Monthly Archives: July 2023

Homeownership is a popular concept. When asked, most Americans say they hope to one day own their own home. So you’d think the homeownership rate would be consistent across the country with the share of the population that owns mostly equal from one region to the next. According to data from the U.S. Census Bureau, though, where you live plays a role in whether you’re more likely to be a renter or a homeowner. In fact, the data shows there’s a pretty significant difference in the homeownership rate from region to region. For example, the Midwest has the country’s highest homeownership rate at 70.3 percent, followed by the South at 67.3 percent. The Northeast and West, on the other hand, have fewer homeowners. The rate in the Northeast is 62.7 percent and, in the West, it’s just 61.9 percent. One obvious reason for the disparity is affordability. The east and west coast are generally more expensive, in addition to being more densely populated. But while that’s true, the West did see the biggest year-over-year increase in homeowners, with a nearly 2 percent gain through the first quarter of this year. (source)

The home buying process doesn’t have to be stressful. If you have the right team of professionals and set your expectations appropriately, you can buy a house without the anxiety. It’s definitely possible. But since buying a house involves large sums of money and decisions about your future, it’s also totally normal to feel a little on edge. In fact, according to one recent survey, most recent home buyers said they felt stressed during the home buying process. Among respondents, 65 percent said so – with too few homes for sale and shifting mortgage rates among the top factors cited as having had a negative impact. But while it’s true that market challenges and affordability factors can cause headaches for hopeful home shoppers, they certainly haven’t dimmed buyers’ positivity. For example, the same survey found a majority of participants think now is a good time to buy a home. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes moved higher last week. In fact, the MBA’s seasonally adjusted Purchase Index was up 2 percent from the week before. The gains came despite rising mortgage rates, which were up across all loan categories including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the FHA, 15-year fixed-rate loans, and 5/1 ARMs. Joel Kan, MBA’s vice president and deputy chief economist, says economic data continues to push rates higher. “Incoming economic data continues to send mixed signals about the economy, with the overall impact leaving Treasury yields higher last week as markets expect that the Federal Reserve will need to hold rates higher for longer to slow inflation,” Kan said. Still, improving purchase demand is encouraging, especially as it remains 26 percent lower than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

There was a point last year, after mortgage rates increased and buyer demand stalled, when the inventory of homes for sale began to rise. The result was more homes for buyers to choose from and a break from the seemingly never-ending home-price increases. It was short lived, though. In fact, according to Black Knight Financial’s latest Mortgage Monitor, inventory has now fallen in 95 percent of major markets since the start of the year. Andy Walden, Black Knight’s vice president of enterprise research, says most markets are seeing fewer listed homes for sale. “For-sale inventory is moving the other direction in much of the country,” Walden said. “Active listings have deteriorated in 95 percent of major markets so far this year and, overall, we’re still down more than 50 percent from pre-pandemic levels.” Fortunately, new home construction has been improving in recent months, which should help the supply of available homes. But inventory will likely remain low for the foreseeable future, which means home buyers need to prepare for a competitive market. (source)

ATTOM Data Solutions’ quarterly U.S. Home Affordability Report compares the current cost of owning a home – including mortgage payments, property taxes, and insurance – to historical averages. The report looks at how much income is needed to cover monthly homeownership expenses on a median-priced single-family home across 574 counties nationwide. According to the most recent release, affordability levels declined during the second quarter, mostly due to home price increases this spring. Rod Barber, ATTOM’s CEO, says prices have been moving higher. “The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices,” Barber said. “Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess.” The report cites future mortgage rate increases, a cooling stock market, and recession as a few hypothetical factors that could soften prices, and overall affordability conditions, in the months ahead. However, absent those factors or an increase in available for-sale inventory, home buyers should continue to prepare for a competitive market. (source)

Fannie Mae’s Home Purchase Sentiment Index is a monthly survey of Americans which tracks perceptions of the housing market, mortgage rates and home prices, and whether it’s a good time to buy or sell a home. In June, the index was relatively flat, with few changes seen from the month before. Among the results, the component measuring whether respondents feel it’s a good time to buy a home was up 5 percent, while the share of participants who believe it’s a good time to sell fell 3 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says most other gauges were unchanged. “Home prices continue to be supported by the tight supply of homes available for sale and, compared to the end of last year, fewer respondents today believe home prices will decrease over the next 12 months,” Duncan said. “Additionally, consumers’ think mortgage rates will stay the same over the next year, whereas mid-to-late last year, most thought rates would continue going up.” Duncan believes the results are a sign home buyers are starting to adapt to the idea that affordability conditions have settled and will remain fairly steady in the coming months. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, the average loan size for purchase applications fell last week to $423,500. That’s the lowest it has been since January. It also could be an indication of who’s most active in the housing market right now. Joel Kan, MBA’s vice president and deputy chief economist, says it shows buyers are more active in affordable areas. “This was likely driven by reduced purchase activity in some high-price markets and more activity in some of the lower price tiers as buyers search for more affordable options,” Kan said. But while buyers continue to search for more affordable options, overall demand for mortgage applications fell last week. It was the first decline in a month. Part of the reason for the decrease was a bump in average mortgage rates, which were up for most loan categories – including 30-year fixed-rate loans with both conforming and jumbo balances, FHA loans, and 15-year fixed-rate loans. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The ability to search online listings of available homes for sale changed the way home buyers shop houses. These days, the majority of buyers first look online to both get a feel for what’s available in their target area and to evaluate what they might be able to afford. Online listings can certainly be a helpful tool, but they also can cause stress, according to one new survey. The survey found 66 percent of young Americans routinely go online to check the estimated value of homes belonging to their friends. Among them, 59 percent say they do it to measure their own income and worth. This, not surprisingly, leads to feelings of stress and concern among 79 percent of the people who do it. That’s a pretty good reason to restrict yourself to only searching listings if you’re looking for ideas or hoping to better educate yourself about your local market. Otherwise, you may find yourself with a bad case of home envy. (source)

The homeownership rate doesn’t change too drastically from year to year. It hit its record high in the second quarter of 2004, at 69.2 percent and its recent low in 2016 when it fell to 62.9 percent. In other words, the percentage of Americans who own a home has been pretty consistent. Over the past few years, though, there has been an increase. In fact, according to the Census Bureau’s first quarter report, the homeownership rate is currently 66 percent. That’s a fairly significant increase since 2016’s low. But what’s more surprising than the overall increase is the demographic that’s driving the gains. An analysis from Freddie Mac found that between 2016 and today, the rate increased the most for households making below the median U.S. family income. The homeownership rate for those households rose from 48 percent to 53.4 percent during that time. For comparison, the rate for households with a family income higher than the median only increased 0.8 percent over the same period. That means, despite a lower than normal number of affordable homes for sale, Americans are still finding ways to achieve their dream of owning a home. (source)

The National Association of Realtors keeps a measure of how many contracts to buy homes are signed each month. Its Pending Home Sales Index is considered a good indicator of future home sales, as contract signings typically precede closings by several weeks. In May, the index fell 2.7 percent from the month before, with pending sales down in three of four regions – only the Northeast saw an increase. Lawrence Yun, NAR’s chief economist, says demand remains resilient despite the slowdown. “Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” Yun said. “The lack of housing inventory continues to prevent housing demand from being fully realized.” In other words, the lack of homes for sale is the primary reason for slower contract signings. Demand from buyers remains strong and continues to outpace the supply of available, existing homes. (source)