Real Estate Archives

Home Buying Conditions Could Soon Stabilize

The National Association of Realtors’ Pending Home Sales Index is considered a good indicator of future home sales because it measures contract signings rather than closings. Generally speaking, contracts to buy are signed weeks before a sale is closed, which means a drop in the number of signed contracts will most likely show up as a decline in home sales the following month. In April, the NAR’s index fell 3.9 percent, indicating that home sales will soon slow. The reasons for this are obvious: Spiking mortgage rates, on top of already high home prices, have buyers concerned about affordability. But, according to Lawrence Yun, NAR’s chief economist, quickly changing conditions could soon stabilize, offering home buyers more certainty in the months ahead. “If mortgage rates stabilize roughly at the current level … and job gains continue, home sales could also stabilize in the coming months,” Yun said. “Home prices in the meantime appear in no danger of any meaningful decline. There is an ongoing housing shortage, and properly listed homes are still selling swiftly – generally seeing a contract signed within a month.”

Sale-Pending

Which Areas Are Most Popular With Buyers?

Home buyer preferences are usually pretty consistent. What home shoppers are looking for in a house or neighborhood doesn’t change all that much from year to year. But, while that’s typically true, the pandemic caused a shift in what buyers are looking for and, two years after its initial onset, the effects are becoming more clear. One recent example can be seen in an analysis of home-price growth and inventory levels in more than 1,000 cities nationwide. The analysis – which aimed to pinpoint the country’s most popular markets – found that all of the top 10 most popular areas were suburban locations about a half-hour from the nearest city center. That’s a change from the pre-pandemic era when urban areas saw faster price growth and higher demand than neighborhoods outside cities. The reason for the shift is fairly easy to see. The pandemic led to an increase in remote work, and with more Americans able to work from home, buyers began looking to live further from city centers, where they could have more space and privacy. (source)

House

How Handy Do You Consider Yourself?

Homeownership has many benefits. It also comes with a fair amount of responsibilities. Among them, maintenance is a big one. It’s up to you to keep your home in good shape, fix things when they break, and make sure mechanical systems are in working order. Of course, you can hire contractors to do the work, but finding good, affordable help can be challenging and the costs definitely add up. So when shopping for a home to buy, it’s also good to have an idea of how handy you are around the house. Being able to handle some home improvement and maintenance projects can help save you money. It can also help widen your options, as you may be more comfortable buying a house that needs a little love and attention. But first, you need to assess your skill level. According to one recent survey, 47 percent of Americans consider themselves handy. Fewer say they’re extremely handy, with 18 percent of respondents ranking their skill level on the higher end of the handiness scale. How handy do you consider yourself?

Tools

Houses For Sale Still Selling Quickly

Homes for sale continue to sell quickly, according to new numbers from the National Association of Realtors. Data from April shows 88 percent of homes sold during the month were on the market less than 30 days and the typical property was on the market just 17 days. Lawrence Yun, NAR’s chief economist, says the housing market is a little unusual right now. “The market is quite unusual as sales are coming down, but listed homes are still selling swiftly …” Yun said. It’s true. Home sales in April fell 2.4 percent from the month before and are now 5.9 percent lower than they were at the same time last year. But despite buyer demand beginning to slow, the pace of sales remains fast. So what’s happening? Well, the inventory of homes for sale is still lower than normal, which is why good listings don’t last long. Even with fewer buyers active in the market, homes will continue to sell quickly until inventory improves. Luckily, relief may be on the way. In April, for example, the number of homes for sale spiked, rising 10.8 percent from the month before. That’s good news for spring buyers. (source)

For-Sale

Home Builders React To Growing Challenges

Home builders are a reliable barometer of housing market health, since their business depends on being able to anticipate buyers’ needs. That’s why the National Association of Home Builders’ monthly Housing Market Index – which measures builder confidence – is a closely watched industry metric. The index is scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In May, the index fell for the fifth straight month, dropping to 69. Though still a positive result, it’s an indication that builders are starting to feel the effects of numerous challenges facing the market, including higher mortgage rates. “The housing market is facing growing challenges,” Robert Dietz, NAHB’s chief economist, said. “Building material costs are up 19 percent from a year ago, in less than three months mortgage rates have surged to a 12-year high and based on current affordability conditions, less than 50 percent of new and existing home sales are affordable for a typical family.” But while the market has become more challenging, all three index components remain in positive territory, including the gauge of current sales conditions which scored a 78 in May. (source)

