This Week in Real Estate

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According to a release by the National Association of Realtors This Week in Real Estate, continued price appreciation is the main contributing factor of the decline in sales from a year earlier for the fifth straight month in July. Below are a few highlights from the fourth week of August that influence our business:
 
 
* Single-Family Built-for-Rent Housing Expands. The number of single-family homes built-for-rent increased over the last four quarters. During this time period, construction starts of this type of housing totaled 42,000 homes, compared to 29,000 for the prior four quarters. There were 13,000 single-family built-for-rent starts for the second quarter of 2018. According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design and NAHB analysis, the market share of single-family homes built-for-rent, as measured on a one-year moving average, stood at 4.7% of single-family starts as of the second quarter of 2018. Despite the current elevated market concentration, the total number of single-family starts built-for-rent remains low in terms of the total size of the building market. The current market share remains higher than the recent historical average of 2.7% (1992-2012) but is down from the 5.8% reading registered at the start of 2013. 

* Home Price Gains Continue to Dampen Demand. Existing home sales posted their fourth straight loss in July and have dropped to their slowest pace since February 2016. The National Association of Realtors (NAR) said sales of previously owned single-family houses, townhouses, condos, and cooperative apartments were at a seasonally adjusted annual rate of 5.34 million units last month. This is a 0.7 percent decline from the 5.38 million units reported for June and puts sales behind those of a year earlier for the fifth straight month, this time by 1.5 percent. Single-family home sales declined by 0.2 percent to a seasonally adjusted annual rate of 4.75 million from 4.76 million in June. They are now running 1.2 percent below the 4.81 million sales pace a year ago. The West saw the only gain, 4.4 percent to an annual rate of 1.19 million in July, but sales are still 4.0 percent below a year ago. The median price in the West was up 5.1 percent to $392,700.

* Big Win for Realtors on IRS Guidance for 20% Income Deduction. The deduction was part of the big tax reform law Congress passed at the end of last year and it was a huge win for REALTORS. But it was unclear who would be eligible for the deduction. Now that proposed regulations are out, it’s clear the new deduction will be available to a wide range of real estate professionals. UnderThe new deduction is available for tax years beginning after Dec. 31, 2017. You’ll be able to claim it for the first time on the 2018 federal income tax return you file next year. Look for detailed NAR guidance by mid-September. It’s a complicated provision and how it works for you will depend on many factors unique to your business structure and your income.

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