Monthly Archives: March 2019

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly down last week. In fact, rates for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages all fell. The declines helped push demand for loans to buy homes up 4 percent from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the gains are an encouraging sign. “Purchase applications have now increased year-over-year for four weeks, which signals healthy demand entering the busy spring buying season,” Kan said. “However, the pick-up in the average loan size continues, with the average balance reaching another record high. With more inventory in their price range compared to first-time buyers, move-up and higher-end buyers continue to have strong success finding a home.” In other words, though affordability conditions and inventory have both improved, the market is still more favorable for buyers at higher price points. The market for first-time and entry-level home buyers remains more competitive. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

For many Americans, coming up with a down payment to buy a house is the only barrier keeping them from pursuing homeownership. In fact, according to one recent survey, 40 percent of respondents said affording a down payment was the biggest thing that kept them from buying. That more than doubles the next most cited reason, which was believing rent was more affordable. But though saving enough money for a down payment was an obstacle for a large percentage of potential home buyers, it wasn’t necessarily an insurmountable one. That’s because, many home buyers simply opted for a smaller down payment. According to the survey, more than half of the respondents who had recently purchased a home said they did it with a down payment of 10 percent or less. And 36 percent said they put down less than 5 percent. In other words, many buyers – rather than put off buying a home – are doing it by investing less up front. But prospective buyers hoping to buy with a smaller down payment should be forewarned. Though it is possible to purchase a house with less than 20 percent down, it will lead to a larger monthly payment and often means paying private mortgage insurance as well. More here.

Among all the indicators that can be used to gauge the health of the housing market, few are as good as new home construction. After all, home builders wouldn’t be building homes if they didn’t think there were interested buyers. So, when new home construction is rising, there’s probably a good reason. And, if that’s the case, then the January numbers recently released by the U.S. Census Bureau and the Department of Housing and Urban Development are encouraging. That’s because they show a 25.1 percent month-over-month increase in the number of new homes that began construction in January and a 30.2 percent increase in the number of completed new homes. That’s a significant improvement and a pretty good indication that home builders expect a busy spring and summer. However, though the construction numbers are impressive, the number of permits to build homes were only up 1.4 percent. That could be a sign that the building boom will be short lived or it could be evidence that rising mortgage rates near the end of last year caused builders to pull back temporarily. More here.

You can’t always pick and choose when it’s time to move. Maybe you found a job in another city or you have a growing family and need more space. Whatever the case, buying a home isn’t something you necessarily do only when the deals are too good to pass up. Sometimes you just have to pack it up and find a new place regardless of what’s happening in the market. But, if you’re someone who has to make a move in the near future, you’ll be happy to hear that buying conditions are improving. In fact, home buyers’ purchase power is on the rise. According to new data from Black Knight’s Mortgage Monitor Report, buying a home has become more affordable over the past few months. Ben Graboske, president of Black Knight’s data & analytics division, says it is now more affordable than it has been since early last year. “There is good news in these numbers for prospective homebuyers, though,” Graboske said. “Combined with the average 30-year fixed-rate declining by more than half a point over the last three months, housing is now the most affordable it’s been since early in the 2018 home buying season.” More here.

There are so many individual factors that can sway someone’s decision to buy or sell a house that it can be difficult to assess perceptions of the real estate market. But Fannie Mae’s monthly Home Purchase Sentiment Index aims to do just that. By asking Americans about their confidence in the economy, their personal finances, home prices, mortgage rates, etc., the index hopes to give an overview of peoples’ feelings about buying or selling a house. According to the results of their February survey, Americans are generally optimistic about the economy and feel secure in their jobs. However, Doug Duncan, Fannie Mae’s senior vice president and chief economist, says consumers are feeling cautious about the housing market heading into spring. “Job confidence reached a new survey high, but consumers were less optimistic about home buying and selling conditions than they were a year ago,” Duncan said. “Notably, home price growth expectations have trended significantly downward, with the net share of consumers expecting home prices to rise falling 19 percentage points from its survey high established at the start of 2018.” Whether or not buyers see slower home price increases as an opportunity will be a large factor shaping this year’s sales season. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were fairly steady last week from the week before. Rates saw slight increases 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 fixed-rate loans. Mike Fratantoni, MBA’s senior vice president and chief economist, says conditions are stabilizing and conventional purchase loans are up. “Slightly higher mortgage rates last week led to a decrease in application volume. Furthermore, the average loan size for purchase applications increased to a record high, led by a rise in the average size of conventional loans. This suggests that move-up and higher-end buyers have so far become a greater share of the spring market,” Fratantoni said. “Overall, conventional purchase loans are up 2.1 percent relative to last year, indicating that home buyers continue to be inspired by the stable rate environment and the modest increase in housing supply.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

