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Fannie Mae’s Home Purchase Sentiment Index measures Americans’ perception of the current housing market and their personal financial situation. The index serves as a gauge of how optimistic consumers are about buying or selling a home. In December, sentiment declined from the month before, with fewer Americans saying it’s a good time to enter the market. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the pandemic may be behind the decline. “The HPSI declined for the second consecutive month and fell to its lowest level since May 2020, as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December – the survey collection period,” Duncan said. But though the index fell from the previous month, 52 percent of respondents still feel it’s a good time to buy. Similarly, about half of respondents said it was a good time to sell a house. The results reflect the cautious optimism potential home buyers and sellers are feeling right now. On the one hand, favorable mortgage rates and pent-up demand are fueling interest; on the other, higher home prices, the pandemic, and low inventory are causing hesitation. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates declined during the last two weeks of 2020. In fact, 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, and 15-year fixed-rate loans. The drop means mortgage rates remain at all-time survey lows. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said record-low rates are good for fixed-rate borrowers. “The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home, as around 98 percent of all applications are for fixed-rate loans,†Kan said. But while rates remains favorable, requests for mortgage applications fell 4.2 percent during the holiday season, mostly due to a 6 percent drop in refinance demand. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Home design trends, by their nature, come and go. There’s always a hot new color or a must-have fashion. And just as quickly as they appear, they’re erased and replaced with the next hot new thing. But when you ask home buyers and homeowners what they want from their homes – beyond the aesthetics – their answers are remarkably consistent. In short, everyone wants their home to be comfortable, efficient, clean, and healthy. That doesn’t change. Home buyers and owners want things like smart thermostats, energy-star appliances, balanced ventilation, leak-detection systems, and other high-performance features that can help lower bills and improve the indoor environment. These have been popular features for years now and have only grown more popular since the onset of the coronavirus. This is no surprise. More time in the house has helped us focus on bettering our homes. And, more than likely, our desire for comfort and wellness at home will continue to live on well after the pandemic has subsided. (source)

Affordability conditions worsened during the final quarter of 2020, according to new numbers from ATTOM Data Solutions. Their fourth-quarter U.S. Home Affordability Report found that homes and condos were less affordable than their historical average in 55 percent of the 499 included counties. That’s up from 43 percent one year ago. Todd Teta, ATTOM’s chief product officer, says affordability has been slipping, but that can change. “Home prices have continued rising throughout 2020 and the housing market has remained remarkably resilient in the face of the brutal economic fallout from the coronavirus pandemic,†Teta said. “The future remains wholly uncertain and affordability could swing back into positive territory. But for now, things are going in the wrong direction for buyers.†The report compared average wage data with median home prices in order to determine whether or not a home buyer’s monthly expenses – including mortgage payment, property tax, and insurance – would require more than 28 percent of their monthly income. (source)

Luxury isn’t easy to define. The dictionary says it’s “the state of great comfort and extravagant living.” But since that leaves a lot to interpretation, we all have different ideas about what luxury really means. This is easy to see when thinking about the housing market. After all, a luxury home in one market can be vastly different than a luxury home in another. So, in order to get a better view of recent home sales, one new report broke them down into five price tiers. The results show that homes in the top – or luxury – tier are selling at a much faster pace than those in the middle and lower tiers. In fact, sales of luxury homes were up 60.7 percent from the year before, while mid-tier priced homes rose 14.8 percent and affordable homes were up 6.8 percent. In short, the luxury home market is far outpacing the rest of the housing market, and it’s not even close. Similarly, vacation- and second-home sales are also seeing a year-over-year bump, with demand for second homes up 100 percent in October. (source)

November is mostly known for darker days, colder weather, and Thanksgiving. It’s not typically known for home shopping. But this year, buyer demand has been anything but typical – and November was no exception. In fact, according to the National Association of Realtors’ most recent Pending Home Sales Index, the number of contracts to buy homes signed during November was the highest ever for the month. Additionally, contract activity was 16.4 percent higher than last year at the same time. Lawrence Yun, NAR’s chief economist, says the backlog of buyers has pushed demand higher, later into the year. “The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” Yun said. Still, despite the fact that demand is higher than normal for the time of year, it was slower than the month before, with the number of pending sales down 2.6 percent from October.

The S&P Case-Shiller Home Price Indices isn’t the only index tracking home-price activity, but it’s among the most closely followed. And, according to their most recent release, prices are rising. In fact, they were up 8.4 percent year-over-year at the end of October. Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, says prices were increasing pre-COVID and have only accelerated since then. “We’ve noted before that a trend of accelerating increases in the National Composite Index began in August 2019 but was interrupted in May and June, as COVID-related restrictions produced modestly-decelerating price gains,†Lazzara said. “Since June, our monthly readings have shown accelerating growth in home prices, and October’s results emphatically emphasize that trend.†The last time home prices increased this quickly was more than six years ago. However, though recent increases have been significant, they’re mostly due to a lack of homes available for sale this fall. As spring approaches, and more homes are listed for sale, price spikes should begin to moderate. (source)

It seems just about everything about the way we live changed in 2020. Home buying was no exception. The coronavirus altered both the way we shop for homes and what we we look for in a house. With more Americans able to work from home, there was a well-documented spike in searches for homes further from city centers, in suburbs and exurbs. There’s also been sustained demand for bigger homes with more rooms. In fact, according to one recent analysis, buyer demand for homes with more bedrooms and extra space saw double-digit increases year-over-year. For example, Atlanta saw a 103 percent spike in buyers searching for five-bedroom homes compared to the same time last year. Similar gains were seen in other cities. Chicago reported a 80 percent increase in showings for four-bedroom homes. Demand for five-bedroom homes was up 73 percent in St. Louis. Overall, it’s clear that there’s a trend toward bigger homes with more space and it’s likely to continue – especially since it looks like many Americans will be able to work remotely, even once the pandemic has subsided. (source)

November sales of newly built, single-family homes were 20.8 percent higher than they were at the same time last year, according to new numbers released by the U.S. Census Bureau and the Department of Housing and Urban Development. The gains are an encouraging sign, especially when combined with recent improvements in residential construction numbers. The new home market is vital to the housing market’s overall health, especially at a time when for-sale inventory is low – as it is now. And since new home construction is the quickest way to add supply when inventory falls behind demand, an accelerating new home market can signal better balance and fewer price spikes in the days ahead. However, while the year-over-year numbers were good, November’s sales pace was slower than the month before, which is a sign that the market may have begun to wind down for the winter. Also in the report, the median sales price of new homes sold in November was $335,300. The average price was $390,100. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were relatively unmoved last week from the week before. Rates for 30-year fixed-rate mortgages with conforming loan balances were flat from one week earlier, while jumbo loans, loans backed by the FHA, and 15-year fixed-rate mortgages all saw declines from the previous week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says rates remain at record lows. “Mortgage rates are closing the year at record lows,†Kan said. “The 30-year fixed rate … is a full percentage point below a year ago.†But while Kan says low rates are helping the market end the year strong, he also notes that tight inventory and higher prices may cause affordability challenges for entry-level and first-time buyers in 2021. “Housing affordability will be worth monitoring next year,†he said. Year-over-year, demand for loans to buy homes was up 26 percent as of last week. Refinance activity was 124 percent higher than one year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.