Monthly Archives: November 2021

In a seller’s market – when there are more home buyers than there are homes for sale – competition is common. A good listing will attract multiple offers and, more often than not, the house will be sold to the highest bidder. This year’s market has been particularly competitive, as the number of homes for sale has been lower than normal while buyer demand has remained elevated. Fortunately, though, the housing market has cooled somewhat after a hot spring and summer. But while it has slowed down a bit, newly released numbers show that bidding wars are still a factor for buyers. In fact, 60.3 percent of home offers in October faced competition. That’s about the same as it was in September – though significantly lower than in April when they peaked at 74.5 percent. In other words, while the number of bidding wars has fallen, the majority of homes for sale are still getting more than one offer. That means, fall and winter buyers should expect there to be multiple interested buyers competing for available listings, especially if the home is move-in ready and selling at an affordable price. (source)

Shopping for a house to buy involves many choices. One of the most obvious is whether you want to buy a new house or an existing home. But before you choose, you should know that market conditions can be very different between the two. For example, though the overall supply of homes remains low, there’s actually a pretty good stock of new homes available for sale. In fact, according to recently released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, there was a 6.3-month supply of new homes for sale in October at the current sales rate. Comparatively, there was just a 2.4-month supply of existing homes. In other words, new home shoppers may find more options to choose from. Finding an affordable one may be more challenging, though. In October, the median sales price of new homes was $407,700, while the median existing-home price was nearly $60,000 less. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes continued to climb last week, rising 5 percent from one week earlier. It was the third consecutive week of increases. Together with a slight uptick in refinance activity, the gains pushed total mortgage application demand 1.8 percent higher than the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the improvement could be a sign that borrowers are trying to lock in low rates – which increased week over week – before they move any higher. “Despite the increase in rates, refinance applications rose slightly, driven by a 2 percent gain in conventional refinances,” Kan said. “Borrowers continue to lock in mortgages in anticipation of higher rates in the future.” Whatever the case, the housing market remains strong going into the holiday season, which typically sees mortgage loan demand slow down. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook forecasting what they think is ahead for the economy and housing market. In November, their outlook is largely positive, with economic growth projected to remain fairly consistent and housing activity continuing its momentum into next year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, doesn’t see any major changes ahead. “Economic growth continues to slow, but not precipitously; and as rates have not yet reacted strongly, housing and mortgage activity remain very strong,” Duncan said. According to the release, the group has revised upward their expectation for total home sales this year and believes the current supply-side issues holding home building back will begin to ease in the months ahead. In fact, they expect new-home construction to rise nearly 5 percent next year, leading to a 13.9 percent increase in sales of new homes. And while they do expect mortgage rates to rise, their forecast is only for slight increases in 2022 and 2023, which means rates will remain low by historical standards. (source)

One of the big challenges for home buyers this year is how quickly homes have been selling. It hasn’t been uncommon to see a good listing go up midweek and sell before the following Sunday. That doesn’t leave much time for interested buyers to get out to see it, consider their options, and make a solid offer. But while new numbers from the National Association of Realtors show homes are still selling quickly, there was a slight improvement in October. In fact, the time the typical home for sale was on the market bumped up to 18 days from 17 days the month before – the first improvement in months. And while 82 percent of homes sold in less than 30 days, that’s 5 percent fewer than did in August, for example. In other words, autumn home shoppers still need to be prepared to act fast, but may have a little more time than buyers did this summer. Lawrence Yun, NAR’s chief economist, says the challenging conditions haven’t slowed buyer demand . “Home sales remain resilient, despite low inventory and increasing affordability challenges,” Yun said. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

If you’re not looking to buy a new house, you may not think the number of new homes being built has anything to do with your home search. But it does. In fact, much of what’s happening in the housing market today is a result of lagging new home construction numbers in the years following the housing crash and financial crisis. With fewer new homes being added to the national housing stock, low inventory became a persistent issue, driving prices and competition higher. The pandemic, supply shortages, and spiking material costs made it even worse over the past year and a half. New numbers from the U.S. Census Bureau and the Department of Housing and Urban Development offer prospective home buyers some hope, though. According to their most recent release, the number of building permits to build new homes rose 4 percent in October. And the number of building permits for single-family homes was up 2.7 percent. That means, a rising number of new homes will be built in the months ahead, which should help alleviate some of the upward pressure on home prices and give buyers more options to choose from when shopping for a house to buy. (source)

Typically, home buyers have a wish list of features they’re looking for in their next house. Whether it’s a bigger yard, more storage, extra bedrooms, or a great location, buyers always have a reason they’re ready to move. After all, why bother moving if your current home has everything you want and need? But when the number of homes for sale is low – as it’s been for the past few years – finding all the things you want in your next house can become more difficult. Fewer options means buyers are more likely to have to compromise on a few or do without some of them altogether. That’s why the early forecasts for next year’s housing market should be encouraging for prospective home buyers. For example, according to one recently released forecast for the year ahead, new listings are expected to reach a 10-year high in 2022, surpassing their most recent high of 7.6 million in 2018. If the prediction comes true, it’ll lead to a better balanced market and more options for home buyers. It’ll also make it more likely that you won’t have to abandon your wish list and settle for a home that has few of the features that had you ready to move in the first place. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes saw its second-consecutive weekly increase, rising 2 percent from the week before. The improvement came during a week when average mortgage rates increased for 30-year fixed-rate loans with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the gains are a sign that buying activity will likely remain strong in the weeks ahead. “Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time – late fall – when home buying activity typically slows,” Kan said. “The second straight increase in purchase applications suggests that stronger sales activity may continue in the weeks to come.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

Home builders are facing many challenges these days. From the supply chain to labor and lot shortages, it’s a difficult time to be in the home-building business. But despite all of those issues, the National Association of Home Builders’ Housing Market Index – which measures how confident home builders are feeling on a scale where any number above 50 indicates more of them view conditions as good than poor – scored an 83 in November, up three points from the month before. So what explains the high level of optimism among home builders? Put simply, it’s buyer demand. “The solid market for home building continued in November despite ongoing supply-side challenges,” Chuck Fowke, NAHB’s chairman, said. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.” In other words, buyer demand for homes remains elevated and the number of homes for sale remains lower than historically normal. That means, homes are in high demand and, despite current conditions, builders are feeling good about the market.

For a lot of us, it’s still hard to believe summer’s over and the clocks have already rolled back. But it is November and the holidays are just around the corner. So maybe it isn’t too soon to start thinking about spring. If you’re a potential home buyer looking to make a move in the next six months, it’s definitely not too early. In fact, it may be the perfect time to get a feel for what you might expect when the housing market starts to heat up again. One good indicator for where the market is headed is how many showings are being scheduled for the homes currently listed for sale. And, if the past is any indicator, you can tell a lot about what spring will look like based on what happens the previous fall. For example, last year’s fall market was atypically competitive – which could’ve tipped you off that the following spring would be among the hottest in recent memory. So how’s this fall been looking so far? Well, according to recently released data, the number of scheduled showings has been around 5 percent lower than it was at the same time in 2020. That’s a pretty good indication that the spring market will be less hectic than this year’s was, with price increases slowing and a higher number of homes for sale. (source)