twentieth anniversary
Banner
Menu

Rising Incomes Help Hopeful Home Buyers


The current housing market is a mixed bag. On the one hand, mortgage rates remain near record lows. At the same time, home price increases are causing affordability concerns. Additionally, home buyer demand is high but the number of homes available for sale is low. Because of this, recent results of Fannie Mae’s monthly Home Purchase Sentiment Index have been volatile. In March, sentiment hit an 18-month low. Then, according to the most recent release, it reached an all-time survey high in May. Partly, the increase in optimism was due to a 7 percent jump in the number of Americans who said their income was significantly higher than it was a year ago. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says rising incomes and low mortgage rates could help home buyers facing higher prices and fewer choices. “Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,†Duncan said. “The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer home buying season gains momentum, the effect may be muted by May’s discouraging jobs report.†More here.

Close-up of Andrew Jackson on a $20 bill with detailed textures.

Competition Climbs Among Buyers’ Worries


A new survey of home buyers found the number who say their main concern is competition has nearly doubled since last November, rising from 11 to 19 percent in just seven months. But despite how quickly competition has emerged among buyers’ worries, it still trails affordability – which topped the list at 26 percent. Still, a lower-than-usual number of homes available for sale and high buyer demand means competition is increasingly a problem for home shoppers – and especially those on a budget. A bidding war can put buyers in the position of having to decide whether to break their budget or lose their chosen house. And the issue is especially pronounced on the lower end of the market where many first-time home buyers are searching for a starter home and a way out of high rents. “Though enticed by high rents and low mortgage rates to begin a home search, first-time buyers face a number of obstacles in today’s competitive market,†said Nela Richardson, chief economist for Redfin, who conducted the survey. “In many cities, starter homes have seen the largest price increases because the supply of affordable homes on the market is so low and the demand for these homes is so high.†Fortunately, the spring and summer sales season usually entices more current homeowners to put their homes up for sale, which could provide buyers some needed relief in the coming months. More here.

House with autumn foliage and a partly cloudy sky.

Could A Lack Of Lots Be Driving Prices Up?


When thinking of buying a home, few buyers consider the number of buildable lots in their area. However, builders say a shortage of available lots is keeping them from putting up more new homes. And at a time when the number of homes available for sale is already low, that isn’t good for buyers. That’s because, more new homes on the market would help slow down price increases, improve affordability, and provide buyers with more choices. According to a recent survey conducted by the National Association of Home Builders, 64 percent of builders say the supply of lots in their market is “low†or “very low.†That’s the highest it’s been since the NAHB began tracking lot availability in 1997. Robert Dietz, NAHB’s chief economist, says the problem is growing. “We have monitored lot availability for the last two decades, and it is clear that the scarcity of building lots is growing,†Dietz said. “Whether due to land use policy, geographic constraints or other regulatory constraints, the lack of lots for residential construction will have negative impacts on housing affordability in many markets.†Regionally, the West had the highest number of builders reporting a low number of lots, at nearly 40 percent. In the South, 23 percent of builders said lot supply was low, compared to 18 percent in both the Midwest and Northeast. More here.

Sign indicating new lots available with an arrow pointing right.

Homeownership Month Promotes Benefits Of Buying


Since the financial crisis and housing crash, the real estate market has made a lot of progress. The job market has improved, millions of mortgage modifications helped struggling homeowners keep their homes, home prices have recovered, and interest rates remain near record lows. As part of National Homeownership Month, the Department of Housing and Urban Development hopes to – not only reflect on that progress – but also promote the benefits of owning a home. “A home is the place where we raise our children, establish roots in a community, and plan our future,†HUD secretary Julian Castro said. “The opportunity to be a homeowner should be open to those ready and able to buy a home. As the housing market continues its recovery we must ensure that responsible homeowners have access to credit to make their dreams of homeownership a reality.†Despite the fact that homeownership continually ranks among Americans’ top goals and is still thought of as a vital part of achieving the American Dream, the nation’s homeownership rate is 63.5 percent – just above a 48-year low and well below its 2004 peak of nearly 70 percent. Still, strong buyer demand this spring is further evidence that, given the opportunity, most Americans want to become homeowners. More here.

A quaint suburban house with tall trees and a 'Home Sweet ...' sign.

Mortgage Rates Mixed As Demand Falls


According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications fell last week, dropping 4.1 percent from the week before. The decline included a 4 percent decrease in the refinance index and a 5 percent drop in demand for applications for loans to buy homes. Still, purchase application demand is 28 percent higher than the same week last year and mortgage rates remain near historic lows. Michael Fratantoni, MBA’s chief economist, told CNBC that some of the volatility in the mortgage market is due to uncertainty about whether or not the Fed will raise interest rates this month. “Market expectations for a June Fed hike have increased recently leading to a flattening of the yield curve, as short-term rates have risen more than longer-term rates,†Fratantoni said. “As a result, we saw an increase in rates for 15-year mortgages last week, even as rates on 30-year loans remained unchanged.†In fact, average mortgage rates fell for both 30-year fixed-rate mortgages with jumbo balances and loans backed by the Federal Housing Administration. On the other hand, rates for 30-year loans with conforming balances were unchanged from the week before and 15-year fixed-rate mortgages increased. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Red stylized geometric arrow symbol inside a black frame.

