Monthly Archives: December 2023

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week. It was the fourth consecutive weekly decline and brought rates to the lowest level since July. Decreases were seen for 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. Mike Fratantoni, MBA’s senior vice president and chief economist, says economic indicators are bringing rates down. “Mortgage rates dropped last week, as incoming data point to a slowing economy and support a pivot by the Federal Reserve to begin cutting rates next year,” Fratantoni said. With rates trending downward, there’s been a bump in demand for mortgage applications. Last week, demand for refinance and purchase loans rose 7.4 percent from the week before, with a 4 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)

The new home market benefited from a lack of existing homes for sale in 2023. Low inventory of previously owned homes meant many buyers turned to new homes when looking for options to buy. That was an opportunity for home builders. Now, according to a new report from the National Association of Home Builders, new home construction has begun to slow due to elevated rates, climbing costs, and labor shortages. Robert Dietz, NAHB’s chief economist, thinks it’ll rebound quickly. “The data continues to show that home building has slowed, but there are signs that it is beginning to turn a corner heading into the end of the year as the Federal Reserve has paused rate hikes as inflation continues to slow,” Dietz said. So where are the most new homes being built these days? Well, between the second and third quarter of this year, large-metro outlying counties posted the largest increase in single-family market share. That means construction was increasingly moving to the exurbs, the area beyond the suburbs, even as overall construction slowed. (source)

Your mortgage payment will be among your biggest monthly bills. That makes it an important number to familiarize yourself with before buying a house. After all, no one wants to buy a house that will lead to financial stress and money worries. So what does the median mortgage payment look like now? Well, according to the most recent numbers from the Mortgage Bankers Association’s Purchase Applications Payment Index, the median payment applied for by purchase applicants increased to $2,199 in October from $2,155 the month before. The $44 increase was mostly due to rising mortgage rates during the month. Since then, however, rates have been falling, which means improvement is on the way. Edward Seiler, MBA’s associate vice president of Housing Economics and executive director of the Research Institute for Housing America, says it’ll happen early next year. “Home buyer affordability conditions declined further in October, with the jump in mortgage rates during the month,” Seiler said. “MBA expects affordability conditions to remain challenging to close out 2023 before a slight improvement by early next year.” (source)

A new report from ATTOM Data Solutions looks at affordability, foreclosures, and underwater mortgages in an effort to determine which housing markets across the country are most vulnerable to decline. Its findings provide a map of exactly where the housing market is strongest and where there may be weaknesses. So where are the country’s strongest markets? Well, the report shows the vast majority of the country is on good footing. Among the 578 included counties, the South was the strongest region with 18 of the 50 least vulnerable markets. Tennessee alone had seven of the 50 strongest housing markets. The Midwest followed with 13, while 12 were located in states across New England. The weakest markets were located in the New York and Chicago metro areas, along with central California. Rob Barber, ATTOM’s CEO, says even the most at-risk markets aren’t at risk of a crash. “It is important to stress that getting onto the most-vulnerable list doesn’t signal an imminent crash for any local market,” Barber said. “It just means that they have greater potential tripwires that could lead to a decline.” (source)

Fannie Mae’s monthly Home Purchase Sentiment Index is based on a survey which asks Americans for their view of the housing market and their personal financial situation. The survey gauges how respondents feel about buying or selling a home, mortgage rates, home prices, their job security, and income. In November, the index was relatively unchanged, as Americans’ perception of the market has remained stuck since the first half of the year. A majority of respondents still say they believe it’s a good time to sell a home, but the number who say it’s time to buy remains low. A rising number of participants see mortgage rates falling over the next 12 months, but home price expectations were relatively unchanged, with 41 percent saying they believe prices will rise. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says sentiment will likely remain low until the number of homes for sale rises. “The lack of housing inventory is likely to remain a challenge for some time, and home purchase sentiment may continue to be suppressed as a result,” Duncan said. “As our forecast indicates, we believe it will be a couple years before home sales return to more normal, pre-pandemic levels.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week. Rates were down 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 are now at a four-month low. “Mortgage rates declined last week with the 30-year fixed-rate mortgage falling to … the lowest level since August 2023,” Kan said. “Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates.” Lower rates have boosted demand for mortgage applications, with the MBA’s Market Composite Index – which measures both purchase and refinance activity – up 2.8 percent from the week before. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

More often than not, home buyers are shopping for a new home because they have to be. Major life changes like marriage, starting a family, or a new job can mean it’s time to move regardless of what’s happening in the housing market. Other times, buyers have some flexibility. Maybe they’d like to move but can wait for more favorable market conditions. These days, there are a lot of buyers who’ve been on the fence for a while. Competition, higher prices, lack of inventory, and rising mortgage rates have had many buyers waiting for the right time. In fact, the vast majority of potential buyers surveyed last spring thought delaying their plans for a few months – or longer – could improve their chances of getting the right place at the right price. Six months ago, for example, a survey of prospective buyers found 85 percent were willing to wait for better conditions. But have they grown tired of waiting? Possibly. A more recent survey asked buyers again whether they’re willing to wait for a more favorable market. This time, however, it found the share of respondents who said yes was almost 25 percent lower than it was in the spring. (source)

December is the time of year when housing market experts release their forecasts predicting what they believe will happen in the year ahead. So far, market experts have generally been optimistic about conditions in 2024. And, according to one newly released forecast, one of the top reasons for their increased optimism is the likelihood that the inventory of homes for sale will improve. Why does that matter? Well, too few homes for sale has been a big frustration for today’s home buyers. Not only has it led to more competition for the homes that are on the market, it’s helped drive up their price. According to the forecast, when mortgage rates began to rise in 2022, many potential home buyers put their plans on hold. Now, with rate increases beginning to calm, homeowners may be ready to list their home and make the move they’ve been delaying over the past year or so. With additional inventory and steadier rates, affordability will improve and home buyers will finally get some relief. (source)

When a contract to buy a home is signed, that home’s sale is considered pending until it closes weeks later. The National Association of Realtors tracks pending sales because they’re considered a good indicator of future home sales numbers. After all, most contract signings will eventually lead to a closed sale. The NAR’s most recent Pending Home Sales Index found signings down 1.5 percent in October from the month before. Lawrence Yun, the group’s chief economist, says low supply is slowing signings. “Home sales are rising in places where more inventory is available,” Yun said. “Sales for properties above $750,000 were higher than a year ago, because there is more inventory at this price point than what we saw last October.” Similarly, newly built homes have also seen year-to-date increases due to rising construction activity. In other words, where there’s inventory, there are buyers, which means the overall lack of available homes for sale remains the primary factor holding home buyers back – even more than affordability challenges. (source)