Monthly Archives: October 2020

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes signed each month. It’s an important barometer of housing-market health because it can be a reliable indicator of future home sales numbers. In September, the index found pending sales down 2.2 percent from the previous month, though still 20.5 percent higher than last year at the same time. Lawrence Yun, NAR’s chief economist, says home buying demand is still strong. “The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” Yun said. “With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.” Regionally, only the Northeast saw a month-over-month improvement, with pending sales now up 27.7 percent from last year in the region.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from the week before. Rates were down for 30-year fixed-rate loans with both conforming and jumbo balances. They also fell for 15-year fixed-rate loans, while rates for mortgages backed by the Federal Housing Administration were up slightly. Overall, mortgage application demand climbed 1.7 percent from the previous week, with refinance activity up 3 percent and demand for loans to buy homes virtually unchanged. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says purchase activity has been strong so far this fall. “Mortgage applications to buy a home were flat compared to the prior week, but overall activity remains strong this fall,” Kan said. “Applications jumped 24 percent compared to last year, and the average loan size reached another record high at $372,600. These results highlight just how strong the upper end of the market is right now, with outsized growth rates in the higher loan size categories.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

In today’s market, there are more home buyers than there are homes available for sale. In other words, it’s a seller’s market. But despite favorable conditions for sellers, the number of homes for sale is down 37 percent year-over-year. So why aren’t more homeowners putting their homes up for sale? Well, according to one recent survey, uncertainty is the answer. Among Americans who have considered selling in the next few years, 34 percent said life is just too uncertain right now, with 31 percent citing financial uncertainty specifically. Among those respondents, 27 percent recently changed jobs and 17 percent had a spouse or partner who had been laid off. But not all potential sellers were holding off because of financial uncertainty. Some have put a pause on their plans because they see conditions getting even better in the future. In fact, nearly 40 percent of participants who are considering selling said they feel they’ll get a better price if they wait. And if that’s the case, it suggests we’ll soon reach a point where we see more homeowners listing their homes, which will help bring greater balance to the market. (source)

Whether you’re buying a new home or not, the pace of new home sales matters to you and your home search. That’s because, how quickly new homes are selling affects how quickly more new homes are built. And, at a time when housing supply lags behind buyer demand, more new homes is the best way to balance the market and keep prices from spiking higher. The U.S. Census Bureau and the Department of Housing and Urban Development releases a monthly report that tracks how many new homes were sold in the previous month. According to their most recent release, the number of new homes sold in September was 3.5 percent lower than the month before. But, despite the decline, new home sales are still 32.1 percent higher than they were at the same time last year. That’s good news for home builders, which means it’s also good news for prospective buyers. Also in the report, the median sales price of new houses sold in September was $326,800. The average sales price was $405,400. (source)

These days, there are plenty of interested home buyers but fewer homes for sale. That means, home sellers have options and buyers have to be prepared. So what are some things buyers can do to ensure their success? Well, they should start by making sure their finances are in order. According to one recent survey, more than one-in-five home sellers who’ve had an offer fall through said it was because of issues with financing. So, if you’re thinking about buying soon, getting pre-approved for a mortgage should be at the top of your to-do list. Pre-approval is different from pre-qualification because it involves a deeper look into your credit and finances. But because of that, it also gives sellers assurance that your offer is secure and you’ll have no problem closing. Another important consideration for today’s buyer is bidding wars. In a hot market, the likelihood that you’ll be competing against other offers means you need to consider what the absolute top of your price range is well before shopping homes. Setting a firm price ceiling will help you avoid paying more than you’d like and ending up in a home you can’t afford. Most of all, though, buyers should become familiar with conditions in their local market, hire experienced pros to guide them, and be ready to move quickly when it comes time to make an offer. (source)

New numbers from the National Association of Realtors show just how quickly homes are selling these days. Their September existing-home sales report found that, not only were sales of previously owned homes up 20.9 percent over last year’s pace, but 71 percent of homes sold during the month were on the market for less than a month. In fact, the typical property was on the market just 21 days. That’s an all-time low. Lawrence Yun, NAR’s chief economist, says the usual seasonal sales patterns may not apply this year. “Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” Yun said. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.” The combination of spiking buyer demand and an unusually low number of homes for sale means home buyers this fall should be prepared for summer-like conditions – with prices up, homes selling quickly, and potential competition for the best listings.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose slightly last week from one week earlier. Rates increased for 30-year fixed-rate loans with both conforming and jumbo balances as well as 15-year fixed-rate loans. Rates for mortgages backed by the Federal Housing Administration were unchanged from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the increases slowed demand week-over-week, though it remains strong compared to the same time last year. “Home buyer demand remains strong this fall, but purchase applications did decrease 2 percent, with both conventional and government purchase activity taking a step back,” Kan said. “Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remained robust compared to a year ago, rising 26 percent and 74 percent, respectively.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

In a hot housing market, where there are more buyers than there are homes for sale, competition rises. A good house will attract multiple buyers and give the home’s seller the benefit of choosing whose offer is best. This, of course, can be stressful for home buyers, as it most often means paying more than expected or losing the house to another buyer. This year, with for-sale inventory down and buyer interest surging, the market has seen plenty of competition. Home shoppers have had to act quickly and decisively in order to beat other buyers and successfully purchase a home. In fact, according to one analysis, nearly 60 percent of home buyers who bought a home in August faced competition. That’s significant. But fortunately for fall house hunters, there’s some potential good news on the horizon. That’s because, in September the number of home buyers reporting that they faced competition fell for the first time in five months. The nearly 3 percent decline could be a sign that the market may finally start to cool off after a hot summer. (source)

Builders don’t build homes, if they don’t feel there’s a market for them. That’s why, the National Association of Home Builders’ Housing Market Index – which measures builder confidence in the market for newly built single-family homes – is considered an important indicator. After all, if builders are feeling good about selling new homes, they will build more, which is good for the market and overall economy. The index, which the NAHB has conducted for 35 years, is measured on a scale where any number above 50 indicates more builders view conditions as good than poor. In October, it rose to 83, which is an all-time high. It’s also only the second time it’s been over 80. The previous time was last month. Chuck Fowke, NAHB’s chairman, says traffic is high and demand is strong. “Traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study, and other purposes in the COVID era,” Fowke said. Regionally, home builders in the West were most optimistic, followed by the Northeast, South, and Midwest.

It’s not surprising that the coronavirus had many economists, analysts, and experts expecting the housing market to suffer in 2020. Social distancing, stay-at-home orders, and fear were all expected to slow sales and put the brakes on what was originally forecast to be a hot spring/summer market. But since buyers bounced back faster than predicted, the housing market’s outlook has gotten much brighter. For example, Fannie Mae’s Economic and Strategic Research Group’s most recent outlook calls for annual home sales, mortgage origination volume, and home price growth all to significantly outpace their 2019 levels. Amid a historic pandemic, that’s no small feat. Doug Duncan, Fannie Mae’s chief economist and senior vice president, says supply – not demand – has turned out to be the big issue in 2020. “Housing continues its multi-year theme of historic supply constraints,” Duncan said. “Strong demand-side drivers, including low mortgage rates and a surge of millennials looking to purchase homes, are contributing to significant home price appreciation, particularly as many older homeowners continue to age in place and other would-be home-sellers adopt a more conservative posture due to COVID-19 concerns, further limiting supply.” (source)