Local Housing Markets Continue To Improve

Though still below it’s all-time high, Freddie Mac’s most recent Multi-Indicator Market Index shows the housing market continuing to improve. In fact, the index – which compares long-term norms to current data in an effort to measure how quickly markets have bounced back following the housing crash – shows a 7.23 percent overall improvement to the national housing market since last year. Additionally, the market has now rebounded 41 percent from its low in October 2010. Len Kiefer, Freddie Mac’s deputy chief economist, says residential real estate should finish the year strong. “The U.S. housing market is poised to have its best year in a decade and the spring home buying season is off to a strong start,” Kiefer said. “Pent up demand for homes and near record-low mortgage rates are bolstering housing markets across the country. The National MiMi currently stands at 83.8, the highest since September of 2008. Home purchase applications are up nearly 14 percent from one year ago, mortgage delinquencies continue to trend down, and robust employment growth are all positive signs.” According to the release, 36 of 50 states and 65 percent of the included metropolitan areas are now within their long-term normal range. Since last year, the most improved cities were Orlando, Denver, Tampa, Cape Coral, and Portland. More here.

Aerial

Real Estate Pros Forecasting A Hot Summer


Realtors know their local real estate market better than anybody. Because of this, the National Association of Realtors conducts a monthly survey of real estate professionals to gauge the current market and the outlook for the future. According to April’s survey, housing market activity is up slightly from one year ago, though many of the fundamentals remain virtually unchanged. Realtors are reporting high levels of demand from buyers but say sales are being held back due to a lack of for-sale inventory, which is also putting upward pressure on home prices in some areas. Despite increasing prices, however, home sales have been improving. In fact, recent sales data shows new and existing home sales both up from one month earlier. Additionally, most economists expect the housing market and economy to continue to improve after a slow first quarter. Still, affordability concerns may be keeping some potential first-time buyers from entering the market. For example, first timers accounted for just 32 percent of sales in April. Historically, first purchases have been closer to 40 percent of total sales. Realtors, however, remain confident in the outlook for the next six months. Summer is typically a busy season and, with help from a seasonal uptick in the number of homes available for sale, conditions should be favorable for prospective home buyers. More here.

Sunny day with sunlight filtering through tree branches above a charming yellow house.

Pending Home Sales Soar To 10-Year High


The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed in any given month. The index is considered a good predictor of future home sales because it tracks signings not closings, which take place roughly a month later. In April, pending sales were up 5.1 percent and reached their highest level since February of 2006. Lawrence Yun, NAR’s chief economist, said demand has exceeded expectations so far this spring. “The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,†Yun said. “The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.†Markets in the South and West were particularly strong in April, with both seeing double-digit increases over the month before. Overall, the number of signed contracts to buy homes was 4.6 percent higher than it was at the same time last year. More here.

A close-up of a 'Sale Pending' sign on a lawn.

Demand For Home Purchase Loans Rises


According to the Mortgage Bankers Association’s Weekly Applications Survey, the number of Americans who requested applications for loans to buy homes rose 5 percent last week. The improvement puts demand for home purchase loans 17 percent higher than it was at the same time one year ago. Lynn Fisher, MBA’s vice president of research and economics, told CNBC purchase application demand rebounded last week after a slight lull. “Purchase applications got back on track last week, resuming the level of activity observed throughout most of April and May,†Fisher said. On the other hand, refinance demand was relatively flat – mostly due to a slight rise in average mortgage rates. In fact, rates were up 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. Also in the report, the average home purchase loan hit an all-time survey high of $307,700. This reflects a lack of homes available for sale at the lower end of the market. Since there are more high-end homes for sale this spring, the average loan size has climbed. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Silhouette of a tree inside a black arrow shape against a bright circular background.

New Home Sales Post Biggest Gain Since ’92

Sales of newly built, single-family homes rose 16.6 percent in April, according to new estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. The gain was the largest month-over-month increase since 1992 and puts new home sales nearly 24 percent higher than they were last year at this time. Combined with rising housing starts, building permits, and sales of previously owned homes, the improvement is another sign that the housing market and economy are gaining strength. And, though economists expected new home sales to increase in April, the actual numbers far exceeded their predictions. In fact, economists polled by Reuters forecast sales rising to a 523,000 unit-rate, while the official estimate came in at 619,000. Regionally, the South, West, and Northeast saw dramatic double-digit increases over the previous month. The Midwest, on the other hand, experienced a 4.8 percent drop in sales. The report also included news that the median price for a new home set a new record at $321,100, up 9.7 percent from last year. More here.

New Home

city cartoon

Thank you for your upload