Monthly Archives: February 2024

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were little changed last week from one week earlier. Rates for 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, and 5/1 ARMs all saw slight decreases. Rates for jumbo loans and 15-year fixed-rate loans increased. But though rates were relatively flat, overall demand for mortgage applications still fell 5.6 percent week-over-week. Mike Fratantoni, MBA’s senior vice president and chief economist, says mortgage rates have increased since the beginning of the year. “Mortgage rates were little changed last week, with the 30-year conforming rate declining slightly … but remaining about a quarter percentage point higher than the start of the year,” Fratantoni said. “Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

New home sales only account for about 14 percent of overall home sales. But these days, due to the shortage of previously owned homes available for sale, home buyer interest in the new home market continues to climb. In January, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family homes rose 1.5 percent from the previous month and were about 2 percent higher than year-before levels. The improvement, though slight, comes at a time of year when sales are typically slow. Additionally, freezing weather last month affected much of the country and likely slowed sales in those regions. Still, compared to the market for existing homes, the new home market continues to post gains. Also, because new home sales are counted at contract signing rather than closing, they can be an important future indicator of housing market activity, making January’s increase a potentially good sign for spring. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases a forecast covering what they expect for the economy and housing market in the months ahead. In February, the group’s outlook is optimistic. In fact, according to their forecast, they expect housing activity to pick up as the year goes on, with lower mortgage rates and increased housing supply helping to make home buying more affordable. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says it depends a lot on the economy. “Right now, our base case scenario foresees economic growth decelerating, rates gradually declining, and new single-family home sales slowly recovering as construction adds supply,” Duncan said. “However, if economic growth continues to surprise on the upside, then we believe the risk of mortgage rates remaining higher for longer will increase.” Duncan says conditions remain hard to predict as the traditional relationship between housing and the larger economy has been upturned post-pandemic. (source)

Whether or not you think now is a good time to buy a house may depend on your age. According to a newly released survey from the National Association of Realtors’ consumer website, there’a pretty sizable generational divide in today’s market. In fact, among surveyed Americans, 55 percent of Millennials and 40 percent of Gen Z respondents say they think now’s a good time to buy, where only 32 percent of Gen X and 17 percent of Baby Boomers said the same. Danielle Hale, the site’s chief economist, says Americans are still positive about home buying. “The current market is very different from where it was before the pandemic, but many Americans still have a positive outlook towards achieving the dream of buying a home,” Hale said. “This optimistic lens may shape the way younger shoppers in particular view mortgage rates. Although mortgage rates are up from a year ago, they have declined more than a percentage point from their recent peak. While some home shoppers and sellers are likely holding out for even lower rates, the improvement in affordability as rates fall has already ushered in an uptick in listings and contract signings.” (source)

There are few things more frustrating as a home buyer than losing a home to another buyer. Whether it’s due to a faster offer or a better one, losing your chance at a home you had your eye on can be deflating. That’s why new numbers from the National Association of Realtors may be good for hopeful home shoppers. According to the data, the typical home for sale in January was on the market about a week longer than in December. In fact, the typical property remained on the market 36 days during the month. That’s an improvement over last year at the same time and quite a bit longer than during the frenzied market of 2021. Still, Lawrence Yun, NAR’s chief economist, cautions buyers that the market remains competitive. “The median home price reached an all-time high for the month of January,” Yun said. “Multiple offers are common on mid-priced homes, and many homes were still sold within a month.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates moved higher last week from one week earlier. Increases were seen 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. Mike Fratantoni, MBA’s senior vice president and chief economist, says the increases led to a decline in mortgage application demand. “Mortgage applications dropped as a result with a larger decline in refinance applications,” Fratantoni said. “Potential home buyers are quite sensitive to these rate changes, as affordability is strained with both higher rates and higher home values in this supply-constrained market.” The rate increase was largely due to news that inflation picked up in January. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

There are too few existing homes available for sale. An ongoing issue for buyers – and the primary factor driving home price increases – the lack of for-sale inventory has led an increasing number of home buyers to consider the new home market as an alternative. Put simply, buyers who aren’t able to find an older home that fits their needs are looking at new homes for additional options. In fact, according to the latest numbers from the Mortgage Bankers Association, mortgage applications for new home purchases were up 19.1 percent in January from last year at the same time. Joel Kan, MBA’s vice president and deputy chief economist, says the spike follows an established trend. “Applications for new home purchases were strong in January, as newly built homes remained an attractive option for prospective home buyers who looked to take advantage of lower mortgage rates during the month,” Kan said. “Applications were up 19 percent from a year ago – the 12^th consecutive annual increase – and the non-seasonally adjusted index was the strongest January reading in the survey’s history.” (source)

Home prices are still rising. They’re increasing at a much slower pace than they were a few years ago but are above year-before levels in every region, according to new numbers from the National Association of Realtors. In fact, the median price for an existing home reached $391,700 at the end of 2023. That’s 3.5 percent higher than it was at the end of 2022. Lawrence Yun, NAR’s chief economist, says the number of homes for sale is expected to rise this year, which will help affordability and sales. “Sales were restrained due to limited inventory,” Yun said. “But increased home building, along with lower mortgage rates, will not only improve housing affordability but also help bring more homes onto the market in 2024.” As it is, price increases depend a lot on location. For example, the Northeast saw a 7.3 percent year-over-year increase, while the South saw prices up only 3.2 percent. The Midwest was up 4.7 percent, while the West increased 4.2 percent. (source)

New home construction numbers aren’t the first thing prospective home buyers check when thinking about buying a home. Current listings, home prices, and mortgage rates are more likely starting points. But the number of new homes being built affects buyers, whether they know it or not. For one, the pace of new home construction can help moderate price increases, as more new homes add to overall supply, which reduces competition and limits price spikes. In other words, if more new homes are being built, it’s good for buyers whether they are shopping for a new or an existing home. So what’s happening in the new home market these days? Well, according to the latest numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, new residential construction fell in January. A large share of the downturn was due to declining multi-family construction. Single-family home construction was also down but the number of permits authorized to build new homes increased 1.5 percent from the month before. Rising permits are an indicator of future construction numbers which means the increase could be a sign that winter construction declines may soon turn into gains as spring approaches. (source)

Home builders know the housing market. They have to, after all. Their business depends on knowing where and what buyers want. That’s why the National Association of Home Builders takes a monthly measure of how confident home builders feel about the market. The NAHB’s Housing Market Index measures builder confidence on a scale where any number above 50 indicates more builders view conditions as good than poor. In February, the index saw its third consecutive monthly increase, rising four points to 48. Alicia Huey, NAHB’s chairman, says decreasing mortgage rates have boosted optimism. “Buyer traffic is improving as even small declines in interest rates will produce a disproportionate positive response among likely home purchasers,” Huey said. “And while mortgage rates still remain too high for many prospective buyers, we anticipate that due to pent-up demand, many more buyers will enter the marketplace if mortgage rates continue to decline this year.” (source)