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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)

The number of contracts to buy homes signed in May fell 2.1 percent from the month before, according to new numbers from the National Association of Realtors. The decline was mostly due to a more than 5 percent drop in the South. The West and Northeast both saw increases, while the Midwest was relatively flat from the month before. The numbers are more evidence that the spring market has been slower than expected. Lawrence Yun, NAR’s chief economist, thinks we may be at a turning point. “The market is at an interest point with rising inventory and lower demand,†Yun said. “Supply and demand movements suggest easing home price appreciation in upcoming months … In the second half of 2024, look for moderately lower mortgage rates, higher home sales, and stabilizing home prices.†If he’s right, it’ll be good news for prospective home buyers, getting ready to start shopping homes for sale. (source)

The U.S. Census Bureau and the Department of Housing and Urban Development released their monthly New Residential Sales report for May. The report, which tracks the number of new homes sold during the month, found sales down significantly from April. In fact, new home sales fell 11.3 percent month-over-month. The decline was likely due to mortgage rates, which spiked at the end of April and may’ve caused buyers to hesitate. But though the latest numbers were disappointing, the report came with a revision to April’s sales numbers, which now show sales up rather than down, as initially reported. Also in the report, the median sales price of new houses sold in May was $417,400. The average sales price was $520,000. There is currently a 9.3-month supply of available new homes for sale – a 16-year high. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly down last week. Rates declined from the previous week for 30-year fixed-rate loans with both conforming and jumbo balances. They also fell for 15-year fixed-rate loans, though FHA loans and 5/1 ARMs saw increases from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says rates are now at a three month low. “Mortgage rates were mostly lower last week, with the 30-year fixed rate declining slightly to … the lowest level in more than three months,†Kan said. As a result, demand for loans to buy homes increased, with FHA and VA loans seeing gains of more than 2 percent. Purchase activity remains lower than last year, though, with demand from buyers now 13 percent below the same week one year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Coming up with a down payment can be an obstacle for some buyers, especially in the aftermath of pandemic-era price increases. Buying a home has gotten more expensive over the past few years and affording the upfront costs requires a plan. Fortunately, home buyers have options. For one, they don’t have to have a full 20 percent down payment in order to purchase a home. In fact, according to one recent survey, 48 percent of recent buyers put down less than 20 percent when buying their home. Additionally, home buyers don’t have to do it all on their own. The same survey found 43 percent of buyers said they used a gift from family or friends for at least part of their down payment. That’s not uncommon, especially among first-time home buyers. But the share of home buyers who used a gift as part of their down payment has been rising. It’s now the highest it’s been since 2018. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook covering its expectations for the economy and housing market. In June, the group adjusted its forecast for total home sales this year, lowering expected annual gains to 1.3 percent from a previous projection of 2.8 percent. But while the group sees weaker than expected home sales ahead, it also says the economy is showing signs of slowing – which could help lower mortgage rates and improve overall affordability. “The economy appears to be slowing, and recent readings offer hope that inflation is cooling after progress on that front stalled in the first quarter – a trend that will likely need to be sustained for the Fed to feel comfortable cutting rates,†Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. Additionally, the group notes that the number of homes for sale is rising and the trend should lead to decelerating home price growth. In short, affordability challenges remain but prospective home buyers may soon see relief as the market gains better balance. (source)

New numbers from the National Association of Realtors show the inventory of homes for sale was up another 6.7 percent in April, pushing available supply 18.5 percent higher than it was last year at the same time. Lawrence Yun, NAR’s chief economist, says that’s good news for buyers. “Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” Yun said. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.” But while rising inventory is undoubtedly good for buyers, the market is still challenging. Median prices hit an all-time high in May while sales were largely unchanged from April. Overall, sales of previously owned homes fell 0.7 percent month-over-month and are now down 2.8 percent from year-before levels. (source)

The National Association of Home Builders’ Housing Market Index is a monthly survey measuring builder confidence in the market for newly built homes. The survey asks builders for their perception of current sales conditions, expectations for the next six months, and home buyer traffic. Responses are scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In June, the index fell two points to 43. Carl Harris, NAHB’s chairman, says interest rates are keeping conditions challenging. “Persistently high mortgage rates are keeping many prospective buyers on the sidelines,†Harris said. “Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages, and a dearth of buildable lots.†But challenging conditions for builders may have benefits for buyers, as the survey also found an increasing number of builders cutting prices and offering incentives to entice home shoppers. In fact, twenty-nine percent of builders reported cutting prices, up from 25 percent the month before. The average reduction was 6 percent. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from one week earlier. Rates declined 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 improvement helped push demand for mortgage applications higher, rising 0.9 percent from the week before. Mike Fratantoni, MBA’s senior vice president and chief economist, says rates are now lower than they’ve been since the end of March. “Mortgage rates dropped last week following the latest inflation data and the FOMC meeting, with the 30-year conforming rate dropping to … its lowest level since the end of March,” Fratantoni said. “Purchase applications increased a small amount for the week, led by applications for conventional loans.” Despite increasing demand, purchase volume remains 10 percent lower 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)