Monthly Archives: May 2024

The number of signed contracts to buy homes can be a good indicator of where home sales are headed. After all, there are several weeks between when a buyer’s offer is accepted and when the deal is closed. That means the number of contracts to buy homes signed in one month is a good indicator of where the next month’s sales numbers will fall. The National Association of Realtors tracks pending home sales for this reason. Its Pending Home Sales Index can provide a more current picture of sales activity. According to the most recent release, activity has slowed. In fact, contract signings in April were down more than 7 percent. Lawrence Yun, NAR’s chief economist, says higher rates in April are behind the decline. “The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” Yun said. “But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions with improved affordability and more supply.” According to the report, pending sales fell across all regions, though the biggest declines were seen in the West and Midwest. (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. It was the first time rates increased in four weeks. Joel Kan, MBA’s vice president and deputy chief economist, says borrowers have been sensitive to recent fluctuations. “Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels,” Kan said. “There continues to be limited levels of existing homes for sale and many buyers are struggling to find listings in their price range that meet their needs.” Last week, though, declining application demand was largely due to a drop in refinance activity. Demand from home buyers was down just 1 percent week-over-week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook detailing its expectations for the housing market and economy. According to its most recent forecast, the group foresees dampened housing activity through the end of the year, though they acknowledge the market’s direction is largely dependent on where mortgage rates head from here. “Our consumer survey suggests that households who are paying attention to the housing market continue to take a wait-and-see approach,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “This is consistent with our latest housing forecast, which does not foresee a dramatic change in activity until affordability improves.” Duncan says the most likely path to improved affordability is for mortgage rates to decrease from their current level. But the group doesn’t expect home sales to decline significantly, even if rates remain elevated, due to the recent improvement in available homes for sale. (source)

The number of previously owned homes sold in April fell 1.9 percent from the month before, according to new numbers from the National Association of Realtors. The monthly decline put sales about 2 percent lower than where they were last year at the same time. Lawrence Yun, NAR’s chief economist, says sales trends haven’t changed too much, except on the higher end of the market. “Home sales changed little overall, but the upper-end market is experiencing a sizable gain due to more supply coming onto the market,” Yun said. It’s true. Sales have surged for homes priced $1 million or more. In fact, high-end home sales have risen 34 percent from last year due to a 40 percent jump in available inventory. But it isn’t just the upper-end of the market seeing inventory gains. The NAR says total housing inventory rose 9 percent in April and is now 16.3 percent higher than one year ago. That’s good news for buyers, as it should help slow future price increases and lead to a better balanced market. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell for the third consecutive week 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 falling rates haven’t yet helped demand for home purchase loans, which remain lower than last year. “Purchase activity continues to lag despite this recent decline in rates, down 11 percent from a year ago, as potential buyers still face limited for-sale inventory and high list prices,” Kan said. Overall, though, mortgage demand was up nearly 2 percent week-over-week due to increases in refinance activity. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

When we move, we tend to stay in the same general region. In fact, the median distance between the home buyers bought and the home they moved from was 20 miles last year, according to the National Association of Realtors. But while the typical buyer doesn’t stray that far from home, there are others who not only leave their area but also their state. There could be several reasons someone might make an interstate move, including a new job or to be closer to family. Whatever the reason, it’s always interesting to see where Americans who move out of state are headed. That’s the idea behind a recent report tracking migration trends. What it found was Americans are leaving high cost-of-living cities and moving to the Southeast, specifically the Carolinas. The report found five of the top ten cities popular with out-of-state movers were located in North and South Carolina, with Myrtle Beach SC and Wilmington NC sharing the top spot. (source)

When you own a home you’re responsible for everything from the front lawn to the furnace. It’s your job to keep things maintained and running smoothly. In other words, it takes some work – or, at least, a list of trusted contractors. But while home maintenance is big part of homeownership, it’s a part that home buyers often overlook. In fact, according to one new survey, buying a home that requires too much maintenance is the most common regret of recent home buyers. Twenty-eight percent of survey respondents named it their top regret. That’s more than those that say they paid too high a price or locked in a higher mortgage rate than they’d like. But while recent buyers feel they took on too much work, future buyers are still prioritizing looks over function, with 33 percent of survey participants saying they want a house with an updated kitchen and bathrooms. That’s almost 10 percent more than those that say they’re looking for one with a strong foundation. (source)

The U.S. Census Bureau and the Department of Housing and Urban Development keep a monthly measure of new home construction. Their report tracks the number of new building permits pulled, the number of homes that began construction, and the number of homes that completed construction during the month. Together, the three components offer a glimpse of where new home construction is and where it may be headed. According to the most recent results, permits and starts were relatively flat from last year in April. Building permits were 2 percent lower than April 2023 and housing starts were 0.6 percent lower than last year. Completions, however, surged. In fact, the number of new homes that completed construction in April was 14.6 percent higher than last year’s level. That may be good news for prospective home buyers, as any increase in the number of homes available for sale can help moderate prices while offering buyers more options. (source)

The National Association of Home Builders’ Housing Market Index measures how confident home builders are in the market for newly built single-family homes. It’s based on a survey and scored so that any number above 50 indicates more builders view market conditions as good than poor. In May, the index scored a 45 – down from 51 in April. Robert Dietz, NAHB’s chief economist, says inflation was behind the decline. “A lack of progress reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” Dietz said. “The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.” According to the index, only the Midwest saw its three-month moving average improve in May, with a three point increase to 49. The Northeast is still the country’s most optimistic region, at 61. (source)