Monthly Archives: May 2022

Whether or not buying a home is considered affordable depends on a number of factors. Home prices, mortgage rates, and income all play a role. That’s why, despite mortgage rate increases during the first quarter of the year, the share of homes considered affordable actually rose from the previous quarter. How’s that possible? Well, a closer look at the numbers shows it’s mostly due to Americans making more money. According to the National Association of Home Builders’ Housing Opportunity Index, 56.9 percent of new and existing homes sold between January and the end of March were considered affordable to families earning the U.S. median income of $90,000. That’s about $10,000 more than Americans were making one year earlier. Naturally, that made buying a home a little easier. But Jerry Konter, NAHB’s chairman, cautions that, with costs continuing to rise, affordability gains aren’t likely to continue. “The first quarter reading is a backward gauge, as surging interest rates, ongoing building material supply chain constraints and labor shortages continue to raise construction costs and put upward pressure on home prices,” Konter said. (source)

One of the primary benefits of owning a home is equity. Put simply, equity is the difference between what you owe on your mortgage and what your home is worth. Which means, you build it as you pay down your loan each month. It also grows when your home’s value increases. It’s homeownership’s main financial benefit and, these days, homeowners have more of it than ever. In fact, according to ATTOM Data Solutions’ most recent U.S. Home Equity & Underwater Report, nearly half of all mortgaged residential properties are now considered equity rich – meaning the combined amount of loan balances secured by those properties is no more than 50 percent of their value. Rick Sharga, ATTOM’s executive vice president of market intelligence, says equity is at record levels. “Homeowners continue to benefit from rising home prices,” Sharga says. “Record levels of home equity provide financial security for millions of families, and minimize the chance of another housing market crash like the one we saw in 2008.” The share of mortgaged homes considered equity rich was at 44.9 percent in the first quarter of 2022, that’s up from 31.9 percent one year earlier. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased again last week, with rates up from one week earlier for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Despite the increase, though, home buyers remained active. In fact, demand for loans to buy homes was up 5 percent from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says it looks like spring buyers aren’t deterred by higher rates. “Despite a slow start to this year’s spring home buying season, prospective buyers are showing some resiliency to higher rates,” Kan said. “Purchase activity has now increased for two straight weeks.” Demand for home purchase loans is now 8 percent below where it was 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. (source)

The lack of available homes for sale has been an issue for years now. It’s pushed prices higher and led to a fast-moving market, where attractive listings only last a few days before they’ve collected multiple offers from competing buyers. Put simply, it’s been challenging for home shoppers. But a new analysis from the National Association of Realtors’ consumer website offers some encouragement for buyers who may need the good news. The website’s most recent monthly Housing Trends Report found that the number of active listings in April posted the smallest year-over-year decline since December 2019. Of course, that means inventory is still down from one year ago. But the 12.2 percent drop from last April is a big improvement over the month before, when the decline was nearly 19 percent. Danielle Hale, chief economist for the website, says the trend is positive. “April data suggests a positive turn of events is on the horizon for weary buyers: If the trends we’re seeing now hold true, we could potentially see year-over-year inventory growth within the next few weeks,” Hale said. That’s great news for prospective buyers, as it would mean more choices, less competition, and slower price increases. (source)

Fannie Mae’s Home Purchase Sentiment Index is based on a monthly survey of Americans. The survey asks respondents whether they think now is a good time to buy or sell a home, where they think home prices and mortgage rates are headed, and how they feel about their financial situation and job prospects. According to the most recent results, rising mortgage rates have led to increased concern about housing affordability, which has caused a 5 percent drop in the number of participants who say they think now is a good time to buy. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says younger respondents were most likely to express concern about market conditions. “The current lack of entry-level supply and the rapid uptick in mortgage rates appear to be adversely impacting potential first-time home buyers in particular, evidenced by the larger share of younger respondents (aged 18 to 34) reporting that it’s a ‘bad time to buy a home,’” Duncan said. But while respondents expressed concern about affordability, the share who felt home prices will rise over the next 12 months dropped and a majority of respondents said they feel secure in their jobs and income. (source)