Construction

Pending Home Sales Fall 2.2% In November

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes that are signed each month. Because it tracks contract signings, not closings, it can be a good indicator of future home sales. In November, the index found pending sales down 2.2 percent from the month before. Lawrence Yun, NAR’s chief economist, says home buying conditions are challenging right now but relief may be on the way. “There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” Yun said. “While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability.” Regionally, contract signings were mostly flat except for in the Midwest, where they fell 6.3 percent. The West also saw a decline, with contract activity down 2.2 percent month over month.

Sale-Pending

Home Prices Increase But At A Slower Pace

These days, housing market conditions are fairly easy to understand. There are fewer homes for sale and, because of that, home prices continue to rise. It’s simple supply and demand. When there are fewer homes for buyers to choose from, the ones that are available go for a higher price. But while that’s been the case for a while now, the most recent S&P Case-Shiller Indices – considered the leading measure of U.S. home prices – offers some encouraging news. The index found that, while prices are still climbing, they’re now increasing at a slower pace. Craig J. Lazzara, managing director at S&P, says, in many of the cities the index tracks, price increases have slowed. “We continue to see very strong growth at the city level,” Lazzara said. “As was the case last month, however, in 14 of 20 cities, prices decelerated – i.e., increased by less in October than they had done in September.” But while the rate of increases has slowed, prices are still rising at a double-digit pace. In fact, October’s gain was the fourth-highest reading in the 34 years S&P has been tracking price data. (source)

Money

Mortgage Rates Fall To Four-Week Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to a four-week low last week. Rates were down for loans backed by the Federal Housing Administration and 30-year fixed-rate mortgages with both conforming and jumbo balances. The decline helped push refinance activity up 2 percent from the week before. But while refinancing homeowners were more active, home buyers weren’t. In fact, demand for loans to buy homes fell 3 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the high end of the market is seeing more activity these days. “The average purchase loan increased for the second straight week to $416,200 – the second highest amount ever,” Kan said. “The elevated loan size is an indication that activity is more on the higher end of the market.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

Fannie Mae Forecast Sees Year Ending Strong

Fannie Mae’s Economic and Strategic Research Group releases a forecast each month covering their predictions for the economy and housing market. According to their most recent release, their outlook for full-year economic growth has been revised upward from last month’s projection. Their home-sales growth projection was also revised upward based on an expected end-of-year sales surge. But while the year-end forecasts were increasingly positive, the group sees challenges ahead in 2022. For one, they expect fewer home sales next year due to limited for-sale listings and growing affordability constraints. “According to the ESR Group, the impact of monetary policy tightening to combat inflation will combine with ongoing supply issues and still appreciating home prices to slow sales activity,” the release says. “While the economy picked up steam late in the year, unfortunately, so did inflation, and the market expects the Fed to recalibrate its monetary policy as a result.” Part of that is an expected mortgage rate increase. But while the Fed is likely to raise rates in 2022, they will still remain low by historical standards. (source)

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Nearly 60% Of Americans Say Now’s The Time To Buy

Each month, Fannie Mae’s Home Purchase Sentiment Index surveys Americans to measure interest in home buying and selling. The index looks at how people view the housing market, home prices, mortgage rates, their jobs, income, and expectations for the future. In February, the HPSI was relatively flat from the month before but remained near all-time highs. In fact, the survey found 59 percent of Americans believe now is a good time to buy a house and 67 percent say it’s a good time to sell. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the housing market has started the year off strong. “The HPSI remained relatively steady in February, reflecting another month of robust consumer sentiment consistent with strong housing market data to start the year,” Duncan said. “In particular, household income sentiment picked back up as more workers saw their wages rise amid tight labor market conditions, helping bolster already strong housing demand.” However, though Americans are optimistic about the housing market and economy, Duncan warns that February’s results don’t yet account for the potential economic impact of the coronavirus, which could affect future survey results. (source)

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