Congress Votes to Extend National Flood Insurance

No lapse in NFIP yet: Congress passed an extension to keep it going until Nov. 21 – the 13th time it’s been extended. President Trump is expected to sign the bill.

WASHINGTON – Don’t expect a lapse – not yet anyway – in the National Flood Insurance Program, the country’s largest flood insurer. The program has been set to expire on Sept. 30, but the U.S. Senate recently passed an extension that would keep the program afloat until Nov. 21. The House had previously passed the extension.

The bill is expected to be signed by President Donald Trump.

This extension will mark the 13th time the program – which is billions of dollars in debt – has been rescued by lawmakers with extensions. The NFIP provides flood insurance coverage to 22,000 communities nationwide and protects property owners against loss from flooding, the most common and costly natural disaster in the U.S.

Federal law requires the purchase of flood insurance for a federally backed mortgage in special flood hazard areas designated by FEMA. Private flood insurance is also available in many high-risk areas, but the NFIP may be the only option for some homeowners.

Any lapse in NFIP funding could jeopardize up to 40,000 home sales a month, the National Association of Realtors® has warned in the past. NAR has long called on long-term reforms to the program. NAR supports reforms to the National Flood Insurance Program, including calls to strengthen flood mapping and mitigation and the development of more private-market flood insurance options.

Meteorologists warn that rising sea levels and increasingly powerful storms will continue to threaten more areas with flooding.

Source: REALTOR® Magazine

© 2019 Florida Realtors®

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NAR: Pending Home Sales Rose 1.6% in August

Pending sales went up 1.6%, reversing the prior month’s decrease, and year-over-year contract signings jumped 2.5%. NAR economist calls it “very encouraging.”

WASHINGTON – Pending home sales reversed course in August after a prior month of declines, according to the National Association of Realtors® (NAR). Each of the four major regions in the study reported both month-over-month growth and year-over-year gains in contract activity.

The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – climbed 1.6% to 107.3 in August, reversing the prior month’s decrease. Year-over-year contract signings jumped 2.5%. An index of 100 is equal to the average level of contract activity.

“It is very encouraging that buyers are responding to exceptionally low interest rates,” says Lawrence Yun, NAR chief economist. “The notable sales slump in the West region over recent years appears to be over. Rising demand will reaccelerate home price appreciation in the absence of more supply.

Regional breakdown: All regional indices were up compared to July, with the highest gain in the West region. The PHSI in the Northeast rose 1.4% to 94.3 and is now 0.7% higher than a year ago. In the Midwest, the index increased 0.6% to 101.7 in August, 0.2% higher than August 2018.

Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August. The index in the West grew 3.1% to 96.4, an increase of 8.0% from a year ago.

Yun says that historically low interest rates will affect economic growth, especially home buying, going forward.

“With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020,” says Yun. “Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”

NAR forecasts home sales to rise 0.6% in 2019 and another 3.4% in 2020. Housing starts are predicted to increase by 2.0% in 2019 and jump an additional 10.6% in 2020, which in turn raises GDP to growth at 2.0% in 2020.

© 2019 Florida Realtors®

September Builder Confidence Hits High for Year

The index gauging builders’ attitudes hit 68 this month. Readings above 50 are considered positive territory, and they’ve been in the mid- to upper 60s since May.

WASHINGTON – Builder confidence in the market for newly built single-family homes rose one point to 68 in September from an upwardly revised August reading of 67, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading above 50 is considered positive territory, and sentiment levels have held in the mid- to upper 60s since May.

“Low interest rates and solid demand continue to fuel builders’ sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor,” says National Association of Home Builders (NAHB) Chairman Greg Ugalde.

“Solid household formations and attractive mortgage rates are contributing to a positive builder outlook,” adds NAHB Chief Economist Robert Dietz. “However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas.”

The HMI index gauging current sales conditions increased two points to 75 and the component measuring traffic of prospective buyers held steady at 50. The measure charting sales expectations in the next six months fell one point to 70.

Looking at the three-month moving averages for regional HMI scores, the Northeast posted a two-point gain to 59, the West was up two points to 75, and the South moved one point higher to 70. The Midwest was unchanged at 57.

© 2019 Florida Realtors®

Federal Reserve Cuts Interest Rates by Quarter Point

The Fed cut rates for the second time this year and said it would keep doing what it deems necessary to sustain the U.S. economic expansion. Interest rate cuts have a direct impact on adjustable-rate mortgages and an indirect effect on fixed-rate loans.

WASHINGTON – The Fed cut rates for the second time this year and said it would keep doing what it deems necessary to sustain the U.S. economic expansion. Interest rate cuts have a direct impact on adjustable-rate mortgages and an indirect effect on fixed-rate loans.

In a statement accompanying the announcement, the Fed said the labor market “remains strong,” economic activity has been “rising at a moderate rate,” and household spending “has been rising at a strong pace.”

However, it also noted economic challenges, including “business fixed investment and exports have weakened.”

While Federal Reserve members often unanimously agree on rate changes, the vote this time was 7-3, the largest number of dissents in three years. Two Fed officials voted to keep rates unchanged, while one member argued for a larger half-point cut.

It’s not clear if the Fed will continue to cut rates later this year or not as some have predicted. While a number of Fed officials favor another rate cut soon, at least two officials expect a rate hike.

© 2019 Florida Realtors®

Fla. Senators Introduce the ‘Canadian Snowbirds Act’

Senate Bill 2507, introduced by Scott and Rubio, would allow Canadian snowbirds to stay in the U.S. for up to eight months – an increase from the current six months.

WASHINGTON – Florida’s U.S. Senators Marco Rubio and Rick Scott think Canadians should be allowed to stay in the United States longer than the current mandatory six months, so they introduced the Canadian Snowbirds Act (S. 2507) in Congress.

The legislation would allow some Canadian citizens to spend up to eight months per year vacationing in the United States without penalty. According to the Canadian Embassy, Canadians who visit Florida contribute more than $6.5 billion each year to the state’s economy.

“Tourism is a crucial part of Florida’s booming economy, creating and supporting thousands of jobs all across the Sunshine State,” Rubio said in a statement. “This bill will be a huge boost to our state’s economy by allowing the millions of Canadian snowbirds who visit Florida each year to stay two months longer.”

To become law, the Senate would have to pass S. 2507 and send it to the House for approval. If that happened, it would then need President Trump’s signature to become law.

The bill would allow Canadian citizens over age 50 who own or rent a U.S. residence to remain in the country for up to 240 days each year. The bill prohibits qualifying visitors from working for American employers or seeking public assistance.

Under current laws, Canadians may remain in the United States for up to six months per year. If they stay more than six months, they’re considered U.S. residents for tax purposes and required to pay U.S. federal income taxes on any and all income they earn that year – regardless of which country it was earned in.

According to VISIT Florida, approximately 3.5 million Canadians visited Florida in 2018 alone. The legislation is endorsed by VISIT Florida and the Canadian Snowbird Association.

“This bill is a win-win for people on both sides of the border,” says Karen Huestis, president of Canadian Snowbird Association 

© 2019 Florida Realtors®

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