The number of contracts to buy homes rebounded in March, according to new numbers from the National Association of Realtors. Their Pending Home Sales Index – which measures signings, not closings – saw a 1.9 percent increase from the month before. It was the first improvement following two consecutive months of declines. Lawrence Yun, NAR’s chief economist, says demand from buyers is high and will likely remain high. “The increase in pending sales transactions for the month of March is indicative of high housing demand,” Yun said. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.” Yun also believes the low supply of homes for sale will begin to recover in the coming months as more new homes are built. “Although these moves won’t immediately replenish low supply, they will be a step forward,” he said. Regionally, the South, West, and Northeast all saw month-over-month gains. The Midwest was the only region that slowed from the previous month.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week. Rates were down 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. The drop marks the third consecutive week rates have fallen. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says declining rates didn’t keep demand for mortgage applications from decreasing. “Mortgage applications decreased last week, even as mortgage rates dropped for the third week in a row,” Kan said. “The purchase market’s recent slide comes despite a strengthening economy and labor market. Activity is still above year-ago levels, but accelerating home-price growth and low inventory has led to a decline in purchase applications in four of the last five weeks.” Last week, demand for loans to buy homes was down 5 percent from one week earlier. It was 34 percent higher than the same week one year ago.
Many home buyers used the coronavirus as an excuse to get away from it all. After the pandemic’s initial onset, interest in small towns and rural areas spiked, as more Americans looked to move somewhere where they could have more space for the same money. The increased interest in suburbs and exurbs pushed price growth in those areas and soon their prices were outpacing urban neighborhoods. But while the trend continued through the end of 2020, the beginning of this year brought a change. Home buyers were, once again, looking to buy in bigger cities. Now, according to one recent analysis, urban single-family homes are showing price increases of almost 20 percent year-over-year. They’re also getting more pageviews online. And, in both cases, they’re outpacing properties in the small towns and rural areas that boomed last year at this time. The newfound interest in urban neighborhoods seems to stem from increasing optimism about the coronavirus vaccines and rebounding economy. But while buyers are looking at properties in the city, they haven’t let go of their need for more space. In fact, single-family homes have been selling faster than condos – not just in cities, but in neighborhoods of all types. (source)
The coronavirus couldn’t stop a hot market in 2020. After a brief pause, home buyers returned and sales bounced back. But while the housing market was an economic bright spot last year – and vaccinations provide hope that the pandemic’s worst days are behind us – there’s still some risk. That’s why ATTOM Data Solutions’ first-quarter 2021 Special Coronavirus Report looked at which markets were most vulnerable among 552 counties across the country. The report analyzed each county – specifically looking at the percentage of homes facing possible foreclosure, the portion with mortgage balances exceeding the estimated property value, and the percentage of average wages required to pay for homeownership expenses. Todd Teta, ATTOM’s chief product officer says there were some areas that showed more vulnerability than others. “Clearly the housing market continues to surge, and things are looking up, more and more, for the U.S. economy in 2021 …” Teta said. “Our analysis suggests that even as the market remains hot, pockets of the East Coast, Midwest, and South are at higher risk from potential damage connected to the pandemic.” The counties seen as vulnerable included areas in New Jersey, Illinois, Connecticut, North Carolina, and Florida. (source)
Today’s market is a seller’s market. But despite the best conditions in years, fewer homeowners are listing their homes for sale. That’s led to a lower-than-normal number of existing homes available on the market. It’s also led to surging new home sales. In fact, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, March saw a 20.7 percent increase over the previous month. That far exceeded economists’ expectations and pushed sales almost 67 percent higher than last year – when the coronavirus had buyers temporarily sidelined. It’s encouraging news, especially when combined with recent data showing both building permits and housing starts up from the month before. The new home market is booming and, if builders can keep up with demand, it should help relieve upward pressure on home prices. It should also give current homeowners more options and some motivation to sell. (source)
The typical home sold in March was on the market for just 18 days, according to the National Association of Realtors’ most recent existing-home sales report. That’s down from 29 days last year at the same time. It’s also a record low. Lawrence Yun, NAR’s chief economist, says buyers remain active despite the market’s fast pace this spring. “Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market,” Yun said. “The sales for March would have been measurably higher, had there been more inventory. Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.” There are several reasons home buyers remain active in the market, despite those challenges. Among them, an improved job market, still favorable mortgage rates, and the coronavirus vaccine lead the list. Buyers feel more optimistic about the economy and the pandemic and it’s leading to strong demand for homes. If new home construction can keep up with demand and help hold home-price increases down, sales will only move higher as we head into summer.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to their lowest point in two months last week. Rates were down 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. The decline helped boost overall mortgage demand, which rose 8.6 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said demand for loans to buy homes looks strong. “The spring housing market also saw a boost from lower rates, with purchase applications – driven by a jump in conventional applications – increasing over 5 percent,” Kan said. “MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead.” The MBA’s weekly survey has been conducted since 1990 and cover 75 percent of all retail residential mortgage applications.
In a normal year, homeowners who want to sell can strategize when the best time for them to list their home might be. For example, it’s generally considered less optimal to put a home up for sale during the dead of winter or the holiday season. But with a pandemic and a lower-than-normal number of homes for sale, when’s the best time for a homeowner to sell this year? Well, according to the National Association of Realtors’ consumer website, the best time might be right now. “Unlike 2020 when COVID upended the spring home-buying season and pushed buyer interest to later in the year, this year’s housing market is following more typical seasonal trends,” Danielle Hale, the website’s chief economist, said. “With half as many homes available for sale this year than last, sellers are well positioned for a quick sale at top dollar.” In other words, buyers have returned to normal but the inventory of available homes has not. That means, home sellers should be in good position until the supply of homes increases. However, with so many unknowns ahead, waiting until later in the year bring its own risks. Which is why now might be the best time to make a move. (source)
When the coronavirus vaccines were first announced last fall, expectations for the economy began to grow. Economists predicted the economy would rebound as newly vaccinated Americans returned to activities restricted by the pandemic. Now, according to the most recent forecast from Fannie Mae’s Economic and Strategic Research Group, the rebound has started. “The ramp-up we’d previously forecast for the economy is underway, as evidenced by, among other measures, increasing airline passenger reservations and restaurant bookings,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “Vaccinations are continuing to roll out, and consumers appear to be increasingly looking toward post-pandemic life.” So what does this mean for the housing market? Well, for one, the group expects mortgage rates to remain steady in the near term. That means, despite recent increases, rates should stay favorable. That’ll help drive demand from home buyers, which Fannie Mae expects will rise from last year’s level. They also expect prices to continue to climb this year, though they see increases decelerating in 2022. (source)
If you’ve been shopping for a house in the past few weeks, you’ve likely already noticed that the spring housing market is off to a hot start. Typically the time of year when home buyers and sellers get active after a long winter, spring is always busy – but this year is different. Not only is it the first spring market following a year of coronavirus restrictions and mitigation efforts, but a lower-than-normal number of homes for sale has led to some record breaking numbers. For example, according to one recent analysis, in March, the number of days the typical home for sale was on the market dropped to 25 days, a record low. At the same time, the number of homes that sold above list price reached an all-time high. In other words, March saw one of the hottest months of housing activity since at least 2012. Homes are selling quickly and competition among buyers means they’re selling for more than homeowners are asking. This means, buyers have to be prepared to act fast and stay flexible when they see a property that fits their needs. (source)