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Each month, we use IBM Watson’s tools to assess the sentiment of hundreds of housing news articles about the US housing market. Overseeing that process is Tides analyst Dan Allen. Insightful and observant, he follows the media and helps us keep a pulse on what’s going on out there. Here are his observations on the top housing media trends in October 2017:
Summary of October News
New home sales for September were reported this month to have surged 18.9% compared to August and 17.0% on a year-over-year basis. This marks the most new home sales since October 2007 and handily beat consensus expectations. August new home sales were also revised up.
Calculated Risk’s Bill McBride attributes the uptick to sales that were pushed back due to hurricane Harvey. His theory is supported by the South Census region’s particularly strong showing in the report. All regions posted higher sales than August.
Homebuilding’s New Giant
Lennar has proposed an acquisition of CalAtlantic for $5.7 billion. The combined companies would displace D.R. Horton as the largest U.S. homebuilder.
Analysts speculate that the companies would see greater efficiency by merging their operations and more leverage to negotiate favorable pricing with suppliers and contractors.
Lennar and CalAtlantic estimate annual cost savings of $250 million upon merging. As homebuilders face rapidly-escalating land and labor costs, those savings could prove advantageous. CalAtlantic is itself the product of a merger between Ryland Group and Standard Pacific.
Surveying the Housing Landscape
Freddie Mac released the results of a new survey about renters and homeownership. The survey revealed that renters cited relative affordability of renting and lifestyle as key reasons for not buying a home.
National Association of Realtors’ Profile of Home Buyers and Sellers reveals that the first-time-buyer share of homebuyers declined to 34%. The survey also found that sellers who purchased their home between 8 and 10 years ago were significantly more likely than other sellers to postpone a home due to being underwater on the home.
Finally, the Census Bureau’s Survey of Construction details the characteristics of homes built in the U.S. in 2016. The survey confirms the strength of residential construction in the South, which captured 55% of single-family homes built last year. The most common characteristics of new homes include 2-car garages, 3 or more bedrooms, 3 or more baths, gas heating and vinyl siding.