The National Association of Home Builders’ Housing Market Index is a monthly measure of interest in the new home market. The survey asks builders for their view of current conditions and is considered an important indicator, since home builders have an unique perspective on things like buyer demand and foot traffic. According to the most recent survey, home builders remain solidly optimistic about demand for new single-family homes, though there are a number of lingering concerns. Robert Dietz, NAHB’s chief economist, says the market’s current challenges are particularly daunting for first-time and entry-level buyers. “Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers” Dietz said. “And while new home sales picked up in March and April, builders continue to grapple with excessive regulations, a shortage of lots and lack of skilled labor that are hurting affordability and depressing supply.” Still, despite these challenges, regional results show, over the past three months, only the South has seen a drop in confidence, while the Northeast, Midwest, and West have all made gains or remained steady. More here.
Naturally, when there are more home buyers than homes for sale, prices and competition increase. That’s why, the fact that there are a lower than normal number of homes for sale ranks high among the main issues affecting today’s home buyer. But what are the factors causing for-sale inventory to lag in markets across the country? Well, one of them is that an increasing number of homeowners have decided that, rather than moving, they’d prefer to renovate or remodel the home they have. In fact, according to Harvard’s Joint Center For Housing Studies, home improvement spending is up. Since 2015, it’s risen 10 percent. And when compared to 2010, it’s up 50 percent. According to the report, older homeowners are driving the trend. “Homeowners age 55 and over have dominated the home remodeling market for nearly a decade, overtaking middle-aged owners as the primary source of home improvement spending,” the report says. “Older homeowners are living longer and are increasingly willing and able to spend for home improvements that allow them to remain safely in their current homes.” More here.
Buying a home involves more than just finding a house you like, making an offer, and moving in. There are many steps along the way and each has an important purpose. Take the inspection, for example. After you’ve had your offer accepted, the home will need to be professionally inspected. This serves a couple of different purposes. First, it provides the home buyer with necessary information about the health of the home and what it’ll take to maintain it. An inspector looks at things like the roof, structural and mechanical issues, plumbing, electrical systems, and the overall condition of the home. Having a professional go through the house can help reveal issues home buyers may’ve missed when walking through the home. And, if there are serious issues with the home’s mechanical systems or structure, it gives the buyer an opportunity to renegotiate their offer to account for the previously undetected problem. For these reasons, it’s a good idea for the home’s buyer to be present during the home inspection. It’s a good opportunity to get to know the home you’re buying and also a chance to ask questions about proper care and maintenance . More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell 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. With last week’s drop, rates are now at their lowest level since September 2017. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the decline led to a surge in demand for loans. “With the 30-year fixed-rate mortgage at its lowest level since September 2017, purchase activity was more than 10 percent higher than a year ago,” Kan said. “Demand is still relatively strong, but there is likely restraint from some prospective buyers, driven by some economic uncertainty. Furthermore, housing supply is still very tight for first-time buyers.” Despite those challenges, however, mortgage application demand was up almost 27 percent from one week earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Like any market, the housing market has ups-and-downs. There are years when conditions favor buyers and then there are years when sellers have all the negotiating power. Unfortunately, when you need to make a move, you don’t always have the luxury of waiting until market conditions are perfect for you. The good news, though, is that, for today’s home buyer, conditions are trending in the right direction. In fact, according to a new report, nearly three-quarters of the nation’s 100 largest metropolitan areas are now more affordable than they were last year at the same time. What’s driving the improvement? Well, there are a few things helping make conditions more favorable for home buyers. For starters, mortgage rates have recently declined. Combined with higher wages and an increasing number of homes for sale, the drop in mortgage rates has helped counteract the effects of rising home prices. And, though prices are still increasing, the rate at which they are has continued to slow. For example, data from May shows year-over-year price increases were the slowest in three years. In other words, in most markets, home prices are beginning to moderate at the same time other buying conditions have improved. In short, buying a house is becoming more affordable in most markets. More here.
