August 2017

Rates Remain Low But Fail To Move Buyers

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with rates for 30-year fixed-rate loans with conforming loan balances and 15-year fixed-rate mortgages both unchanged from one week earlier. Rates for jumbo loans and those backed by the Federal Housing Administration were up slightly in last week’s survey. Joel Kan, MBA’s associate vice president of industry surveys and forecasting, told CNBC mixed economic news led to an up-and-down week for mortgage rates. “It was an up-and-down time for rates last week in response to mixed economic news coupled with the Fed’s FOMC statement,” Kan said. “The statement outlined a mostly healthy outlook, with a slight concern over inflation and the news that balance sheet reduction could begin ‘relatively soon.’” But despite still low rates and the generally upbeat economic outlook, overall mortgage demand fell 2.8 percent, with refinance activity down 4 percent and demand for loans to buy homes 2 percent below the previous week’s results. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Homeownership Rate Rises Unexpectedly

For several years following its 2004 peak, the homeownership rate was falling. Fewer Americans were buying homes and, instead, more were choosing to rent. The reasons behind this were fairly obvious. The housing crash and financial crisis made buying a home difficult for younger Americans who were struggling to get on their feet and kept hesitant homeowners from putting their homes on the market due to lost value. The combined effect was that fewer Americans were in a position to buy and the very idea of homeownership as a wise financial decision was called into question. Since then, though, home prices have largely bounced back and a stronger job market has led to rising buyer demand. Because of this, the homeownership has now begun to inch back up. For example, the latest report from the U.S. Census Bureau shows the homeownership rate improved during the second quarter of this year and is nearly one percent higher than at the same time last year. Still, at 63.7 percent, the rate is comparatively low. At its peak, it was near 70 percent. More here.

Pending Home Sales Bounce Back In June

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed in any given month. Because it tracks signings and not closings, it’s considered a good indicator of future existing home sales. In June, the index increased 1.5 percent, marking the first gain in three months. Lawrence Yun, NAR’s chief economist, said the improvement is a welcome sign and hinted that prospective buyers might even be better positioned in coming months. “It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” Yun said. “Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford.” In other words, at a time when the supply of homes for sale is lower than normal, competition among buyers is already high in many markets. However, with fewer investors and all-cash buyers active in the market, there should be more room for traditional buyers to successfully find and close on a house. More here.