Mortgage rates have been moving higher in recent months. Which means, if you’re currently shopping for a home, your prospective monthly mortgage payment has too. But with rates moving quickly, it can be hard to keep up with what it means for your budget. So what should you know about recent mortgage rate increases and how they’ve affected monthly payments? Well, the Mortgage Bankers Association’s new Purchase Applications Payment Index tracks median mortgage payments and how they change from month to month. According to the index – which covers data through the end of March – the national median mortgage payment was $1,653 in February. In March, it moved up to $1,736. With rates up about a point over the same time period, that may be less than you expected. Of course, an extra $83 a month makes a difference, especially for first-time buyers. Fortunately, though, the increase was even less for buyers with smaller loans. In fact, the index found borrowers applying for lower-payment mortgages only saw a $35 increase month over month. (source)

If you have a home to sell and have been wondering about the best time to list it, ATTOM Data Solutions has your answer. Each year, they release an analysis of the best days of the year to sell a home. They compare home valuations with 11 years of sales data to determine the days when sellers got the best price for their house. According to this year’s analysis, there’s no better time than right now. In fact, the month of May ranks as the best month to sell a home, with a seller premium of 12.6 percent. The top five days of the year were all in May, with the 23rd topping the list as the single best day of the year to sell a house. Rick Sharga, ATTOM’s executive vice president of market intelligence, says the next couple of months offer sellers their best opportunity. “April showers may bring May flowers, but May brings home sellers the best opportunities to watch their profits grow,” Sharga said. “Homeowners looking to maximize the price premium they can claim on their homes should sell their properties in May, June, and July when buying activity is at its peak.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were relatively flat last week after a long stretch of consecutive increases. In fact, rates even fell slightly for 30-year fixed rate loans with conforming loan balances and loans backed by the Federal Housing Administration. With rates calm for the first time in weeks, borrower demand for mortgage applications rose. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand for loans to buy homes was up 4 percent week over week. “Purchase applications increased for conventional, FHA, and VA loans and were up 4 percent overall,” Kan said. “This is potentially a good sign for the spring home buying season, which has seen a slow start thus far.” Still, Kan cautions that the market remains challenging, with low inventory, rising prices, and increasing rates pushing monthly mortgage payments higher for spring buyers. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

A housing market with too few homes for sale can be frustrating for home buyers. For home sellers, though, it’s an opportunity. Evidence of this can be found in ATTOM Data Solutions most recent U.S. Home Sales report. The report covers the first quarter of 2022 and shows the typical single-family home sold at the beginning of the year generated a gross profit of $103,000. That’s up from $75,000 one year ago at the same time. Rick Sharga, ATTOM’s executive vice president of market intelligence, says though rapidly rising prices have pushed profits higher, they’re likely to slow down soon. “Home prices simply can’t continue to go up as rapidly as they have for the past few years …” Sharga said. “Ultimately, as affordability worsens, price appreciation should slow down, and we may even see modest price corrections in some markets.” It may have already started. ATTOM’s report found home seller profits actually fell from the previous quarter. In fact, during the fourth quarter of 2021, the typical home sale generated $107,000. (source)

The U.S. Census Bureau and Department of Housing and Urban Development’s most recent New Residential Sales report covers how many new homes were sold in March. According to the data, sales fell 8.6 percent from the month before and are now 12.6 percent lower than they were last year at the same time. New home sales are an important barometer of housing market health, since they are counted when the contract to buy is signed rather than when the sale is closed. Because of this, they offer an early glimpse of where the market may be headed. However, they’re also frequently revised. For example, while this month’s report shows a significant drop from February’s rate, February sales have been updated and now show more new homes sold than was previously reported. So what does this mean? It means sales activity most likely slowed in March but we shouldn’t read too much into the severity of the decline. (source)