Some home features are necessities and others are luxuries. For example, kitchens are a must. You’re not going to find many homes for sale that don’t have a kitchen. On the other hand, garages aren’t. Not all homes come with a garage. But while they might not be an absolute must, garages – depending on where you live – may be a luxury buyers are willing to pay more for. But just how much do buyers value garages? Well, according to one recent analysis, homes with garages sell for nearly $25,000 more than homes without – an approximately 12 percent premium. But, like a lot of things, where you are is a big factor in determining how valuable a garage might be. For example, homes with garages sell for 38 percent more than homes without them in Chicago, where the winters can be harsh and snowy. But in warmer weather areas like Los Angeles or Miami, garages aren’t as desirable. In fact, in some cities, only around half the homes sold last year even had a garage, which is quite a difference from Midwestern cities like Cleveland, where over 90 percent of homes had one. More here.
Determining when it’s a good time to for you to buy a house means thinking about things like market conditions, your life goals, job security, and personal finances. That’s why Fannie Mae’s monthly Home Purchase Sentiment Index surveys Americans about those things in an effort to gauge perceptions of the current housing market. And, according to the most recent results, Americans are becoming more enthusiastic. In fact, there was a 13 percent month-over-month increase in the number of respondents who said now is a good time to buy a house. Doug Duncan, Fannie Mae’s chief economist, says there are a lot of positive trends currently supporting buying sentiment, though there are also some remaining concerns. “Another sharp rebound in the ‘Good Time To Buy’ component lifted the HPSI nearer its survey high set during last year’s home buying season, though several uncertainties remain,” Duncan said. “While consumers’ more favorable mortgage rate outlook suggests continued support for housing affordability, potential home buyers still face supply constraints. Additionally, while the survey recently resumed its upward trend, consumers’ sense of income growth and job security have moved lower from the highs established earlier in the year, which, if sustained, could weigh on the housing market in the second half of the year.” More here.
Housing market conditions are largely location based. What’s true in one neighborhood might not be true in another. But a lot of what causes those differences is rooted in home values. In other words, conditions on the high end of the market can sometimes look very different than those on the lower end of the market. That’s certainly true today. For example, recent data shows that the number of homes for sale above $750,000 was up 11 percent in April, while, at the same time, the number of available homes below $200,000 fell 8 percent. Combine that with the fact that a significant share of buyer demand is coming from first-time home buyers who are likely looking for something affordable and you can begin to see the problem. The high end of the market is currently cooling off, with an increasing number of available homes and fewer active buyers. At the same time, the market for affordable, starter homes continues to be competitive, with more buyers than homes for sale. This disparity explains why, though recent indicators show improving conditions for buyers, home sales numbers have not yet shown a corresponding increase. As more affordable homes become available, the market will balance and sales will begin to climb. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell 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 mortgages. The drop brought rates to their lowest point since the first week of 2018. Mike Fratantoni, MBA’s senior vice president and chief economist, said rates are decreasing because of concerns over trade tensions. “Mortgage rates dropped to their lowest level since the first week of 2018, driven by increasing concerns regarding the ongoing trade tensions with China and Mexico,” Fratantoni said. “Some borrowers, particularly those with larger loans, jumped at the opportunity to refinance, bringing the index and average refinance loan size to their highest levels since early April.” Unfortunately, purchase application demand didn’t see a similar bounce. In fact, demand for applications for loans to buy homes fell from one week earlier. Fratantoni suspects the decline was due in part to the Memorial Day holiday. More here.
Buying a house is a major financial transaction. So, it makes sense that you’d want to take your time and not rush into anything. Unfortunately, though, buying a house also requires you to act fast, especially in a competitive market. If you spend too much time deliberating, you may lose the house to a buyer who’s quicker than you and makes an offer while you’re still thinking it over. In other words, the home buying process can sometimes make you feel like you have to rush. This is particularly true for buyers who haven’t been through the experience before and don’t know exactly what to expect. That’s what a recent survey of homeowners found, anyway, The survey – which asked homeowners for their views on homeownership and their regrets and expectations – found that the vast majority of young homeowners (between 18 and 34 years old) had at least one regret about their home. And, among those regrets, feeling like they rushed their decision and didn’t have a chance to consider all the options earned the top spot. In fact, 29 percent of young homeowners said they regret rushing the process. By comparison, just 12 percent of older buyers said they felt rushed. More here.