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Cautious Buyers May Be Overestimating Costs

Affordability is the top concern for potential home buyers entering the summer season. That’s not a surprise. With prices and mortgage rates up, it’s natural that Americans who are hoping to buy might be leery when seeing news of rising housing costs. But, though affordability conditions are challenging in some markets, buyers may have some misconceptions that are adding unnecessary stress and anxiety. For example, according to the results of one recent survey, potential home buyers see saving for a down payment as the biggest obstacle preventing them from buying a house. But, at the same time, they overestimate the amount of money they’ll need to put down in order to buy. The survey found 58 percent of participants said they are planning for a 20 percent down payment. But though that may be the recommended down payment amount, it isn’t required. The National Association of Realtors, for example, found that the median down payment for first-time buyers has been at 6 percent for the past three years. In other words, though home buyers are right to take seriously the costs and responsibilities of becoming a homeowner, they may want to explore all of their options before deciding they can’t afford to buy. More here.

One Way New Homeowners Can Save Money

There are a lot of things you need to set money aside for when youâ€™re getting ready to buy a house. You have to have money for a down payment, closing costs, and moving expenses but you also need to consider how much youâ€™ll need for any future home maintenance. Buying a home means youâ€™re on the hook for any repairs and renovations you need along the way â€“ and you will inevitably run into issues at some point, whether itâ€™s a clogged toilet or a leaky faucet. When it happens, you can pay someone else to fix it or try doing it yourself. Naturally, though, these costs can add up, if you call in a contractor for every loose hinge or minor leak. So itâ€™s a good idea for homeowners to do as much of their own work as possible. And, these days, itâ€™s easier than ever to find how-to videos, tips, and information that can help you become handier around the house. Minor repairs can be surprisingly easy, once you have the right tools and some know-how. So, if youâ€™d like one less thing to save for, start by brushing up on your home improvement skills. More here.

Americans Say Now Is The Time To Sell A House

Depending on your plans, the fact that home prices have been increasing lately could be good or bad. After all, current homeowners who are looking to sell a house will feel much differently about higher prices than a first-time buyer who has to save for a down payment. This reality is reflected in the most recent Home Purchase Sentiment Index from Fannie Mae. The index – which measures Americans’ perception of the housing market and economy – reached a new all-time high in May, backed by spiking confidence among potential sellers. In fact, the number of participants who said now was a good time to sell a house is up 14 percentage points over the same time last year. But Doug Duncan, Fannie Mae’s senior vice president and chief economist, says that the optimism about selling has a flip side. “The HPSI edged up to another survey high in May, bolstered in part by a fresh record high in the net share of consumers who say it’s a good time to sell a home,” Duncan said. “However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presenting a potential dilemma for repeat buyers.” More here.

Mortgage Rates Drop To Lowest Level In Weeks

According to the Mortgage Bankers Associationâ€™s Weekly Applications Survey, average mortgage rates fell last week across all loan categories, bringing rates to their lowest level in six weeks. Rates were down for 30-year fixed-rate loans with conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. The drop brings some relief to spring home buyers, who have been contending with higher prices and rising rates since the start of the season. Once again this week, rates were reacting to concerns about the global economy. â€œConcerns over Italyâ€™s political turmoil, and questions about possible imposition of trade tariffs by the U.S. on its major trade partners, pushed Treasury rates lower this week,â€ Joel Kan, an MBA economist, told CNBC. Whatever the reason for the drop, it was good news for both buyers and homeowners looking to refinance, with the total level of mortgage application demand up 4 percent over the previous week. The MBAâ€™s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

First Quarter Sees Return Of First-Time Buyers

First-time home buyers are an important demographic when it comes to the health of the housing market. Because theyâ€™ve historically accounted for about 40 percent of home sales, they garner a lot of attention from experts, economists, and analysts hoping to gauge how the market is doing and where itâ€™s headed. In recent years, first-time buyers have been less active than usual. The financial crash and recession led to a long period where Americans of typical home-buying age did not have the economic stability or job security to feel comfortable pursuing homeownership. Then, even after economic conditions began to improve, a lack of affordable, starter homes kept many younger Americans on the sidelines. This year, conditions are still challenging but new numbers from Freddie Mac show things may finally be changing. Thatâ€™s because, first quarter results show that first-time buyers accounted for 46 percent of new mortgages during the early part of this year. Thatâ€™s the largest quarterly share since 2012 and an indication that young Americans are finally becoming more active in the real-estate market. More here.

