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51 » VISIT US ONLINE @ DSNEWS.COM PROCEED WITH CAUTION: EXISTING HOME SALES AND ECONOMIC GROWTH e U.S. is embarking on its ninth year of economic expansion and Fannie Mae is predicting economic growth rebound. According to their Economic & Strategic Research Group's June 2017 Economic and Housing Outlook, second-quarter economic growth will rebound to 2.9 percent from last quarter's 1.2 percent. Consumer spending growth is expected to return to its traditional role as the biggest contributor to economic growth, picking up to 3.1 percent this quarter from 0.6 percent in the first quarter. Fannie Mae said moderate growth is expected to continue into next year; however, uncertainty in fiscal and monetary policy makes the forecast a little difficult. "is month marks the eighth anniversary of the U.S. economic expansion, the third longest of the post-World War II era. While we expect modest growth to continue in 2018, the potential for fiscal stimulus remains a notable wild card," said Fannie Mae Chief Economist Doug Duncan. "e odds that Congress will enact major pieces of legislation this year and jump-start meaningful fiscal stimulus have diminished, and the economy also faces another fiscal policy uncertainty in coming months, as Congress will have to raise the debt ceiling to avoid a government shutdown." Duncan said the Federal Open Market Committee's June decision to raise the Fed funds rate by 25 basis points has increased the uncertainty of monetary policy. "Our June forecast assumes that the Fed will increase the target rate once more this year in September and will begin to taper reinvestment of principal payments from its securities holdings in December. However, the recent slowdowns in hiring and inflation could lead the Fed to hold off on the September rate hike in order to gather more data." According to Duncan, the housing market hasn't changed all that much in the last year. Labor and inventory shortages are constraining sales and therefore, increasing home prices. "We expect total home sales to rise 3.2 percent this year and total single-family mortgage originations to drop about 21 percent to $1.62 trillion," Duncan said. "A large drop in refinance originations will likely outweigh a modest rise in purchase originations. We expect the refinance share to move down to around 34 percent in 2017 from 48 percent in 2016." TEAR-DOWN STARTS BOAST YEAR-OVER-YEAR INCREASE e National Association of Home Builders (NAHB) released their estimate of single- family tear-down starts in 2016 last month, and calculated that the number has increased from 2015's average of 7.7 percent to 10.6 percent. A tear-down start is defined by a home that was built on land that was once previously the sight of another structure. e estimate operates under the assumption that builders would find evidence of a previous structure when they go to erect a new one. e NAHB uses the NAHB/Wells Fargo Housing Market Index (HMI) as a base and sends the survey to a panel of single-family builders located across the country to collect the information. e estimate is based on a weighted percentage to arrive at the total amount of single-family tear- down starts. Of the single-family builders polled, 69 percent—the largest group—said that 0 percent of their starts were located on a site that had a previous structure on it, compared to 2015's total of 51 percent. Ten percent of those polled said the number of single-family starts ranged between 1 percent and 10 percent; 12 percent said the starts for the year ranged between 11 percent and 30 percent. Only 2 percent said their starts were at a tear-down location between 31 percent and 99 percent of the time. Five percent of those polled said 100 percent of their single-family starts were located on land that was once home to another structure. Based on the 10.2 percent weighted percentage, the NAHB estimates that an approximate total of 79,300 starts were at a tear-down site out of 781,000 total single-family starts reported by the U.S. Census Bureau. Out of those 79,300 single-family starts, 33,400 were located in the West region—as divided and defined by the Census principal regions. e Midwest was home to 12,300 tear-down starts; the South 23,800; and the Northeast 9,800. While these figures are only estimates, the NAHB reports that the increase in tear-down starts is indicative of the continued recovery of the single-family housing market. of homes sold in May were on the market for less than a month— down from 29 days in April and 32 days a year ago, a record high since the association started tracking existing homes data back in 2011. Source: June 2017 Report from the National Association of Realtors STAT INSIGHT 55%

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