be in generally good standing – with no missed a payment in the past six months and no more than one missed payment in the past 12 months.
While there are other requirements for the credit profile, it is designed to ease the process to allow more borrowers qualify. The cost and credit requirements can keep some lower-income borrowers from seeking refinancing. This new option will ease some of the cost, such as a credit worth up to $500 for an appraisal.
FHFA, which oversees Fannie and Freddie, estimates the refinancing option could save borrowers an average of $100 to $250 a month. The new refinance option will be available to eligible borrowers beginning this summer.
A new generation of startups wants to disrupt the way houses are built by automating production with industrial 3D printers.
3D printing, also known as additive manufacturing, uses machines to deposit thin layers of plastic, metal, concrete and other materials atop one another, eventually producing three-dimensional objects from the bottom up. In recent years, 3D printers have mostly been used to create small quantities of specialized items such as car parts or prosthetic limbs, allowing consumers or businesses to produce just what they need using the machines at home or work.
Now a small number of startups around the world are applying 3D printing to home construction, arguing that it’s faster, cheaper and more sustainable than traditional construction. They say these technologies could help address severe housing shortages that have led to soaring home prices, overcrowding, evictions and homelessness across the U.S.
But 3D home construction is still in the early stage of development. Most startups in this field are developing new technologies and not building homes yet. And two of the highest profile and best-financed companies – Mighty Buildings and ICON – have delivered fewer than 100 houses between them.
To move beyond a niche market, construction firms will need to significantly ramp up production and persuade home buyers, developers and regulators that 3D printed houses are safe, durable and pleasing to the eye. They’ll also need to train workers to operate the machines and install the homes.
“To the extent that 3D printing can offer a faster, cheaper way to build even single family housing units or small units, it can address a portion of the problem,” said Michelle Boyd, who directs the Housing Lab at the University of California, Berkeley’s Terner Center for Housing Innovation. But the sheer magnitude of the housing shortage demands many types of solutions, from loosening zoning restrictions to building more high-rise apartment buildings, she said.
Proponents note that printing houses rather than nailing them together could save huge quantities of scrwood, metal and other discarded construction materials that are dumped into landfills every year.
Backers say 3D printing reduces the need for human labor at a time when home builders are struggling to find enough skilled workers to meeting housing demand. Many construction workers left the trades after the housing-fueled financial crisis more than a decade ago, and fewer young people are entering the field.
Jason Ballard, CEO and co-founder of a 3D printing construction startup called ICON, said its 3D printing system can do the work of 10 to 20 workers in five or six different trades. And unlike humans, the machines can work up to 24 hours a day, saving developers time and money.
“With 3D printing, we’re able to print exactly what we need,” said Sam Ruben, the company’s co-founder and chief sustainability officer at Mighty Buildings. The process can eliminate nearly all construction waste, he said, which can add up to savings of two to three tons of carbon per housing unit.
In Mighty Buildings’ factory warehouse in Oakland, Calif., a 3D printer deposits thin layers of a stone-like material that quickly hardens under ultraviolet light and resists fire and water. Wall panels are printed one layer at a time and then filled with an insulating foam. Robotic arms finish the surfaces into various designs.
The printer can produce the entire exterior shell of a studio home or individual wall panels that can easily assembled with simple tools, the company said. Mighty Buildings is now producing 350-square-foot backyard studios, known in the industry as “accessory dwelling units,” that can be used as extra bedrooms, playrooms, gyms or home offices.
So far the company has delivered six units and has another 30 under contract, starting at $115,000 each, which doesn’t include the cost of installation and site work. Two units can be combined to make a 700-square-foot dwelling. The company’s home construction costs are about 40 percent lower than that of traditional homes in California, Ruben said.
Most of the modules are assembled in the factory, transported by truck to the owner’s property, then put into place using a crane. The unit size is limited by the dimensions of the truck bed and the clearance heights of tunnels and overpasses.
Backed by more than $70 million in venture capital, Mighty Buildings is planning to build more factories with a goal of producing 1,000 housing units next year. It’s also creating software that allows developers to custom design printed buildings . Ultimately, the company plans to produce townhouses and multistory apartment buildings, Ruben said.
Mighty Buildings is teaming up with a Beverly Hills, Calif.-based developer, the Palari Group, to create a planned community of 3D printed homes in the desert resort community of Rancho Mirage in California’s Coachella Valley.
The solar-powered development, set for completion next spring, will have 15 lots with a 1,450-square-foot primary home plus a 700-square-foot secondary home and swimming pool in the backyard, costing around $850,000, said Basel Starr, Palari’s CEO and founder.
Those lots sold out quickly and there’s a waiting list of 500 homebuyers, Starr said. He’s planning similar developments in other parts of California.
Austin, Texas-based ICON has used 3D printing technology to produce low-cost housing. It’s printed homes for the chronically homeless in Austin as well as poor families in Nacajuca, Mexico. Instead of producing homes in factories, it brings its Vulcan printer to work on-site, squeezing out long tubes of concrete layer by layer that dry quickly to form the walls of a house.
“The factory comes to you, imprints the house right where it intends to be. We chose that method to eliminate a lot of the shipping costs and then also to give ourselves a lot of design freedom,” said Jason Ballard, ICON’s CEO and co-founder.
Its current technology can reduce construction costs by up to 30 percent and build a house twice as fast as traditional methods because the 3D printer does nearly all the work, Ballard said.
“The benefits that automation and digitization had brought to so many other industries with regard to speed and affordability were completely missing from the construction industry,” Ballard said. 3D printing, he said, “was like the most powerful automation of all the automations we could discover.”