Monthly Archives: July 2024

Most of us know what it means to be sticker shocked. It’s when you find out the price of something is much higher than you expected. It can be a surprise. It can also be a disappointment if you were actually ready to buy. These days, according to the results of a new survey, sticker shock may be a common occurrence in the housing market. In fact, the survey – from the National Association of Home Builders and the U.S. Census Bureau – found there’s a fairly large gap between what home buyers expect to pay for a house and what homes actually cost. The survey found 38 percent of buyers expect to pay less than $250,000 for their next home. That’s well below the median price of an existing home, which is now above $400,000. It’s also well below the cost of buying a newly built home, which tend to be more expensive than older homes. For example, in 2023, only 5 percent of new homes that began construction were priced under $250,000. (source)

There’s been a lot of talk recently about how market conditions may be keeping current homeowners from making a move. But homeowners may be moving sooner than the experts think. In fact, according to one new survey, there’s no shortage of homeowners thinking about moving in the near future. The survey found 38 percent of homeowners said they’re likely to purchase a home in the next year. That’s a significant number and a good sign that buyer demand remains high – and particularly among homeowners, who have been seen as reluctant to give up the favorable terms of their current mortgage. But it’s not just homeowners. The same survey found large majorities of Gen Z and Millennial respondents who said they believe buying a home is attainable – an indication that interest among buyers is building and more Americans may be getting ready to make a move in the months ahead. (source)

The Mortgage Bankers Association tracks mortgage credit availability to determine how easy or difficult it is for borrowers to get a loan. Each month, its Mortgage Credit Availability Index gauges whether credit has loosened or tightened on a scale where any increase indicates borrowers’ access to credit has improved – whether through less restrictive lending standards or through offered loan programs. In June, the MCAI increased for the sixth consecutive month. Joel Kan, MBA’s vice president and deputy chief economist, says the gains have been encouraging. “Mortgage credit availability increased in June for the sixth consecutive month, as lenders expanded their offerings of cash-out refinance programs,” Kan said. “The recent growth in credit availability is encouraging, but the index is still hovering near 2012 lows.” (source)

Homeownership hasn’t lost its appeal, according to the results of a new survey of young Americans. The survey, which probed Gen Z’s attitudes toward homeownership and buying in the current market, found 92 percent of respondents said owning a home was important to them. That’s the overwhelming majority and good evidence that the dream of owning a home endures. But while most survey participants said they want to own a home, it wasn’t their top priority. In fact, most Gen Z participants had other goals they put ahead of homeownership, including finding stable employment, building a career, saving money, and starting a family. Those are worthy goals and a good indication that young Americans are looking to get established before buying. But they don’t expect to wait long. Ninety percent of respondents said they believe they’ll buy a home before the age of 35, with 33 percent expecting to be homeowners by 25. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly unmoved 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 week-over-week, while rates for jumbo loans and 15-year fixed-rate loans both increased. Joel Kan, MBA’s vice president and deputy chief economist, says mortgage demand was also relatively flat. “Purchase activity picked up slightly, driven by increases in FHA and VA applications,” Kan said. “Refinance applications decreased for the fourth consecutive week, in line with higher rates.” Refinance activity was down 2 percent from the previous week, while demand for loans to buy homes saw a 1 percent increase. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Americans started feeling better about the housing market as it headed into the summer season, according to the latest survey results from Fannie Mae’s monthly Home Purchase Sentiment Index. The percentage of survey respondents who said it’s a good time to buy a home rebounded in June, with a 5 percent increase over the month before. The share who say it’s a good time to sell also improved, rising 2 percent from May. Mark Palim, Fannie Mae’s vice president and deputy chief economist, says affordability remains a concern, despite the optimistic turn. “Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both home buying and home selling conditions,” Palim said. “If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand.” (source)

ATTOM Data Solutions keeps a quarterly record of how affordable it is to buy a house based on monthly homeownership expenses for a median-priced home, including mortgage payments, property taxes, and insurance. Its U.S. Home Affordability Report looks at data from 589 counties to determine whether homeownership is more or less affordable today compared to historical levels. According to the most recent report, affordability was more challenging during the second quarter, as prices continued to increase and mortgage rates briefly spiked. In fact, 582 of the 589 analyzed counties were less affordable than in the past. Rob Barber, ATTOM’s CEO, says some of the affordability crunch was seasonal. “It’s common for these trends to intensify during the spring buying season when buyer demand increases,” Barber said. “However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012.” (source)

Home buyers got a bit of a break in May, according to new numbers from the Mortgage Bankers Association. The MBA tracks mortgage payments each month with its Purchase Applications Payment Index – which measures mortgage payments relative to income. In May, the index fell 1.6 percent, indicating affordability improved. In fact, the national median mortgage payment fell to $2,219 from $2,256 the month before. For borrowers applying for lower-payment mortgages, the median payment fell to $1,508. Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America, says mortgage rates calmed in May after spiking in April. “Home buyer affordability conditions improved in May as slightly lower mortgage rates and an uptick in housing inventory slightly eased the recent rise in application payment amounts,” Seiler said. The MBA is forecasting further affordability improvement as the year goes on, with lower rates and slowing home-price growth in the months ahead. (source)

The S&P Case-Shiller Home Price Index has been tracking home prices for decades and is among the most closely followed measures of US home values. The index is based on a three-month moving average and covers all nine census divisions. According to the most recent release, home prices continue to rise, though at a slightly slower pace than before. For example, the National Index found prices up 6.3 percent from last year at the same time, which is just short of the 6.5 percent year-over-year gain found in last month’s report. Brian D. Luke, head of commodities, real & digital assets at S&P, says prices look to be on a similar path as last year. “2024 is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall,” Luke said. “Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year.” (source)