Monthly Archives: October 2019

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes is now 10 percent higher than at the same time last year. That demand remains above year-before levels despite low inventory and rising prices is further evidence that low interest rates continue to help home buyers handle today’s market challenges. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the trend should continue. “Mortgage applications were mostly unchanged, with purchase activity rising 2 percent and refinances decreasing less than 1 percent,” Kan said, of last week’s results. “Purchase applications continued to run at a stronger pace than last year, finishing a robust 10 percent higher than a year ago. Considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains.” Also in the report, average mortgage rates increased across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the FHA, and 15-year fixed-rate loans. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Pending home sales increased for the second consecutive month, according to new numbers from the National Association of Realtors. Their Pending Home Sales Index – which measures the number of contracts to buy homes signed each month – saw a 1.5 percent improvement over the month before. Signed contracts are now 3.9 percent higher than last year at the same time. Lawrence Yun, NAR’s chief economist, says historically low mortgage rates are the main factor driving sales right now. “Even though home prices are rising faster than income, national buying power has increased by 6 percent because of better interest rates,” Yun said. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.” But while low mortgage rates are helping to offset price increases, affordability levels are largely dependent on inventory. And Yun says more new home construction is the answer to balancing housing supply with the growing demand for homes. As the number of available homes for sale rises, price increases will slow and home buyers will have more options to choose from. More here.

Considering the popularity of home renovation shows, it’s easy to see why home buyers might be tempted to buy a fixer upper. After all, on TV, renovating a house can be budget-friendly, quick, and even fun. But prospective home buyers, who think they may want to look for a house that needs some work, need to first be realistic. Not everyone has the skills or time to take on a renovation themselves and hiring a contractor can get expensive. Not to mention, all the little details reality TV shows edit out that can cause stress and frustration for an inexperienced do-it-yourselfer. So before you buy a project, be sure you have a good idea of how much work the house will need, how much you’ll be able to do yourself, how much it’ll cost to hire contractors, and what the time frame will be. While a fixer-upper can be a good option for some buyers, it’s not for everyone. Being realistic about whether or not it’ll work for you can help you avoid taking on something that ends up costing you more time, money, and energy than originally anticipated.

There are several reasons new homes tend to be more expensive than previously owned homes. One is that they’re new. You’re going to pay more for any house that has updated fixtures and features, let alone one where everything in it is brand new. But though new homes generally go for a higher price, new data from the U.S. Census Bureau and the Department of Housing and Urban Development shows they’re currently more affordable than they’ve been in years. In fact, the median price of new homes sold in September was $299,400. That’s 8.8 percent lower than they were last year at this time and the lowest new-home prices have been since February 2017. But while that’s good news for home buyers who want to buy new, it didn’t lead to a significant sales bump. In September, sales of newly built single-family homes were down 0.7 percent, with only the Midwest seeing an increase from the previous month. Still, despite the slight decline, sales are 15.5 percent higher than they were last year. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates spiked last week from the week before. And though they remain low, rates increased 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. Naturally, the increase led to a drop in refinance activity, with week-over-week numbers showing a 17 percent decline. Purchase demand was also down, though just 4 percent from one week earlier. Mike Fratantoni, MBA’s senior vice president and chief economist, says interest rates have been volatile lately. “Interest rates continue to be volatile, with Brexit votes and ongoing trade negotiations swinging rates higher or lower on any given day,” Fratantoni said. But while rates have been volatile, they remain low by historical standards. They also continue to be a motivating factor for potential home buyers. In fact, purchase demand, though down from the previous week, remains 6 percent higher than last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

The supply of available homes for sale is limited. So, when you find one that fits your needs and budget, you generally want to move quickly. After all, there could be other buyers, with similar taste, who get an offer accepted before yours is even on the table. These days, that’s especially true. In many markets, there are fewer homes available for sale than is typical. That means, more competition and less time to deliberate before making a decision to buy. But while that’s true, new numbers from the National Association of Realtors show the end of the summer season has provided a little breathing room to interested buyers. According to the NAR’s existing-home sales report the number of days the typical property remained on the market rose to 32 in September. That’s an improvement from August, though no change from year-before levels. Still, while it’s an improvement, 32 days isn’t all that long. And, considering nearly half of all homes sold in September were on the market for less than a month, prospective home buyers still need to make sure they’re prepared and ready to move when they find a house they like. More here.

When a homeowner refinances their mortgage, they’re replacing their original mortgage with a new one. The reason to do this is to secure better terms on their home loan. So naturally, the right time to refinance a loan is when mortgage rates are lower than they were when the house was purchased. That’s why it’s no surprise that a recent report from Ellie Mae shows that, in September, refinances made up a larger share of total mortgage loan activity than they had in any previous month dating back more than four years. After all, mortgage rates have been trending downward ever since spiking last winter. In fact, they’re now hovering just above historic lows and it’s fueling the increasing interest in refinancing among current homeowners. “The continued decline in interest rates is driving the refinance revitalization that is now accounting for almost 50 percent of all closed loans in the month,” Jonathan Corr, president and CEO of Ellie Mae, said. And with rates expected to remain low for the foreseeable future, homeowners will likely continue to benefit from refinancing their loans and locking in a lower rate. More here.

The most recent forecast from Fannie Mae’s Economic and Strategic Research Group says the housing market may be an economic bright spot going into 2020. While other economic indicators are pointing to uncertainty and downside risk, real estate looks strong and may help contribute to economic growth after nearly two years of being a drag on the economy. But while a strong housing market is a positive for the economy, what does it mean for the average home buyer? Well, Doug Duncan, Fannie Mae’s senior vice president and chief economist, says not that much. “While consumer spending, supported by a healthy labor market and gains in household wealth, remains the current expansion’s economic engine, the housing sector appears poised to offer meaningful near-term contributions to growth,” Duncan said. “Unfortunately, expectations for a stronger housing market through the early part of next year are unlikely to offer prospective home buyers much respite from the longstanding affordability issues.” In other words, market conditions will see little change for the foreseeable future. Mortgage rates are expected to stay low, prices will likely continue to increase, and available inventory will depend on whether or not there’s a significant bump in new home construction. More here.

Supply and demand have a lot to do with how much it costs to buy a house. When there are more homes than buyers, prices fall and buying becomes more affordable. When there are more buyers than homes, it gets more expensive. That’s why the new home market is so important. After all, new home construction is a big part of the supply side of that basic equation. That’s why a new survey from the National Association of Home Builders is encouraging. Their Housing Market Index asks builders for their opinion of the new home market and scores their responses on a scale where any number above 50 indicates more builders view conditions as good than poor. In October, the index hit 71, its highest score since February 2018. In short, home builders are feeling good about the market for newly built homes and it could help affordability levels. Greg Ugalde, NAHB’s chairman, says there are a few factors that are boosting confidence in the market. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth, and a reduction in new home inventory,” Ugalde said. If builders’ confidence in the market leads to more new home construction, it could have a balancing effect on the market which will help moderate future price increases and overall affordability. More here.