Monthly Archives: February 2025

Sales of newly built single-family homes tumbled in January, falling 10.5 percent from the month before, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. That’s a significant decline but there may be more to the decrease than initially meets the eye. How so? Well, for one, new home sales are often volatile and frequently corrected. For example, last month’s totals were revised upward from the originally reported annual rate of 698,000 units to 734,000 units, making December’s increase even larger. Also, a look at regional numbers shows – much like residential construction data in January – the areas of the country that were hit by winter storms and frigid temperatures during the month saw bigger declines than were seen elsewhere. In fact, sales were down 20 percent in the Northeast but rose 7.7 percent in the West. What does this mean? It means January’s new home sales decline may not be an accurate reflection of the health of the new home market. Put another way, new home sales are just 1.1 percent lower than they were last year at the same time. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to the lowest level since mid-December last week. Rates were down 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. The drop, however, failed to spur demand for mortgage applications. “Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market. This pushed mortgage rates lower with the 30-year fixed-rate decreasing to … the lowest rate since mid-December,” Joel Kan, MBA’s vice president and deputy chief economist, said. “Applications were about one percent lower for the week, which included the President’s Day holiday, as purchase applications stayed flat from a week ago while refinance applications saw a small decline.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Buying a home that needs some work has appeal. Maybe it’s because of the popularity of home-remodeling shows or our desire to find a bargain, but fixer-uppers have generally been popular over the past 10 years. In fact, before the pandemic, listings that mentioned needing work, “TLC,” or having “good bones” were more likely to sell than those that didn’t. But that may be changing. In fact, according to one new analysis of keywords found in listings, “remodeled” is the hot term for home buyers these days, with potential buyers more likely to save a listing or share it with a partner if it’s a home that’s already had work done. Remodeled homes get 26 percent more daily saves and sell for a premium of nearly 4 percent. That’s an additional $13,000, the highest premium of any of the almost 400 terms included in the analysis. It’s also pretty good evidence that today’s shoppers are less interested in doing the work and more interested in finding a home that’s move-in ready. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook detailing what the group believes is ahead for the economy and housing market. According to the most recent release, the economy has started the year off strong and the group believes its momentum will carry forward. But changing trade policy has caused some uncertainty about where things will head from here. Kim Betancourt, Fannie Mae’s vice president of multifamily economics and strategic research, says mortgage rates, in particular, could go either way. “Ongoing uncertainty around trade policy adds risk to our GDP and inflation outlooks, which may have implications for mortgage rates, although the direction – up or down – would depend on a number of factors,” Betancourt said. “Higher mortgage rates would exacerbate the existing ‘lock-in effect’ and worsen affordability, which may then weigh on home sales and mortgage origination activity. Of course, if mortgage rates move lower, we’d likely see an improvement in affordability and a corresponding pickup in housing activity.” The group expects some volatility but ultimately believes rates will remain within a narrow range, ending the year just slightly lower than they are now. (source)

Sales of previously owned homes fell 4.9 percent in January, according to the National Association of Realtors. The month-over-month decrease included declines in the South, West, and Northeast. The Midwest was unchanged from the month before. Lawrence Yun, NAR’s chief economist, says affordability remains a challenge. “Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve,” Yun said. “When combined with elevated home prices, housing affordability remains a major challenge.” Despite the challenge, though, sales were above last year’s level in all regions but the South, which was unchanged. Overall, existing-home sales were 2 percent higher year-over-year in January, marking the fourth consecutive annual increase. Also in the report, total housing inventory was up nearly 17 percent from last year at the same time. (source)

New home construction plays an important role in housing market conditions. When builders are building more homes, the added supply helps level the market and keeps home prices from spiking. Which means, if you’re a prospective home buyer, the number of new homes being built affects you – whether you’re buying a new home or not. So, how’s new residential construction doing these days? Well, the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development shows the number of new, single-family homes that began construction in January was down 8.4 percent from the month before. That’s a significant decline, but analysts say snowstorms and frigid temperatures were the primary reason for the decrease. Winter weather affected much of the country in January and brought numbers down in the Midwest, Northeast, and South. The West, on the other hand, saw a 24.9 percent surge in home building. Overall, the number of single-family homes that began construction in January was just 1.8 percent below last year at the same time. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with slight declines for 30-year fixed-rate loans with conforming balances, 15-year fixed-rate loans, and 5/1 ARMs and increases for FHA and jumbo loans. With rates still elevated, demand for loans to buy homes fell 6 percent week-over-week. Joel Kan, MBA’s vice president and deputy chief economist, says demand was at its slowest pace since the start of the year. “Mortgage rates decreased on average over the week, as markets brushed off unexpectedly strong inflation data,” Kan said. “Despite mortgage rates declining … mortgage applications decreased to their slowest pace since the beginning of the year. Purchase applications were down for the week, as buyers remained on the fence, although loosening inventory may help support activity in the coming months.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Home builders know the housing market as well as anyone. Maybe more. Builders have to know what buyers want, where they want it, and what they’re willing to pay. That’s why the National Association of Home Builders keeps a monthly measure of home builder confidence. After all, if home builders are feeling good about market conditions, chances are the market is in good shape. According to the most recent results of the NAHB’s index, builder confidence slipped back in January after recent gains. The index is scored on a scale where any number above 50 indicates that more builders feel good about conditions than poor. January saw a five point drop to 42. Carl Haris, NAHB’s chairman, said the decline was due to uncertainty about new government policies. “While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty and cost factors created a reset for 2025 expectations …” Harris said. “Uncertainty on the tariff front helped push builders’ expectations for future sales volume down to the lowest level since December 2023.” (source)

Most of us will need a loan to buy a house. But access to credit isn’t fixed. That means it’ll be easier to get approved for a loan at some points more than others. Ultimately, it depends on current lending standards and available loan programs, which is why the Mortgage Bankers Association tracks them with its Mortgage Credit Availability Index. The monthly measure of whether credit is loosening or tightening is a good gauge for prospective buyers as they get their finances in order. Joel Kan, MBA’s vice president and deputy chief economist, says the most recent results should be encouraging. “Credit availability increased to start 2025, driven by conventional credit supply rising to its highest level since June 2022,” Kan said. “There were expanded loan offers for cash-out refinances, along with more jumbo and non-QM loan programs. Although similar to last month, these were limited to borrowers with better credit. All other subindexes saw increases in January, a positive development for the spring home buying season, if these trends continue.” (source)

January isn’t thought of as being among the housing market’s hottest months for home buyers. Buyers are more likely to have their plans on hold in the middle of winter, while they wait to see what the spring market might have to offer. This year, though, January was good to buyers. In fact, it actually broke records. How so? Well, according to one new analysis, it was the best January on record for home seller price cuts. Nearly 23 percent of home sellers lowered their price during the month, giving buyers a break on affordability conditions at a time when mortgage rates were at an eight-month high. The number of cuts was the highest for any January since 2018 and joins a growing list of signs pointing to easing conditions this year. With price increases and mortgage rates expected to calm and new listings rising, home buyers can expect a more favorable market, whether they’re ready to buy today or waiting for spring. (source)