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Measuring the number of contracts to buy homes signed in a given month will give you a good idea of what the following month’s home sales numbers will look like. After all, signing a contract to buy is the first step in a closing process that usually lasts a few weeks. Which means a signed contract today will be a closed home sale in about a month. It also means The National Association of Realtors’ Pending Home Sales Index can give us an early insight into what’s happening in the housing market now. The NAR’s most recent release says contract signings fell 1 percent in July. But while the decline indicates the market is still slowing, the rate of decline improved greatly from the previous month, according to the new numbers. In fact, the previous month’s index saw an 8.6 percent drop. Lawrence Yun, NAR’s chief economist, says the market should soon begin to stabilize. “Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5 percent by the end of this year and into 2023,†Yun said. “With mortgage rates expected to stabilize … alongside steady job creation, home sales should start to rise by early next year.†(source)

Fannie Mae’s Economic and Strategic Research Group releases a forecast each month detailing their outlook for the economy and housing market in the months ahead. The group looks at things like consumer spending, GDP growth, home sales, and mortgage originations and predicts where they’re headed through the end of this year. Their August release contains few surprises for anyone thinking about buying or selling a house. In short, it says the housing market has been softening due to rapid home price increases and the recent spike in mortgage rates. Fannie Mae believes the shift in affordability conditions will cause home sales to fall 16.2 percent this year from the year before. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the broader economy, and the Fed’s response to it, will determine how quickly things level off. “The question for many market observers is how quickly, and with home much additional tightening, the core inflation rate will come down to the Fed’s preferred target,†Duncan said. “In our view, the labor market’s continued strength suggests that the Fed is likely to maintain its aggressive posture through the end of the year.†(source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week 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. As a result, home purchase activity slowed, dropping 1 percent from the week before. Demand for home purchase loans is now 21 percent lower than last year at the same time. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says last week’s numbers may indicate a shift in who’s buying right now. “Last week’s purchase results varied, with conventional applications declining 2 percent and government applications increasing 4 percent, which is potentially a sign of more first-time home buyer activity,†Kan said. “The average purchase loan size continued to trend lower, as purchase activity at the high end of the market is weakening.†The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

U.S. Home values have been rising steadily for years now. The pandemic caused them to accelerate, but it’s not as though they just start increasing two years ago. In fact, according to one monthly measure, there hasn’t been a month when they haven’t increased since 2012. There were times, of course, when the increases would slow, but no month in the past 10 years saw the typical home value decline month over month. It did in July, though, falling 0.1 percent from the month before. The typical home, according to the numbers, now costs $357,107 – $366 less than it did in June. The improvement was small, but still encouraging for buyers shopping for a home in a tight market. It also follows a trend. The typical home value has been slowing for a few months now, after peaking in April. Month-over-month growth was near 2 percent earlier in the year and had slowed to 0.8 percent by June. It’s just another sign that the market is rebalancing, with buyer demand slower than before and the number of available homes rising. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates for 30-year fixed-rate mortgages with conforming loan balances fell last week from the week before. The drop came during a week where rates for FHA, jumbo loans, and 15-year fixed-rate loans all saw slight increases. Overall, though, rates were relatively calm. They’re also down significantly from their peak in June. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says further declines could bring hesitant home buyers back to the market. “If home price growth slows more significantly and mortgage rates move lower, we might see some purchase activity return later in the year,” Kan said. For now, purchase activity remains depressed. Last week, it fell 1 percent from the week before and was 18 percent lower than last year at the same time. The MBA’s weekly survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. (source)