Existing Home Sales Decline
Existing home sales fell for the third consecutive month while the median price rose to a record high in April.
The National Association of Realtors reported that sales were down 2.7% from March, another decline as the inventory of homes remains tight. Sales were 20% higher than in April 2020, which was the first month of lockdowns with government stay-at-home orders.
April’s median home price rose 19.1% from last year to a record $341,600, according to the association.
The association reported that the inventory of listings rose 10.5% from March but is still down 20.5% from a year ago and near record lows.
Once lockdowns lifted, existing and new home sales started rising rapidly, driven by historic low mortgage rates. Tales of sellers drawing multiple offers above asking price continue in desirable areas of the country.
Mortgage applications rose for the week that ended May 14 by 1.2% from the previous week even though mortgage rates have risen over the past two weeks, driven mostly by refinancing, according to the Mortgage Bankers Association. The rate for a 30-year fixed loan rose to 3.15%, which still is historically low.
The index for measuring new mortgages for new purchases declined 4% last week, however, that reflects the dip in sales of new and existing homes. The average mortgage application hit $411,400.
“There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply,” Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement.
Lawrence Yun, the National Association of Realtors’ chief economist, said in a statement that the shotage of existing homes could ease later this year as further “vaccinations are administered and potential home sellers become more comfortable listing and showing their homes.”
Biden Counters Republicans on Infrastructure
On Friday, President Biden slashed $600 billion from his proposed $2.3 trillion infrastructure proposal in a counteroffer to Republicans.
Republicans, however, said that still wasn’t enough. A group of Senate Republicans still have a $568 billion infrastructure proposal on the table.
To whittle down his plan, Biden shifted funding for research and development, small businesses and improvements to separate bills now in Congress. He reduced funding for rural broadband from $100 billion to $65 billion, matching the Republican proposal.
Additionally, Biden's proposed funding for roads, bridges and other major infrastructure projects dropped to $120 billion from $159 billion.
West Virginia Sen. Shelley Moore Capito, who is leading the Republicans on the infrastructure negotiations, reportedly said that Biden's plan still remains “well above the range of what can pass Congress with bipartisan support.”
Railroad Merger Alters Course
The potential merger between two rail companies to create the first freight network from Canada through the United States and into Mexico has changed course but still could benefit industrial real estate development along the path.
Kansas City Southern scuttled a $25 billion deal with suitor Canadian Pacific to marry up with Canadian National Railway, which offered $33.6 billion. Kansas City Southern’s board called the Canadian offer a “company superior proposal.”
The announcement comes after Canadian Pacific refused to increase its offer.
The breakup cost Kansas City Southern $700 million. But Canadian National is reimbursing Kansas City Southern the money, according to the announcement.
A single network may benefit such developments as the one Riverside, Missouri-based NorthPoint Development announced with Kansas City Southern in January that involves 220 acres in Wylie, Texas, near Dallas. NorthPoint is developing a logistics park with the potential of 2.4 million square feet of building space next to the rail company’s intermodal terminal.
Canadian Pacific hasn’t given up on the deal, however. It sent a letter to the Surface Transportation Board on Friday to initiate the process for approval of the deal struck in March, noting the regulatory hurdles for Canadian National.