Monthly Archives: July 2024

The S&P Case-Shiller Home Price Indices is considered among the leading measures of U.S. home prices. It covers all nine census divisions and has data going back nearly 30 years. According to the most recent results, the indices show home prices strong through the first half of the year – though the rate of increase has begun to slow. For example, prices were up 5.9 percent year-over-year in May, down from 6.4 percent the previous month. Still, Brian D. Luke, head of commodities, real & digital assets at S&P, says the first half of the year has been better than previous years. “While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging,” Luke said. “Our home price index has appreciated 4.1 percent year-to-date, the fastest start in two years.” (source)

Home sellers have had a good run over the past few years. Elevated home prices moved even higher during the pandemic and the increases, while slower, have continued in most markets. In fact, according to ATTOM Data Solutions’ second-quarter 2024 U.S. Home Sales Report, the median U.S. home price hit a new record during the second quarter, reaching $365,000. The gains pushed home seller profits higher too, with the typical raw profit back up over $130,000. Rob Barber, ATTOM’s CEO, says profits were up but margins were relatively unchanged. “Prices jumped back upward, which was great news for owners,” Barber said. “So did raw profits. Profit margins also remained historically elevated. But the bottom-line profit-margin trend didn’t move much at all because soaring prices are far from a new thing. Even greater price improvements will be needed to kick margins up over the rest of the year.” (source)

The new home market accounts for just over 10 percent of total home sales. But though it’s only a small slice of overall housing-market activity, it plays an important role. After all, when the new home market is healthy, and builders are building more homes, that adds supply to the inventory of available homes which means more choices for home buyers and fewer price spikes. So what’s happening in the new home market now? Well, according to the latest numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family homes were relatively flat month-over-month in June, falling 0.6 percent from the month before. The slight decline was mostly due to higher mortgage rates during the month, which slowed buyers. But with rates down since then – and expectations that they’ll ease further as the year goes on – builders are optimistic that conditions will improve and buyers will return. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates fell again last week, as rates continued to ease after spiking earlier this year. Rates were down from the week before for 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. Jumbo loans saw a slight increase from the previous week. Joel Kan, MBA’s vice president and deputy chief economist, says rates are now at a five-month low. “Mortgage rates continued to ease, with the 30-year fixed rate dipping to … the lowest level since February 2024,” Kan said. “Refinance applications were up, driven by conventional and FHA application activity, as some borrowers took the opportunity to act.” The refinance index is now 38 percent higher than last year at the same time. Purchase activity, on the other hand, is still lagging last year’s level, with demand for loans to buy homes 15 percent lower than last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Sales of previously owned homes slowed in June, according to new numbers from the National Association of Realtors. Existing-home sales slipped 5.4 percent from the month before and were also down 5.4 percent from year-before levels. But despite slower sales, Lawrence Yun, NAR’s chief economist, says the market is improving for buyers. “We’re seeing a slow shift from a seller’s market to a buyer’s market,” Yun said. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” The market is becoming better balanced and that’s good for buyers. The inventory of existing homes is now at a 4.1-month supply at the current sales pace – the highest level in more than four years and nearing the number needed for the market to be considered balanced. (source)

The number of homes for sale has been improving for a while now and the gains continued in June. In fact, according to recently released data, inventory was up 4 percent from May. The improvement pushed the number of homes on the market 23 percent higher than last year and shrunk the gap between current levels and pre-pandemic averages – it is now the smallest it’s been since 2020. Inventory improvements have also led to year-over-year increases in all but two of the country’s 50 largest metropolitan areas. What does this mean for summer home buyers? Well, it means homes on the market will last a little longer, though attractive listings will still sell quickly. It also means home prices may begin to moderate. The latest numbers show 24.5 percent of listings received a price cut in June. That’s the highest share for this time of year since 2018. (source)

When the U.S. Census Bureau and the Department of Housing and Urban Development release their monthly New Residential Construction report, it comes with three components. The first tracks building permits, measuring the number of permits to build new homes pulled during the month. The second category is housing starts, which tracks how many new homes started construction. The final component is completions. Completions gauge how many new homes were finished during the past month. In June, they surged. In fact, privately owned housing completions were up 10.1 percent in June from the month before and 15.5 percent higher than last year at the same time. The other two components also saw improvement but the spiking number of completed new homes is a sign that more inventory is coming to the market. That helps buyers, as more supply helps tame price increases while offering shoppers more options. (source)

Home builders know the housing market. They have to, if they hope to be successful. Builders have to know what buyers want, where they want it, and when they’ll be ready to buy. That’s why the National Association of Home Builders takes a monthly survey of home builders, asking for their perception of the current market and their expectations for the months ahead. The survey is scored on a scale where any number above 50 indicates that more builders view conditions as good than poor. In July, it fell to 42, down one point from June. But despite the slide, the component measuring expectations for the next six months rose to 48. NAHB Chairman, Carl Harris, says builders expect better buying conditions later in the year. “While buyers appear to be waiting for lower interest rates, the six-month sales expectation for builders moved higher, indicating that builders expect mortgage rates to edge lower later this year as inflation data are showing signs of easing,” Harris said. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from one week earlier. Rates were down for 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Joel Kan, MBA’s vice president and deputy chief economist, says rates are now at a four-month low. “Mortgage rates declined last week, as recent signs of cooling inflation and the increased likelihood of Fed rate cuts later this year pulled them lower. The 30-year fixed rate declined to … the lowest rate since March 2024,” Kan said. As a result, demand for mortgage applications was up four percent last week, pushed higher by a 15 percent jump in refinance activity. The seasonally adjusted purchase index fell 3 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)