property management Archives

Market For New Homes Strong In January

In January, sales of newly built single-family homes increased 3.7 percent over the previous month and are now 5.5 percent higher than last year at the same time, according to new numbers released by the U.S. Census Bureau and the Department of Housing and Urban Development. But though the improvement was solid, it didn’t meet economists’ expectations. Surveyed economists were predicting a 6.3 percent sales increase. Weather could be among the possible reasons sales didn’t perform as well as expected. For example, a look at regional results shows sales up by double digits in the Northeast and Midwest. The South also saw gains, rising 4.3 percent from the month before. In the West, however, sales fell – which may be due to the fact that the west coast has had an unusually rainy winter. Overall, though, the news was positive, with sales signaling a boost in consumer confidence and a healthy level of demand among prospective buyers. It also shows that interested buyers have not been deterred by the rise in mortgage rates. The median sales price of new homes sold in January was $312,900. The average sales price was $360,900. More here.

Is January’s Sales Spike A Sign For Spring?

There has been a lot of discussion lately about what the housing market will look like this year. Will higher mortgage rates and rising prices hold off buyer demand or will consumer confidence and a better job market fuel a spike in sales regardless of what rates and prices do? One early answer comes in the form of the National Association of Realtors’ latest home sales figures. In January, for example, the number of previously owned homes that were sold was 3.3 percent higher than the month before and reached its strongest pace in a decade. This could be a sign that this spring’s real estate market will continue to build on last year’s strength. Lawrence Yun, NAR’s chief economist, says the January report shows that consumers are coming out despite the changing landscape for home buyers. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of the year appear to have sparked considerable interest in buying a home,” Yun said. “Market challenges remain, but the housing market is off to a prosperous start as home buyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.” Regionally, home sales saw strong gains in the West, South and Northeast but fell 1.5 percent in the Midwest. Also in the report, home prices experienced their biggest increases over last year in the West, South, and Midwest. The Northeast, on the other hand, only saw a modest increase year-over-year. More here.

Mortgage Rates See Slight Increase Last Week

Average mortgage rates were up last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. Mortgage rates increased across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, 15-year fixed-rate loans, and mortgages backed by the Federal Housing Administration. Despite the increase, however, rates remain roughly within the same range they’ve been since they jumped last November. Joel Kan, MBA’s associate vice president of industry surveys and forecasting, says last week’s increase was related to expectations that the Fed might raise interest rates soon. “Rates were up last week as markets assessed that the Fed might increase rates sooner than expected on the strength of a recent pick-up in inflation readings” Kan told CNBC. Whatever the reason, higher mortgage rates have taken a toll on refinance activity, which dropped again last week. Demand for loans to buy homes also fell last week and, according to Kan, isn’t as high as it usually is at this time of year. Typically, buyers are beginning the mortgage process in anticipation of the spring season. This year’s lull may be due to higher interest rates, though it may also be the result of there being fewer homes available for sale in many markets across the country. More here.

Buying A Home Remains An Affordable Choice

Despite rising prices and higher mortgage rates, an analysis of homes sold during the final quarter of 2016 found that 59.9 percent of both new and existing homes were affordable to a family earning the median income of $65,700. The numbers – from the National Association of Home Builders Housing Opportunity Index – show that the majority of homes available for sale are still within reach for Americans hoping to buy this year. Robert Dietz, NAHB’s chief economist, says buying remains an affordable choice, despite the fact that affordability conditions fell slightly from the previous quarter. “Affordability remains positive nationwide even as demand is outstripping supply in many markets,” Dietz said. “Though mortgage rates are rising, incomes should rise faster as well, helping to keep home prices affordable.” The report found the national median home price increased to $250,000 in the fourth quarter, up from $247,000. Still, a stronger job market and rising wages should help offset the effects of higher prices and rising mortgage rates. In addition, builders remain confident that the market will continue to improve this year, which could lead to more new homes being built. As more homes become available for sale, price increases should begin to moderate, which would help improve affordability conditions even further. More here.

Mortgage Rates Mixed In Latest Survey

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up and down last week. For example, rates for 30-year fixed-rate loans with conforming balances fell, while jumbo loans moved up slightly. On the other hand, mortgages backed by the Federal Housing Administration saw a decline and rates for 15-year fixed-rate loans were unchanged from the week before. But despite the fact that rates remained within a fairly steady range last week, demand for mortgage applications was down overall. Refinance activity fell to an eight-year low – mostly due to mortgage rates moving higher over the past few months. At the same time, purchase activity is 3 percent higher than it was at the same time last year, though down from the week before. In other news from the MBA, mortgage credit availability increased for the fifth consecutive month in January. That’s good news for prospective buyers. When lending standards are easing, it makes it more likely that qualified home buyers will be approved for a loan. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of retail residential mortgage applications. More here.

