Housing market conditions can vary depending on a lot of factors. Location is an obvious one. What’s true in one market isn’t necessarily going to be true in others. It isn’t the only factor, though. Markets can also vary depending on price range. For example, over the past several years, the market for luxury homes has behaved differently than the market for typical homes. In fact, according to one recent analysis, luxury home values – defined as the most valuable 5 percent of homes in any given area – have trailed typical home values in annual appreciation. That is, until this year. Since January, luxury homes have been outpacing typical homes, with the typical home price up 3.2 percent year-over-year and luxury homes seeing a 3.9 percent gain. The reason? Well, luxury home inventory has been slower to recover than inventory in the rest of the market. Currently, total inventory is up 22.7 percent over last year, while the number of available luxury homes has increased 15.7 percent. (source)

Rising home prices during the spring sales season pushed the share of equity rich homes higher, according to new data from ATTOM Data Solutions. ATTOM’s most recent U.S. Home Equity & Underwater Report found 49.2 percent of mortgaged residential properties were considered equity rich, meaning the combined amount of loan balances on those properties was less than half their estimated market value. In short, spring was good for homeowners. Rob Barber, ATTOM’s CEO, says homeowner wealth turned for the better. “Homeowner wealth took a notable turn for the better during the second quarter as equity levels piggybacked on some of the biggest home-price spikes we’ve seen in recent years,” Barber said. “After a period where equity seemed stagnant or even declining, this brought another boost of good news for homeowners from the enduring housing market boom.” (source)

When a contract to buy a house is signed, that home’s sale is considered pending until the deal is closed weeks later. That makes contract signings a fairly reliable indicator of future home sales, since most signed offers lead to closed sales. The National Association of Realtors tracks pending home sales for this reason. Its Pending Home Sales Index is released monthly and is considered a good predictor of existing-home sales numbers. In June, the index moved 4.8 percent higher, with improvement seen in each of the country’s four regions. Lawrence Yun, NAR’s chief economist, says the growing supply of available homes is behind the increase. “The rise in housing inventory is beginning to lead to more contract signings,†Yun said. “Multiple offers are less intense, and buyers are in a more favorable position.†(source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were relatively unchanged last week after hitting the lowest level since February the week before. Rates were flat week-over-week, with little movement for 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. Mike Fratantoni, MBA’s senior vice president and chief economist, says flat rates weren’t enough to push demand higher. “Last week, VA refi application volume dropped sharply, which drove the aggregate result,†Fratantoni said. “Borrowers may be waiting for signs that mortgage rates will drift lower as the Federal Reserve begins to cut short-term rates.†Demand for loans to buy homes was down 2 percent from one week earlier and is now 14 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)

The S&P Case-Shiller Home Price Indices is considered among the leading measures of U.S. home prices. It covers all nine census divisions and has data going back nearly 30 years. According to the most recent results, the indices show home prices strong through the first half of the year – though the rate of increase has begun to slow. For example, prices were up 5.9 percent year-over-year in May, down from 6.4 percent the previous month. Still, Brian D. Luke, head of commodities, real & digital assets at S&P, says the first half of the year has been better than previous years. “While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging,†Luke said. “Our home price index has appreciated 4.1 percent year-to-date, the fastest start in two years.†(source)

Fannie Mae’s Economic and Strategic Research Group releases a monthly outlook detailing what they believe is ahead for the housing market and economy. The group forecasts everything from economic growth to home sales, mortgage rates, and home prices. According to the most recent release, affordability conditions are still holding home buyers back but the group sees improvement on the way. For one, better inflation numbers and a slowing labor market should lead the Federal Reserve to cut interest rates this fall, which will help tame mortgage rates. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says prices should also slow. “We continue to expect home price growth on a national level to decelerate – but remain positive – over the near term, but it should be noted that conditions often vary by region, particularly as it relates to supply,†Duncan says. For example, inventory remains tight in the Northeast and Midwest, while Sunbelt metros are now at, or above, pre-pandemic inventory levels. (source)

Home sellers have had a good run over the past few years. Elevated home prices moved even higher during the pandemic and the increases, while slower, have continued in most markets. In fact, according to ATTOM Data Solutions’ second-quarter 2024 U.S. Home Sales Report, the median U.S. home price hit a new record during the second quarter, reaching $365,000. The gains pushed home seller profits higher too, with the typical raw profit back up over $130,000. Rob Barber, ATTOM’s CEO, says profits were up but margins were relatively unchanged. “Prices jumped back upward, which was great news for owners,” Barber said. “So did raw profits. Profit margins also remained historically elevated. But the bottom-line profit-margin trend didn’t move much at all because soaring prices are far from a new thing. Even greater price improvements will be needed to kick margins up over the rest of the year.” (source)

The new home market accounts for just over 10 percent of total home sales. But though it’s only a small slice of overall housing-market activity, it plays an important role. After all, when the new home market is healthy, and builders are building more homes, that adds supply to the inventory of available homes which means more choices for home buyers and fewer price spikes. So what’s happening in the new home market now? Well, according to the latest numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, sales of new single-family homes were relatively flat month-over-month in June, falling 0.6 percent from the month before. The slight decline was mostly due to higher mortgage rates during the month, which slowed buyers. But with rates down since then – and expectations that they’ll ease further as the year goes on – builders are optimistic that conditions will improve and buyers will return. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates fell again last week, as rates continued to ease after spiking earlier this year. Rates were down from the week before for 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. Jumbo loans saw a slight increase from the previous week. Joel Kan, MBA’s vice president and deputy chief economist, says rates are now at a five-month low. “Mortgage rates continued to ease, with the 30-year fixed rate dipping to … the lowest level since February 2024,†Kan said. “Refinance applications were up, driven by conventional and FHA application activity, as some borrowers took the opportunity to act.†The refinance index is now 38 percent higher than last year at the same time. Purchase activity, on the other hand, is still lagging last year’s level, with demand for loans to buy homes 15 percent lower than last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Sales of previously owned homes slowed in June, according to new numbers from the National Association of Realtors. Existing-home sales slipped 5.4 percent from the month before and were also down 5.4 percent from year-before levels. But despite slower sales, Lawrence Yun, NAR’s chief economist, says the market is improving for buyers. “We’re seeing a slow shift from a seller’s market to a buyer’s market,†Yun said. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.†The market is becoming better balanced and that’s good for buyers. The inventory of existing homes is now at a 4.1-month supply at the current sales pace – the highest level in more than four years and nearing the number needed for the market to be considered balanced. (source)