Pending Home Sales Slow Slightly In April

Between the time an offer is accepted and the deal is closed, a homeâ€™s sale is typically referred to as pending. Thatâ€™s because, thereâ€™s a chance, during this period, that the sale wonâ€™t go through, as there are a number of hurdles yet to clear. The buyerâ€™s loan and financing have to be finalized and steps like the home inspection and appraisal can also alter the terms of the deal or end it altogether. In short, buying a home is a major transaction and thereâ€™s usually a few weeks between the contract signing and closing. For that reason, the National Association of Realtors tracks pending home sales each month, as they can be a good indicator of what future home sales will look like. According to their most recent report, pending sales fell 1.3 percent in April, with most regions flat from the month before. The slight decline was mostly due to a drop in the Midwest. Still, the report is an indication that inventory levels in much of the country are holding sales back. With a fewer-than-normal number of homes for sale, buyers are having more difficulty locating the right house and, as a result, the number of home sales has not matched the level of demand. More here.

How Much Does Your Neighborhood Matter?

When you buy a house, youâ€™re also buying the surrounding neighborhood. And, depending on your lifestyle and wishlist, the neighborhood may be even more important to you than the actual home youâ€™re buying. After all, most of your life happens outside your home. So your proximity to schools, shopping, healthcare, recreation, and nature will have a large effect on how much you enjoy living in a particular house. In short, finding your dream house in the wrong neighborhood could make it a nightmare. Unconvinced? Well, a recent survey of Americans found large majorities who said the feel of a neighborhood was important when deciding where to live. In fact, 80 percent said the surrounding neighborhood had to fit their personality and an almost equal amount said theyâ€™d consider moving if they found they didnâ€™t like their new neighborhood. In other words, when shopping for a new house, be sure to spend as much time considering the area around it as you do the areas inside it. It could even work out to be a better idea to find a smaller house in a great location than a big house somewhere you may grow to dislike. More here.

Average Mortgage Rates Down From Previous Week

Home buyers looking to buy a home this spring have their eye on two things: home prices and mortgage rates. Lately, both have been rising but the latest numbers from the Mortgage Bankers Associationâ€™s Weekly Applications Survey offers some potential relief. Thatâ€™s because the survey â€“ which has been conducted every week since 1990 and covers 75 percent of all retail residential mortgage applications â€“ found average mortgage rates were down last week across all loan categories, including 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, MBAâ€™s associate vice president of economic and industry forecasting, told CNBC rates fell slightly last week due to concerns about the global economy. â€œRates slipped slightly over the week as concerns over U.S. trade policy and global growth sent some investors back to safer U.S. Treasurys,â€ Kan said. In short, the decline may be a temporary break, as long-term trends remain in place. Still, lower rates, regardless of the reason, are good news for buyers. More here.

The Latest On Where Home Prices Are Headed

Home prices are a top concern for both home buyers and sellers. After all, a lot of the calculus that goes into determining whether or not itâ€™s a good time to sell or buy a house is based on where home values are and where they are expected to be in the future. For that reason, itâ€™s good to follow the S&P Case-Shiller Home Price Indices, as they are considered the leading measure of U.S. home prices. According to the latest data, prices have continued to rise at around the same pace theyâ€™ve been increasing, with both month-over-month and year-over-year data showing little change. In short, prices are going up but no faster than they have been. David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, says things arenâ€™t expected to change any time soon. â€œUnless inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising,â€ Blitzer says. But despite rising prices, Blitzer notes that the market is calmer today than it was during the last price boom in the early 2000s. More here.

Why The New Home Market Matters To You

If you arenâ€™t in the market for a new home, why should you care about the new home market? Well, for starters, it plays a very important role in the health of the housing market. And that affects all buyers, not just new home buyers. How? Simply put, new home construction is the quickest way to add homes for sale to the market. And, when more homes are added, buyers can be more choosy, which results in less competition and fewer home price spikes. In other words, when new homes are being built and sold, the overall real estate market benefits, including buyers looking for an existing home in a more affordable price range. So, if thatâ€™s true, howâ€™s the new home market doing? According to the latest numbers from the Commerce Department, new home sales were 11.6 percent above last yearâ€™s level in April, which is good. But, though year-over-year numbers are positive, recent revisions to totals from the first three months of the year were revised downward, indicating some lingering weakness in the market. More here.