Monthly Archives: October 2024

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from the week before. Rates were up 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 recent increases have muted overall mortgage demand. “Mortgage applications were essentially flat last week as rates increased for the fourth time in five weeks, driven by bond market volatility in advance of the presidential election and the next FOMC meeting,” Kan said. Still, despite recent rate increases, demand for loans to buy homes was up 5 percent last week and is now 10 percent higher than last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Home prices are still rising, according to the latest results of the S&P Case-Shiller U.S. National Home Price Index. S&P’s index – considered among the leading measures of home price activity – has been tracking prices for nearly 30 years. The most recent release shows prices up 4.2 percent year-over-year. But while prices continue to increase, the rate of increase has slowed. For example, the previous month’s report showed prices up 4.8 percent from year-before levels. In other words, prices continue to rise but at an ever slower pace. Brian D. Luke, S&P’s CFA, head of commodities, says prices are decelerating. “Home price growth is beginning to show signs of strain, recording the slowest annual gain since mortgage rates peaked in 2023,” Luke said. “As students went back to school, home price shoppers appeared less willing to push the index higher than in the summer months. Prices continue to decelerate for the past six months, pushing appreciation rates below their long-run average of 4.8 percent.” (source)

Sales of newly built single-family homes are now at the highest level since May 2023, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. In September, sales rose 4.1 percent from the previous month and were 6.3 percent higher than last year at the same time. The increase put the seasonally adjusted annual rate at 738,000 units, higher than the 720,000 units economists expected. In short, the new home market continues to outperform the market for previously owned homes. New home sales account for 15 percent of all home sales and have, over the past few years, gained steam as the inventory of existing homes for sale has been lower than historically normal. That’s resulted in more construction of new homes and more shoppers turning to the new home market for additional options. The inventory of new homes for sale is now at levels last seen in 2008. (source)

The share of current homeowners who can consider themselves equity rich remains historically high, according to ATTOM Data Solutions’ third quarter 2024 U.S. Home Equity & Underwater Report. The report found 48.3 percent of mortgaged residential properties were equity rich – meaning the combined loan balances secured by those properties were no more than half the properties’ value. That’s higher than last year when it was 47.4 percent but lower than the second quarter of this year when it hit its recent peak of 49.2 percent. Rob Barber, ATTOM’s CEO, says homeowners remain in great shape. “Despite the flat pattern, home equity keeps providing a significant boost to the economy in the form of financial leverage that tens of millions of households can use to finance major purchases or investments,” Barber said. “We can expect to see small movements up or down over the coming months as the housing market moves into its annual slow season.” (source)

Sales of previously owned homes fell 1 percent in September, according to the latest numbers from the National Association of Realtors. Decreasing sales numbers were found in three of four U.S. regions, with only the West seeing an increase. Lawrence Yun, NAR’s chief economist, says sales have been relatively flat despite improving conditions. “Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” Yun said. “There are more inventory choices for consumers, lower mortgage rates than a year ago, and continued job additions to the economy.” Yun also notes that home price increases are moderating, with wage growth now outpacing home price appreciation. That’s all good news for home buyers but it has yet to translate into closed sales. Expectations are that sales will breakout sometime soon but exactly when is anybody’s guess. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates saw mixed results last week, with little movement from the week before 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. Though steady, rates remain up from last month’s lows and that’s pushed demand for mortgage applications lower, with purchase loan activity down 5 percent last week. Joel Kan, MBA’s vice president and deputy chief economist, says buyers are still in better position than they were last year at this time. “Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some home buyers in the market,” Kan said. “For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The quickest way to solve an inventory problem is to create new supply. That’s certainly true for the housing market. When there are few available homes for sale and current homeowners don’t look likely to sell, new home construction can help fill the gap. And luckily for today’s home buyers, builders have been doing just that. In fact, according to one new analysis, roughly 1 million single-family homes were completed in 2023 – the second highest total since before the housing crash and financial crisis nearly 15 years ago. It’s also about 11 percent higher than in 2019, before the pandemic. That’s good news for home shoppers, as more homes available for sale – whether old or new – help keep prices in check. But while the gains are encouraging, we aren’t there quite yet. Estimates show for-sale inventory was down as much as 4.5 million homes as recently as 2022. (source)

Most home buyers need a loan to buy a house, which makes access to credit a potentially important factor in the home buying process – even if it isn’t as closely followed as the ups-and-downs of home prices and mortgage rates. The Mortgage Bankers Association follows access to credit, though, and its monthly Mortgage Credit Availability Index gives potential borrowers a look at whether lending standards are loosening or tightening. In September, the index fell 0.5 percent on a scale where any decline indicates standards have tightened. Joel Kan, MBA’s vice president and deputy chief economist, says economic uncertainty has credit restrained. “Mortgage credit availability tightened slightly in September as lenders remained cautious in this uncertain economic environment,” Kan said. According to Kan, there was a decline in some loan programs for cash-out refinances and jumbo loans but the government index saw an increase due to more VA streamline refinances. (source)

Home builders have a unique perspective on the housing market. After all, their success depends on being able to know what buyers want, where they want it, and when. That’s why the National Association of Home Builders’ monthly Housing Market Index – which measures builder confidence in the market for newly built, single-family homes – is a closely watched barometer of market health. If builders feel good about their prospects, chances are the market is in good shape. The index is scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In October, it saw its second-consecutive monthly improvement, rising to 43 from 41 the month before – with the index component measuring expectations for the next six months up four points to 57. Carl Harris, NAHB’s chairman, says builders feel good about 2025. “While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions,” Harris said. (source)

Fannie Mae’s Economic and Strategic Research Group releases a monthly outlook forecasting what the group believes is ahead for the economy and housing market. In October, the group says the economy is stronger than expected and should slow less than previously thought. The housing market, on the other hand, still depends a lot upon whether – and when – current homeowners decide to move. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says affordability levels hinge on homeowners. “The timing of the long-expected pick-up in home sales activity, as well as a further moderation in home price appreciation, will depend in part on the willingness of current homeowners to relinquish their low mortgage rates by offering their homes for sale,” Duncan said. “Of course, continued strong homebuilding activity will also play a significant role as the shortage of national housing stock remains the primary impediment to affordability.” In other words, as more homes become available for sale – both old and new – buyers will begin to see better deals. (source)