Monthly Archives: January 2020

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed each month. Because signed contracts proceed closings by several weeks, the index is an important housing-market indicator, as it can be a good predictor of future home sales. In December, contract signings fell from the month before but remain nearly 5 percent higher than they were one year earlier. Lawrence Yun, NAR’s chief economist, says low mortgage rates and a strong job market are helping drive interest in homeownership, though challenges remain. “Due to the shortage of affordable homes, home sales growth will only rise by around 3 percent,” Yun predicts. “Still, national median home price growth is in no danger of falling due to inventory shortages and will rise by 4 percent. The new home construction market also looks brighter, with housing starts and new home sales set to rise 6 percent and 10 percent respectively.” In other words, conditions are favorable for home buyers but a lot depends on whether or not new residential construction can keep up with the high level of demand.

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes has started the year off strong and is now 17 percent higher than at the same time last year. The improvement comes after purchase activity increased 5 percent last week from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says low rates and a healthy job market are the main factors driving demand. “Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week,” Kan said. “Rates were driven lower by investors’ increased concern about the economic impact from China’s coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks … Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019.” Survey results show average mortgage rates fell for 30-year fixed-rate loans with both conforming and jumbo balances, as well as 15-year fixed-rate loans. Rates for loans backed by the Federal Housing Administration, on the other hand, were up from one week earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

During the 36 years between 1968 and 2004, home prices increased every year. The average annual increase during that period was 6.4 percent. These days, home values are climbing but not as quickly. In fact, according to the most recent data from the S&P Case-Shiller Home Price Indices, prices are up just 3.5 percent year-over-year. That’s a relatively modest gain compared to the historical average. It’s also welcome news for potential home buyers concerned about affordability levels – since it means price increases have slowed from where they were just a few years ago. Still, Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, says prices have risen significantly since bottoming out in 2012. “The U.S. housing market was stable in November,” Lazzara said. “With the month’s 3.5 percent increase in the national composite index, home prices are currently 59 percent above the trough reached in February 2012, and 15 percent above their pre-financial crisis peak.” Of course, how quickly prices are rising depends on where you look. For example, Phoenix, Charlotte, and Tampa saw faster gains than other cites. In those metros, home values were up between five and six percent. (source)

New numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show sales of newly built single-family homes rose 10.3 percent in 2019 over year-before levels. The improvement is good news for the housing market, as it points to rising buyer demand. But, though sales were up last year, the majority of those sales were concentrated in higher price ranges. For example, in December, just 10 percent of new home sales were homes priced below $200,000. That’s an indication that there’s still a need for more affordable new-home inventory. Currently, there’s a lack of entry level homes available for sale, which has made it more difficult for first-time buyers to enter the market. However, as more homes are built in affordable price ranges, it’ll help balance inventory levels, lower competition among buyers, and stabilize home prices. As it is, the median sales price of new homes sold in December was $331,400. The average sales price was $384,500. (source)

It’s no secret that home prices have been climbing in recent years. And though increases have slowed from what they were a few years ago, prices are still heading higher. That can cause affordability challenges for prospective buyers, especially those who are buying for the first time. But, for current homeowners, higher home prices are welcome news. That’s because, when home values rise, so does home equity. So just how much have recent sellers profited from the sale of their home? Well, according to ATTOM Data Solutions, home sellers nationwide realized a home price gain of $65,500 on the typical sale, which is a 13-year high and up from $58,100 the year before. Todd Teta, chief product officer at ATTOM, says 2019 was a great year to be a home seller. “The nation’s housing boom kept roaring along in 2019 as prices hit a new record, returning ever-higher profits to home sellers and posing ever-greater challenges for buyers seeking bargains,” Teta said. “In short, it was a great year to be a seller.” Profits and return on investment have improved now for eight consecutive years, though last year’s improvement was the smallest since 2011. (source)

Deciding which home to buy is a big decision. The home you choose will likely be the one you live in for the next several years. So naturally, when you find one that fits your needs and lifestyle, you should take your time and weigh out all the pros and cons before making an offer. Right? Well, not exactly. These days, good homes sell quickly. In fact, according to the latest data from the National Association of Realtors, the typical home was on the market for just 41 days in December and 43 percent of homes sold in less than a month. That means, you have to act fast when you find a house you like, or you’ll risk the home being purchased by another buyer before you’ve even made an offer. This is why it’s important to be prepared, pre-approved, and aware of what your must haves and dealbreakers are. You’re less likely to make a decision you’ll regret if you’ve got everything in order and have thoroughly thought out what you want, what you don’t want, and how much you’d like to spend.

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 those backed by the Federal Housing Administration seeing no change week-over-week. Rates for jumbo loans saw a slight increase, while 15-year fixed-rate loans saw rates fall to their lowest level since 2016. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand for mortgages is up. “Mortgage applications dipped slightly last week after two weeks of healthy increases, but even with a slight decline, the total pace of applications remains at an elevated level,” Kan said. “The purchase market has started 2020 on a strong note, running 8 percent higher than the same week a year ago.” Naturally, mortgage rates hovering just above historic lows have something to do with the increased demand. Fortunately, Kan sees favorable rates continuing. “Our expectation is that rates will stay along this same narrow range,” he said. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

The housing market has up years and down years. And the list of factors that influence it is long. Everything from geopolitical tension to student loan debt has a role in determining how many Americans decide it’s time to buy a house. So what do conditions look like for the housing market in 2020? Well, according to Fannie Mae’s Economic and Strategic Research Group, things are looking good. Their latest forecast cites factors like rising wages, a strong labor market, and improved household finances as reasons to be encouraged. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says Americans are doing well and market factors are positioned for them to take advantage. “Strong consumer demand and low mortgage rates – as well as moderate improvements to supply – have housing well-positioned for a comeback year in 2020,” Duncan said. “While we expect housing to regain its place as an economic growth driver after a period of relative sluggishness, we recognize that the problems of affordability and inventory are likely to persist for the forecast horizon.” (source)

Moving means a new house, new routines, and a fresh start. Naturally, it can be exciting. But the actual work of moving isn’t quite as fun. Packing up a house, sorting through belongings, cleaning out basements, closets, and storage spaces isn’t a task most people look forward to. And, depending how long you’ve lived in your house, there can be a lot to go through. So how many of us pack up our lives and move each year? Well, according to one recent analysis, around 10 percent. In fact, 9.8 percent of Americans moved in 2019, which was the lowest rate since 1947. However, it wasn’t much lower than it’s been over the past few years. For example, only 10.1 percent moved in both 2017 and 2018. Of course, the fact that fewer of us have been moving in recent years isn’t because we can’t bear the thought of cleaning out the garage. Factors like the economy, job market, demographics, home prices, and mortgage rates are far more likely to influence how many Americans move in any given year. (source)

The National Association of Home Builders conducts a survey each month to measure builders’ confidence in the market for newly built homes. Because a builder’s business depends on being able to accurately gauge consumer interest in buying homes, the survey is considered a good indicator of housing market health. In January, the NAHB’s Housing Market Index hit 75 on a scale where any score above 50 indicates more builders view conditions as good than poor. Greg Ugalde, NAHB’s chairman, says conditions are favorable and should lead to more gains this year. “Low interest rates and a healthy labor market combined with a need for additional inventory are setting the stage for further home building gains in 2020,” Ugalde said. This is good news for potential home buyers, as added for-sale inventory would help moderate price increases and provide more options for buyers to choose from. Regionally, the index found builders most optimistic in the West, where three-month moving averages rose one point to 84. The Northeast and Midwest also saw gains, while the South remained unchanged at 79. (source)