Monthly Archives: July 2023

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes signed each month. The index is considered a good indicator of future home sales since most signed contracts lead to closed sales several weeks later. According to the most recent release, the index found pending home sales up month-over-month in June. It was the first increase since February. Lawrence Yun, NAR’s chief economist, says the housing recession is over. “The recovery has not taken place, but the housing recession is over,” Yun said. “With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out. Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.” The NAR expects home sales to bounce back next year after slowing in 2023. (source)

New estimates from the U.S. Census Bureau and the Department of Housing and Urban Development show sales of newly built single-family homes fell 2.5 percent in June from one month earlier. The decline was the first since February and follows a downward revision to May’s estimate. But while that may sound like discouraging news for the new home market, the long-term trend remains strong. How strong? Well, June’s estimate – while down from one month earlier – remains nearly 25 percent higher than at the same time last year. In other words, the market for newly built homes continues to grow, mostly due to a lack of previously owned homes for sale. Supply issues in the existing-home market have helped drive more buyers to look at new homes, which has supported more new residential construction. Also in the report, the median sales price of new houses sold in June was $415,400. The average sales price was $494,700. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with little change seen from one week earlier. Rates were unchanged for 30-year fixed-rate loans with conforming balances. Jumbo loans, those backed by the Federal Housing Administration, and 15-year fixed-rate loans all saw minor increases. Despite steady rates, demand for mortgage applications fell 1.8 percent from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says purchase demand was driven down by a drop in FHA loan activity. “The 2.5 percent decline in purchase activity, partly driven by a 10 percent decrease in FHA applications, pushed the purchase index to its lowest level in over a month,” Kan said. “The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May.” The MBA’s weekly survey has been conducted since 1990 and cover 75 percent of all retail residential mortgage applications. (source)

The S&P Case-Shiller Home Price Indices is a closely followed monthly price report that has been tracking home values for nearly 30 years. The report is considered among the leading measures of U.S. home prices. According to their most recent release, S&P found national home prices up 1.2 percent in May, the last month included in the report. The gain is evidence home values remain strong and will continue to be in coming months. Craig J. Lazzara, managing director at S&P, says there’s reason for optimism. “Home prices in the U.S. began to fall after June 2022, and May’s data bolster the case that the final month of the decline was January 2023,” Lazzara said. “Granted, the last four months’ price gains could be truncated by increases in mortgage rates or by general economic weakness. But the breadth and strength of May’s report are consistent with an optimistic view of future months.” The strongest price gains, somewhat surprisingly, were found in cold-weather cities, including Chicago, Cleveland, and New York. (source)

When home sales slow down, it’s easy to assume the reason behind the decline is fewer buyers in the market. But according to the latest release from Fannie Mae’s Economic and Strategic Research group, buyer demand is not the issue in today’s market. In fact, it’s the opposite. The group – which releases a monthly outlook covering their expectations for the economy and housing market in the months ahead – says the lack of available homes for sale is the defining feature of today’s housing market. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the housing market’s supply issue isn’t new. “We began discussing our expectations of a supply shortage in late 2014, and it remains front and center in the housing market in 2023,” Duncan said. “The supply of existing homes is near the 2009 crisis low, and it’s showing no signs of easing. This puts the onus on home builders and can be seen in the construction data.” The low supply of previously owned homes for sale has slowed sales and kept prices high. It has also helped support more new home construction, which is encouraging for the market’s future. (source)

There are plenty of interested home buyers out there but the number of available homes for sale remains low. That creates challenging affordability conditions as it helps push home prices higher. It also creates an opportunity for home builders. Fortunately, it seems they’re answering the call. In fact, according to new residential construction numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, building permits for new single-family homes hit a 12-month high in June – rising 2.2 percent from the month before. That means home builders are ramping up construction of new homes to help meet demand from buyers. The increased supply will not only help new-home shoppers but also buyers of existing homes, as any increase in the total number of available homes for sale relieves upward pressure on home prices. (source)

Sales of existing homes fell in June, according to new data released by the National Association of Realtors. The decline was mostly due to falling sales in the South and West. The Northeast saw increases and the Midwest was unchanged from the previous month. But though sales of previously owned homes were down 3.3 percent from one month earlier, it doesn’t mean buyers weren’t active. In fact, homes continued to sell quickly, with 76 percent selling in less than a month. The typical home was on the market just 18 days. Lawrence Yun, NAR’s chief economist, says home prices are also holding firm. “Home sales fell but home prices have held firm in most parts of the country,” Yun said. “The national median home price in June was slightly less than the record high of nearly $414,000 in June of last year.” In other words, home sales were down in June but the market remains strong and competitive, mostly due to too few homes available for sale. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates saw a significant decline last week from one week earlier. Rates were down 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. Joel Kan, MBA’s vice president and deputy chief economist, says cooling inflation helped lower rates. “Mortgage rates declined last week, as markets responded positively to incoming data showing that U.S. inflation continues to cool,” Kan said. Lower rates led to a 7 percent bump in refinance activity, though demand for loans to buy homes still fell 1 percent despite the improvement. Kan says purchase activity is being held back by low housing supply, which has been an issue for the housing market since before the pandemic. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The National Association of Home Builders conducts a monthly survey to measure builders’ confidence in the market for newly built homes. Builders have a unique perspective on the market, since their business depends on knowing when, where, and what buyers want. Because of this, the NAHB’s survey is considered an important indicator of housing market health. In July, the survey found confidence up for the seventh consecutive month. In fact, their Housing Market Index – which is based on survey results – rose one point to 56 on a scale where any number above 50 indicates more builders view conditions as good than poor. Alicia Huey, NAHB’s chairman, says the lack of available homes for sale has been good for the new home market. “The lack of resale inventory means prospective home buyers who have not been priced out of the market continue to seek out new construction in greater numbers,” Huey said. Survey components measuring current sales conditions and buyer traffic both saw increases in July, while the component gauging future expectations saw a slight decline. (source)

The standards lenders use to evaluate prospective borrowers aren’t fixed. That means there are times when it’s easier for home buyers to get approved for a loan and times when it’s more difficult. For that reason, the Mortgage Bankers Association keeps a monthly measure of mortgage credit availability. Any increase in their Mortgage Credit Availability Index indicates that lending standards have loosened and borrowers will have an easier time securing financing. A decline means lenders have stricter requirements and borrowers will have to meet higher financial standards before being approved for a loan. In June, the index found credit availability loosened, though the improvement was slight. According to Joel Kan, MBA’s vice president and deputy chief economist, the index remains at a low level due to slower mortgage demand. “Lenders are streamlining their operations by offering fewer loan programs, with some exiting certain channels,” Kan said. “Data from our Weekly Applications Survey indicated that June mortgage applications were more than 30 percent lower than a year ago and at the slowest pace since December 2022.” (source)