Monthly Archives: October 2023

More than 10 million households have recently purchased and moved into a new home, according to a new study from the National Association of Home Builders. The study – which looks at data from the American Housing Survey in hopes of determining who today’s typical buyer is and what type of home they buy – breaks down buyers based on age, income, down payments, and home purchased. So who is today’s typical home buyer? Well, the study found recent home buyers had a median age of 41 and a household income of $97,700. First-time buyers, on the other hand, were closer to 33 and made less money than move-up buyers. Among all buyers, more than half put less than 20 percent down on the house they purchased and the vast majority bought detached single-family homes – with 6.9 percent buying a single-family attached homes and 2 percent purchasing condos. The median value of homes purchased was $318,185 for all buyers and $271,445 for first-time buyers. (source)

If you’re thinking about making a move, you’re likely thinking about home values. Whether they’re up or down will have an impact on the decisions you make, whether you’re a buyer, a seller, or both. So where are they now? Well, according to one recent analysis, values were relatively flat in September from the month before. In fact, they were down just 0.1 percent nationally. That’s slower than they’ve been at any point since February but not that far off normal. In fact, between 2015 and 2019, monthly home-price increases were between 0.1 and 0.4 percent, making September’s results fairly typical compared to pre-pandemic growth. Year-over-year, home values were up 2 percent, pushing the typical home value to $350,000 nationally. Overall, September’s data shows the market began to calm as the summer season came to a close. That could be encouraging news for fall buyers hoping for a break from challenging affordability conditions. (source)

For most home buyers, applying for a mortgage is step one. You aren’t going to get very far in the home buying process without first confirming that you’ll be able to get a loan. But while your financial stability, income, and history has a lot to do with whether you’re ultimately approved to borrow, those aren’t the only determining factors. Mortgage credit availability is another. Put simply, lending standards aren’t fixed. There are times when it’s easier to get a mortgage and times when it’s more difficult. That’s why the Mortgage Bankers Association keeps a monthly measure of whether standards are tightening or loosening. It’s a useful look at what prospective borrowers can expect when applying for a loan. According to the MBA’s most recent Mortgage Credit Availability Index, credit loosened in September, making it a little easier on borrowers. Joel Kan, MBA’s vice president and deputy chief economist, says lenders are offering more options to buyers facing elevated rates. “Credit availability increased slightly in September, as lenders increased their loan offerings marginally to meet the changing needs of borrowers who are facing higher mortgage rates,” Kan said. “There were more loan programs for ARM loans for borrowers seeking lower initial monthly payments and also some increases in non-QM product offerings.” (source)

According to the Mortgage Bankers Association’s Weekly Applications survey, average mortgage rates were up last week 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. But while rates for most loan categories increased, rates for adjustable rate mortgages saw a significant decline from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says interest in ARMs spiked as a result. “The level of ARM applications increased by 15 percent over the week, bringing the ARM share up to 9.2 percent of all applications, the highest share since November 2022,” Kan said. “The yield curve has become less inverted in recent weeks and ARM pricing has certainly improved.” That improvement helped push overall mortgage application demand higher week-over-week, including a 1 percent increase in demand for loans to buy homes. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Traditionally, buying a house was something you did with your spouse. First, you’d get married then you’d move into your newly purchased home together. But while married couples still account for the largest share of home buyers, things have been changing recently. In fact, according to one new survey from the National Association of Realtors’ consumer website, an overwhelming majority of survey participants now say they’d be willing to buy a home with someone other than a spouse or partner. Danielle Hale, the website’s chief economist, says market conditions are partly responsible for the shift in attitudes. “The challenging market conditions this year are changing buyer behavior in significant ways, driving many more people to explore alternative living situations they may not have considered in the past,” Hale said. Among survey respondents, 83 percent said they’d consider buying a house with a family member or friend, with 37 percent saying they’d be most open to buying with their child – though romantic partners, siblings, cousins, or other family members in the same age group followed closely behind. (source)

Fannie Mae’s Home Purchase Sentiment Index measures how Americans feel about their finances, the economy, their job, and the housing market. Based on a monthly survey, the index gauges whether consumers believe mortgage rates and home prices are headed up or down, whether they think it’s a good or bad time to buy or sell a home, and whether their personal finances and job security has improved or worsened over the past year. According to the most recent results, Americans are feeling cautious about the housing market, with an increasing number of survey respondents saying they believe mortgage rates and prices will continue to rise. But while participants are clearly worried about affordability, the vast majority say they think it’s still a good time to sell. In fact, 63 percent said they think now’s the right time. However, among them, a growing number list elevated rates as a reason to hold off. Doug Duncan, Fannie Mae’s chief economist, says homeowners aren’t eager to give up their current rate. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon …” Duncan said. (source)

A lot about the way we live changed during the pandemic. Some of those changes were temporary. Others, though, are here for the long term. Remote work, for example. The Internet made working from a home a possibility but it was the pandemic that turned it into a reality. Now, more than three years later, it’s clear that remote work is here to stay. So are the changes it brought to the housing market. With more people able to work from anywhere, ideas about how and where we want to live changed too. People who no longer needed to consider their commute were free to live wherever they’d like – and many took advantage. That led to growing demand for privacy, space, and affordability which pushed buyers further from urban centers and out into the suburbs and exurbs. The subsequent surge in competition for homes, higher prices, and faster sales in those areas has largely continued ever since, as remote-working home buyers exchange proximity to city centers for more space and lower costs. (source)

The housing market has an inventory problem. The lower-than-normal number of homes for sale has prices rising and home buyers frustrated. But while year-over-year numbers show fewer homes on the market and prices higher than last year, monthly data tells a different story. In fact, it shows some short-term improvement. For example, according to newly released numbers from the National Association of Realtors’ consumer website, inventory increased in September from the month before, rising nearly 5 percent. That’s a significant bump, and at a time of year when the housing market typically begins to slow down. Additionally, the analysis found a rising number of homes saw price reductions during the month. The increase in price cuts – also unusual for the season – is an encouraging sign for fall buyers. Danielle Hale, the website’s chief economist, says it’s a break for buyers but challenges remain. “An uptick in homes with reduced prices is a small break for buyers on top of the usual seasonal factors that align to make [the] first week in October the best week to buy,” Hale said. “Yet, the larger context remains challenging. Buyers still struggle with the triple threat of rising listing prices, record-high mortgage rates, and limited inventory, making affordability a continued concern.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up last week from one week earlier. Rates rose across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. Joel Kan, MBA’s vice president and deputy chief economist, says rates have been moving higher in recent weeks. “Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields,” Kan said. “Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week …” Because of increasing rates, demand for mortgage applications fell during the week, with demand for loans to buy homes down 6 percent from one week earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

These days, home buyers face a number of challenges. With prices and mortgage rates both up and the supply of homes for sale down, the market has gotten more difficult over the past year and a half. But not all the news is bad for buyers. For example, according to the Mortgage Bankers Association, median mortgage payments were relatively flat this summer. The MBA’s Purchase Applications Payment Index measures new monthly mortgage payments based on the loan applications of recent home buyers. The latest results show the median payment rising just $8 in August from the month before. That brought it to $2,170 – about the same as it was in May when it came in at $2,165. Edward Seiler, MBA’s associate vice president, housing economics, and executive director of the Research Institute for Housing America, says there could be even better news ahead. “If mortgage rates shift lower in 2024 as we anticipate, the combination of rising inventory levels and lower rates should lead to stronger demand for buying a home,” Seiler said. (source)