Monthly Archives: February 2019

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year mortgages. The drop coincided with a surge in home buyers applying for loans to buy homes. In fact, the purchase index was up 6 percent from the week before and is now 3 percent higher than last year at the same time. Michael Fratantoni, MBA’s senior vice president and chief economist, said rates are stabilizing and it’s helping spur demand for loans. “Mortgage rates were little changed last week, but as we anticipated, home buyers are responding favorably to this more stable rate environment,” Fratantoni said. “Purchase applications for both conventional and government loans rose last week, with the government gain led by a 14 percent increase in applications for VA purchase loans.” Along with home price increases beginning to slow, favorable rates and growing inventory have combined to make this spring’s housing market a better deal for buyers. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgages. 

During times when the housing market has more buyers than homes for sale, the quickest remedy is to build more new homes. Adding inventory to the market gives buyers more options, helps balance supply and demand, and keeps home prices in check. In short, new home construction plays a vital role in housing market health and affordability conditions. That’s why it’s good news that recently released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show a 3.6 percent increase in the number of new homes that began construction in 2018. The year-over-year improvement put the number of completed new homes last year at nearly 1.2 million. Unfortunately, toward the end of the year, rising mortgage rates and stock market volatility slowed the pace of new home construction. However, with buying conditions becoming more favorable and builder confidence on the rise, there is reason to believe new construction of single-family homes will begin to climb again this spring. That’s encouraging, not just for buyers interested in finding a new home this year, but all potential home buyers. More here.

To understand housing demand, it helps to break it down generationally. For example, baby boomers – because they are older and more likely to be settled somewhere – are the least active in the market. Generation X, on the other hand, are in the prime of their professional life and, since they are making more money and have growing families, they account for a large share of buyers looking to upgrade from their first home into something more spacious. Finally, there are millennials. Born between 1982 and 2000, millennials are now at, or will soon reach, the age of the typical first-time home buyer. So, naturally, they should represent an increasing share of the demand for homes. But do they? Well, the short answer is yes. According to a new report from the National Association of Realtors’ consumer website, millennials are now the age group responsible for the most new mortgages. In fact, in 2018, millennials accounted for 45 percent of all new mortgages. By comparison, Generation X home buyers were responsible for 36 percent of new mortgages and baby boomers represented 17 percent of purchase loans. More here.

Fannie Mae’s Economic and Strategic Research Group puts out a monthly outlook covering economic and housing conditions and their expectations for the coming months. According to their February forecast, home buyers may have something to look forward to as spring approaches. That’s because, this year’s real estate market looks to be more favorable than it has been in the recent past. Doug Duncan, Fannie Mae’s chief economist, says many indicators are pointing toward a good spring for buyers. “On housing, a reduction in our forecast of existing home sales has our team projecting fewer 2019 purchase mortgage originations,” Duncan said. “However, falling – or at least not rising – interest rates, strong employment, continued wage growth, and a deceleration in home price appreciation should support more favorable home buying conditions heading into the spring, along with improved affordability.” In other words, things are trending in a more balanced direction and this year’s home buyers stand to benefit. More here.

New numbers from the National Association of Realtors show sales of previously owned homes fell 1.2 percent in January from the month before. It was the third consecutive monthly decline and, among the country’s four major regions, only the Northeast saw an increase in sales activity. But, though that sounds like the housing market may be headed in the wrong direction, it doesn’t tell the whole story. Why? Well, market fundamentals are actually improving for anyone who may be considering a move this year. In addition to lower mortgage rates and rising inventory, home price increases were the slowest in six years and homes were on the market for an average of 49 days – which is considerably longer than it was last summer, when most listed homes were selling in under a month. In short, spring home buyers may find buying conditions more favorable than expected. “Decelerated sales and increases in inventory will work in favor of potential home buyers, putting them in a better negotiating position heading into the spring months,” NAR president, John Smaby, said. “On top of that, low interest rates will bring an additional $80 per month savings compared to the rates of just a few months ago.” In other words, slow January sales may just be a lull before the market begins to heat up again this spring. 