New home sales data from the end of last year was delayed because of the government shutdown. But, the now released numbers contain an unexpected surprise. That’s because sales of newly built single-family homes rose nearly 4 percent in December from the month before. The gains put 2018 totals 1.5 percent above the year before. It was also a seven-month high. Economists polled before the release predicted a sharp drop in sales, which makes the improvement even more surprising. However, though rising sales are an encouraging sign – especially since a healthy new home market leads to better conditions for all home buyers – new home sales data tends to be volatile and is often revised. For example, part of the reason December numbers increased was that November’s sales were revised downward. Why is this? Well, new home sales data is based on permits, so it can be unreliable. Still, the fact that there was any improvement at the end of last year, when mortgage rates were rising and the market was slow, is a good sign that buyer demand remains healthy. More here.

Buyers remorse is common when making large purchases. After all, if you’ve spent a significant amount on something, you want to be sure you got your money’s worth. And, since buying a home is among the largest purchases you’ll ever make, the risk of remorse runs high. According to a recent survey conducted by the National Association of Realtors’ consumer website, young home buyers are particularly vulnerable. In fact, millennial homeowners expressed the most regret of any generation, with 63% saying there were things they’d do differently the next time around. So what do young homeowners regret most about their home purchase? Well, the top answer was not accounting for the cost of maintenance and repairs. Expenses led the list, followed by the more common complaints about being too small, too big, or not in the right neighborhood. The good news is there are ways to avoid underestimating the costs of owning a home. Planning ahead and setting aside money in case of emergency repairs is one. Another good way of knowing what you’re getting into is to have the home inspected before closing the deal. More here.

Every year, Americans are surveyed about the things they most want in their next home. And while some things change, like the preferred type of kitchen cabinetry or paint colors, there are other things that remain the same year after year. For example, the National Association of Home Builders recently surveyed nearly 4,000 home buyers who have either just purchased a house or plan to in the near future. They then ranked 175 features based on how important they are to buyers. Not surprisingly, the most popular features, once again, were storage related. Buyers want garage storage, walk-in pantries, and laundry rooms. Having a place to put things isn’t the most flashy home feature but it is a necessity. Which is why storage is a perennial favorite. Another favorite is energy-efficient features. In short, home buyers want a home that’s efficient enough to keep their utility bills low and spacious enough to keep their things neat and tidy. They also overwhelmingly want a house in the suburbs. In fact, 64 percent of survey participants said they’d prefer to buy in a suburban location, while 24 percent wanted something rural, and 11 percent wanted a place in the city. More here.

When a contract is signed to buy a house, that home’s sale is considered pending. It isn’t final until closing, which typically happens a few weeks later. However, since contract signings usually lead to final sales, they’re a good way of measuring current buyer interest and an indicator of what home purchase activity will look like a month or so down the road. That’s why January’s Pending Home Sales Index from the National Association of Realtors is encouraging. The report shows a 4.6 percent increase in the number of signed contracts in January compared to the month before. All four major regions of the country saw growth. Lawrence Yun, NAR’s chief economist, says there are a number of factors that are driving the improvement. “A change in Federal Reserve policy and the reopening of the government were very beneficial to the market,” Yun said. “Home buyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.” According to Yun, there’s reason to believe the gains will continue. Income is rising faster than home prices in many areas, job creation continues to be strong, and mortgage rates look like they’ll be steady in the near term. In short, conditions are stabilizing just as the market readies itself for spring. More here.