The housing market is emerging from its winter doldrums: Several different measures released this morning all point to a recent pickup in the real estate market.
Sales of existing homes jumped 6.1 percent in March to a seasonally adjusted annual rate of 5.19 million — well above expectations and the best month since September 2013. “The pickup in sales is echoed in stronger mortgage applications, new home sales, and faster rising prices—all suggesting a rebound in demand as the spring selling season approaches,” UBS economists wrote Wednesday.
The median sale price last month was $212,100, up 7.8 percent from a year earlier (compared with a 7.2 percent annual gain as of February). “It looks like the combination of limited available inventory and a decline in the share of distressed sales in the market continue to put upward pressure on prices,” J.P. Morgan economist Daniel Silver wrote.
Mortgage purchase applications, meanwhile, rose 5 percent on a seasonally adjusted basis in the week ending April 17, suggesting that the increased activity from March has also continued into April.
That trend may also reflect a policy change by the Federal Housing Administration in January. “Almost immediately after the mortgage insurance premium was cut by 50 basis points, purchase applications started to climb to highs not seen since the summer of 2013,” the IHS Global Insight economists Patrick Newport and Stephanie Karol wrote Wednesday. “We expect that the rule change will support market entry among younger buyers.” First-time homebuyers played an important part in the March increase, they suggest, as they increased their purchases by 10 percent year-over-year. Investors, meanwhile, bought 9 percent fewer properties than they had in March 2014, as the charts below from UBS detail.
The housing recovery had softened in recent months, even beyond the winter’s weather-related issues, so the new data — while not yet signaling a stronger trend — is an encouraging sign for increased activity in the spring and potentially beyond. “Home sales should pick up through the rest of 2015,” Gus Faucher, senior economist at PNC Financial Services Group, wrote Wednesday. “The fundamentals for housing are solid, with average job growth (200,000+ per month), good affordability, very low mortgage rates, increasing consumer confidence, expanding access to credit, and significant pent-up demand after years of depressed sales.”
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The cost of insulin used to treat Type 1 diabetes nearly doubled between 2012 and 2016, according to an analysis released this week by the Health Care Cost Institute. Researchers found that the average point-of-sale price increased “from $7.80 a day in 2012 to $15 a day in 2016 for someone using an average amount of insulin (60 units per day).” Annual spending per person on insulin rose from $2,864 to $5,705 over the five-year period. And by 2016, insulin costs accounted for nearly a third of all heath care spending for those with Type 1 diabetes (see the chart below), which rose from $12,467 in 2012 to $18,494.
The partial government shutdown has hit the economy like a hurricane – and not just metaphorically. Analysts at the Committee for a Responsible Federal Budget said Tuesday that the shutdown has now cost the economy about $26 billion, close to the average cost of $27 billion per hurricane calculated by the Congressional Budget Office for storms striking the U.S. between 2000 and 2015. From an economic point of view, it’s basically “a self-imposed natural disaster,” CRFB said.
The U.S. could save billions of dollars a year if Medicare were empowered to negotiate drug prices directly with pharmaceutical companies, according to a paper published by JAMA Internal Medicine earlier this week. Researchers compared the prices of the top 50 oral drugs in Medicare Part D to the prices for the same drugs at the Department of Veterans Affairs, which negotiates its own prices and uses a national formulary. They found that Medicare’s total spending was much higher than it would have been with VA pricing.
In 2016, for example, Medicare Part D spent $32.5 billion on the top 50 drugs but would have spent $18 billion if VA prices were in effect – or roughly 45 percent less. And the savings would likely be larger still, Axios’s Bob Herman said, since the study did not consider high-cost injectable drugs such as insulin.