Monthly Archives: June 2023

Housing market conditions differ from one location to the next. It’s true within metro areas and certainly from state to state. Buyers in California, for example, will most likely encounter a different dynamic than buyers in Ohio. That’s common knowledge. But while conditions can definitely vary by location, the latest results from the S&P Case-Shiller Home Price Indices, show home prices are climbing almost everywhere. “The ongoing recovery in home prices is broadly based,” Craig J. Lazzara, managing director at S&P, says. “Home prices peaked in June 2022, declined until January 2023, and then began to recover.” According to Lazzara, S&P’s National Composite index rose 1.3 percent in April (repeating March’s performance), and now stands 2.4 percent below its June 2022 peak. The indices – considered among the leading measures of U.S. home prices – not only found national numbers just below last year’s high, they also show month-over-month increases in all 20 major metropolitan markets included in the report. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, demand for loans to buy homes is rising. Last week, purchase application demand increased for the third straight week, reaching its highest level of activity in more than a month. Joel Kan, MBA’s vice president and deputy chief economist, says new homes are helping buyers find options. “Purchase applications increased for the third consecutive week to the highest level of activity since early May but remained more than 20 percent lower than year ago levels,” Kan said. “New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market.” The increase in purchase activity came during a week when mortgage rates saw mixed results. The average rate for 30-year fixed-rate loans with both conforming and jumbo balances increased from the week before, as did rates for 5/1 ARMs. Rates for FHA loans and 15-year fixed-rate loans, on the other hand, saw declines. (source)

Sales of newly built single-family homes are skyrocketing, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. In fact, May estimates show sales up 20 percent from where they were last year at the same time and 12.2 percent higher than they were in April. The gains surpassed economists’ expectations and continued an upward trend for the new home market, furthering evidence that buyers are ready and looking to make a move. So why is the market for new homes so much hotter than the existing-home market? The simple answer is supply. There is a lack of previously owned homes available for sale right now and it’s pushing buyers to consider newly built options. The increased demand has helped home builders too, as housing starts also surged during the month, seeing their biggest increase in more than three decades. (source)

These days, there are fewer existing homes for sale and it’s helping to support price growth, according to a new commentary from Fannie Mae’s Economic and Strategic Research Group. The group releases an updated outlook each month covering what they expect from the housing market and overall economy in the days ahead. Their latest release addresses how the low inventory of homes for sale has kept prices strong even in the face of rising mortgage rates. “Housing prices continue to show stronger growth than what was previously expected given the suddenness and significant magnitude of mortgage rate increases,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, says. “Housing’s performance is testimony to the strength of demographic-related demand in the face of Baby Boomers aging in place and Gen-Xers locking in historically low rates, both of which have helped keep housing supply at historically low levels.” Fannie Mae expects demographic factors to keep inventory low for the foreseeable future, which should help prevent sharp price declines in most markets. (source)

Every buyer wants to get the most home for their money. That’s why demand spikes any time mortgage rates fall. We all want to get the best deal possible, and according to a newly updated 2023 forecast from the National Association of Realtors’ consumer website, our chances may be improving. Danielle Hale, the website’s chief economist, says affordability has been challenging so far this year. “The housing market has really seen a double whammy in 2023, with retrenchment in the number of homes for sale coupled with still-high prices and mortgage rates that have kept both first-time and repeat buyers on the sidelines,” Hale said. But while conditions have been challenging during the first half of the year, they should start to calm during the second half of 2023. For one, home prices are expected to remain mostly flat. The website’s forecast calls for prices to fall just 0.6 percent this year. Mortgage rates are also expected to slow as the year progresses, with the updated forecast calling for rates to gradually ease as inflation cools. That means improving affordability conditions for home buyers and a calmer, slightly more affordable housing market in the months ahead. (source)

In May, sales of previously owned homes rose 0.2 percent from the month before, according to new numbers from the National Association of Realtors. The increase, though slight, added to growing evidence that home buyers remain active and interested this year. Lawrence Yun, NAR’s chief economist, says steady rates have helped. “Mortgage rates heavily influence the direction of home sales,” Yun said. “Relatively steady rates have led to several consecutive months of consistent home sales.” But while steady rates have calmed buyers and led to increasing demand, the lack of available homes for sale continues to hold back sales. At the end of May, there was a 3-month supply of available existing homes for sale at the current sales pace. For comparison, a 6-month supply is considered healthy for the housing market. But though inventory remains low, the report found that it’s improving, rising nearly 4 percent from April to May. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates for 30-year fixed-rate loans with conforming loan balances fell last week – while jumbo loans, FHA loans, 5/1 ARMs, and 15-year fixed-rate loans all saw week-over-week increases. Still, despite mixed rates, demand from home buyers rose, climbing 2 percent from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says buyer demand remains firm, especially among first-time buyers. “Purchase applications increased, driven by a 2 percent gain in conventional purchase applications and a 3 percent increase in FHA purchase activity,” Kan said. “First-time home buyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory.” Overall, demand for mortgage applications was up 0.5 percent last week from the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Buying a house requires a plan. It’s not something you do on a whim. A big part of that plan is figuring out your financing. The details of how much you’ll need and where you’ll get it are among the first you’ll need to nail down. So what strategies are today’s home buyers using to finance their home purchase? Well, according to one recent survey, loans top the list. That’s no surprise. The vast majority of us will require a mortgage to buy a house. Loans from financial institutions were named by 68 percent of survey respondents. Americans are also leaning on support from friends and family. Twenty-three percent of participants said they expect to use a financial gift from someone close to them to help cover upfront costs and a down payment. Outside of loans and gifts, the other most popular answer was savings, with 46 percent of survey respondents saying they plan to use money they’ve saved. Whichever strategy you use, be sure to figure it out before you fall in love with any listings. Not having your financing lined up in advance is a great way to lose the home of your dreams to a better prepared buyer. (source)

The National Association of Home Builders conducts a monthly survey of builders in order to gauge their confidence in the market for new homes. Builders have a unique perspective on the market and, because of that, the NAHB’s survey is a closely watched barometer of housing health. In June, the index reached positive territory for the first time in almost a year. In fact, the index scored a 55 on a scale where any number above 50 indicates that more builders view conditions as good than poor. The reason for home builders’ growing optimism? There are several. The lack of available existing homes for sale is one. Because buyers are struggling to find previously owned homes to buy, the new home market is seeing more demand. Robert Dietz, NAHB’s chief economist, says the likelihood that the Fed will slow interest-rate increases is another. “The Federal Reserve nearing the end of its tightening cycle is also good news for future market conditions in terms of mortgage rates and the cost of financing for builder and developer loans,” Dietz said. (source)

There isn’t one definition of “the good life.” It’s a little bit different for everyone. But while we each have our own individual dreams, goals, and aspirations, there are some things we all agree are included in the good life. Health and financial security, for example. In a recent survey from Fannie Mae, both were named important or somewhat important by nearly 100 percent of respondents. It makes sense. After all, you can’t enjoy much without your health and enough money to take care of yourself. Living somewhere you love also made the list, with 94 percent saying it was an important part of the good life. But what about homeownership? Well, Fannie Mae took the same survey in 2020, when rates were historically low and the home buying frenzy was in full swing. Back then, 87 percent of participants said owning a home was key to living the good life. What about now, though? Has anything changed after the price and rate increases of the past two years? Surprisingly, no. The new survey found the exact same share of participants put homeownership on the list. That’s more than twice as many as those that said fancy cars, jewelry, and clothes were most important. (source)