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage demand increased 3.6 percent last week from the week before. And, though the majority of the improvement was refinance activity, purchase demand also rose. The news is encouraging, as it points to gaining interest as spring approaches. Joel Kan, MBA’s associate vice president of industry surveys and forecasts, says the numbers show promise. “After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago – showing some promise as we edge closer to the spring home buying season,” Kan said. The improvement comes during a week when average rates were up for most loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances. However, despite higher rates week-over-week, Kan noted that they are close to 10-month lows right now – which provides incentive to both potential home buyers and homeowners who might benefit from refinancing. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. 

The real estate market tends to slow down in the fall and winter. Spring and summer are far more popular with home shoppers. But last fall, in addition to the normal seasonal slowdown, mortgage rate increases caused many potential home buyers to put a hold on any plans to purchase a house. In short, affordability conditions, the holidays, and harsher weather dampened demand for homes. Since then, however, mortgage rates have decreased and for-sale inventory has shown signs of recovery. This combined with a healthy job market and the approaching spring sales season has spurred renewed optimism among housing professionals. Take the National Association of Home Builders’ Housing Market Index, for example. The index – which measures builder confidence in the market for new homes – saw a four point rebound in February and is now at 62 on a scale where any number above 50 indicates more builders view conditions as good than poor. Randy Noel, NAHB’s chairman, says expectations for the months ahead have turned hopeful. “Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” Noel said. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.” More here.

The fact that younger Americans these days are facing some financial challenges is well documented. Rent has increased and so has student loan debt. That can make saving money to buy a home difficult. So it shouldn’t be too surprising to hear that there are an increasing number of young adults living with their parents. But new numbers from the Urban Institute make clear just how many. According to their research, the share of people between the ages of 25 and 34 who are living with their parents has increased from 11.9 percent in 2000 to 22 percent in 2017. “This translates to more than 5.6 million additional young adults under their parents’ roofs between the two years,” the study says. “This trend matches the decline in young adults’ marital rate (from 55.3 percent to 40 percent) during this period.” In short, young Americans are getting married and establishing households later in life. So what does this mean for the housing market? Well, it means there are a lot of potential first-time home buyers who are going to be looking for affordable, entry-level homes in the years to come. How, where, and when they decide to enter the market will affect competition, prices, and available inventory for buyers everywhere. More here.

Finding the right home involves a little bit of luck. After all, the chances that there’ll be a place in your price range, with all of the features you desire, in the neighborhood you want to live in, at the exact time you’re looking aren’t necessarily great. But, the more homes there are available for sale in the area you’re searching, the better those odds become. That’s why inventory is such a hot topic these days. There’s been a shortage of homes for sale over the past few years and it’s made buying a house more difficult, especially in affordable price ranges popular with buyers looking for their first home. But recent numbers show that conditions are beginning to swing back in favor of home buyers. That’s because, inventory has been rising, and at a good pace in the markets that need it most. In fact, in some of the nation’s most competitive markets – like San Jose, Seattle, Denver, Los Angeles, and San Diego – the number of homes for sale has seen double-digit increases year-over-year. This is undoubtedly good news for home shoppers, as it means better odds they’ll be able to find and purchase a home that fits their needs. However, because the previous years’ inventory declines were significant, it’ll take some time to reverse those losses. That means, buyers can still expect a competitive market this year, though it’s finally trending in their direction. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were down across all loan categories last week. Rates fell for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. But despite rates having become more favorable over the past several weeks, demand for loans to buy homes has also been falling. Joel Kan, MBA’s associate vice president of industry surveys and forecasts, says uncertainty is behind the decline. “Application activity fell last week – even with rates decreasing – as renewed uncertainty about the domestic and global economy likely held potential home buyers off the market,” Kan said. “Despite the recent decline in applications, we still expect that the continued strength of the job market and lower rates will support more purchase activity in the coming months.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.