Will Wage Increases Offset Affordability Worries?

Buying a home is not something many people do without weighing the pros and cons. After all, there are a lot of factors that play into whether or not a homeowner decides to sell their house or a renter makes the jump and buys a home of their own. Mortgage rates, home prices, employment conditions, and personal finances can all play a role for Americans deciding whether or not to enter the housing market. For this reason, Fannie Mae’s monthly Home Purchase Sentiment Index measures how consumers are feeling about their financial situation and the real-estate market in an effort to gauge overall optimism and how likely Americans are to buy or sell a home this year. In January, the index moved up after five consecutive months of decline. The bump in optimism was mostly related to an increasing sense of job security and a spike in the number of respondents who said their household income is significantly higher than it was at the same time last year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says optimism about economic conditions is high but whether that means more home buyers and sellers this spring remains to be seen. “Any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan said. More here.

Mortgage Rates Moved Higher Last Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage interest rates moved up last week. Rates increased for 30-year fixed-rate loans with both jumbo and conforming balances, as well as 15-year fixed-rate mortgages. Loans backed by the Federal Housing Administration saw rates flat from the week before. The rate increase contributed to a 3.2 percent drop in the number of Americans requesting applications for loans last week. Another reason for the drop in demand, according to MBA chief economist, Michael Fratantoni, was changes to a proposal that would’ve reduced mortgage insurance premiums on FHA loans. “Following the decision to suspend a proposed decrease in the FHA mortgage insurance premium, FHA refinance applications dropped more than 25 percent, while FHA purchase applications fell almost 6 percent,” Fratantoni told CNBC. Still, even with last week’s decline, the number of applications for loans to buy homes remains higher than it was last year at the same time and Fratantoni continues to believe home sales this year will exceed last year’s levels. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Pending Home Sales Rise In December

When a buyer signs a contract to purchase a home, it is referred to as a pending sale because it usually takes a few weeks before the transaction closes and the house is considered officially sold. Since most of these transactions end in a sold house, the National Association of Realtors tracks them as a way of predicting the number of final sales that will be seen in coming months. In December, the NAR found pending sales up 1.6 percent from the month before. Lawrence Yun, NAR’s chief economist, says the year ended on a high note. “Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract,” Yun said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs.” Yun also points out that home sales figures vary depending on the price of the house. For example, sales of homes above $250,000 were up 10 percent over the year before in December. By comparison, sales of homes under $100,000 fell 11.6 percent. This indicates that there are more homes for sale at the higher end of the market than there are at more affordable levels. However, an expected increase in the number of new homes built this year could help balance the market, offering buyers more choices and helping to moderate future price increases on existing homes.

House Payment Less Than Rent In Most Markets

An analysis of data from the U.S. Department of Housing and Urban Development and the Bureau of Labor Statistics found that a monthly house payment – including mortgage, property taxes, and insurance – is more affordable than rent in 66 percent of the 540 counties included in the report. The 2017 Rental Affordability Report, released by ATTOM Data Solutions, shows that buying a house remains an affordable choice for Americans in most markets. Daren Blomquist, senior vice president of ATTOM, says that can change quickly, however. “While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” Blomquist said. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make the leap this year.” Still, rent is rising faster than home prices in nearly 40 percent of U.S. housing markets, which could make the choice between buying and renting a close call even with higher mortgage rates. To gauge the affordability of renting versus buying, the report compared fair market rent on a three-bedroom property to the monthly house payment on a median-priced home in the 540 counties with more than 900 home sales. More here.

Existing Home Sales Have Best Year Since 2006

In 2016, sales of previously owned homes reached their highest level in 10 years, according to new estimates from the National Association of Realtors. A combination of low mortgage rates and an improving economy helped push sales higher than the year before. Still, they remain about 1 million short of where they were in 2006. Lawrence Yun, NAR’s chief economist, says conditions were favorable for most of the year but December sales declined from the month before. “Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” Yun said. “However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.” In fact, sales were down 2.8 percent from November, though they remain 0.7 percent higher than they were a year earlier. Still, lower-than-normal inventory levels mean prices could continue to see upward pressure unless more homeowners put their homes up for sale or new home construction ramps up this year. Also in the report, home prices rose 4 percent from December 2015 and inventory has now fallen year-over-year for 19 consecutive months. More here.