Americans started feeling better about the housing market as it headed into the summer season, according to the latest survey results from Fannie Mae’s monthly Home Purchase Sentiment Index. The percentage of survey respondents who said it’s a good time to buy a home rebounded in June, with a 5 percent increase over the month before. The share who say it’s a good time to sell also improved, rising 2 percent from May. Mark Palim, Fannie Mae’s vice president and deputy chief economist, says affordability remains a concern, despite the optimistic turn. “Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both home buying and home selling conditions,†Palim said. “If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand.†(source)

ATTOM Data Solutions keeps a quarterly record of how affordable it is to buy a house based on monthly homeownership expenses for a median-priced home, including mortgage payments, property taxes, and insurance. Its U.S. Home Affordability Report looks at data from 589 counties to determine whether homeownership is more or less affordable today compared to historical levels. According to the most recent report, affordability was more challenging during the second quarter, as prices continued to increase and mortgage rates briefly spiked. In fact, 582 of the 589 analyzed counties were less affordable than in the past. Rob Barber, ATTOM’s CEO, says some of the affordability crunch was seasonal. “It’s common for these trends to intensify during the spring buying season when buyer demand increases,†Barber said. “However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012.†(source)

Home buyers got a bit of a break in May, according to new numbers from the Mortgage Bankers Association. The MBA tracks mortgage payments each month with its Purchase Applications Payment Index – which measures mortgage payments relative to income. In May, the index fell 1.6 percent, indicating affordability improved. In fact, the national median mortgage payment fell to $2,219 from $2,256 the month before. For borrowers applying for lower-payment mortgages, the median payment fell to $1,508. Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America, says mortgage rates calmed in May after spiking in April. “Home buyer affordability conditions improved in May as slightly lower mortgage rates and an uptick in housing inventory slightly eased the recent rise in application payment amounts,†Seiler said. The MBA is forecasting further affordability improvement as the year goes on, with lower rates and slowing home-price growth in the months ahead. (source)

The S&P Case-Shiller Home Price Index has been tracking home prices for decades and is among the most closely followed measures of US home values. The index is based on a three-month moving average and covers all nine census divisions. According to the most recent release, home prices continue to rise, though at a slightly slower pace than before. For example, the National Index found prices up 6.3 percent from last year at the same time, which is just short of the 6.5 percent year-over-year gain found in last month’s report. Brian D. Luke, head of commodities, real & digital assets at S&P, says prices look to be on a similar path as last year. “2024 is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall,†Luke said. “Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year.†(source)

The number of contracts to buy homes signed in May fell 2.1 percent from the month before, according to new numbers from the National Association of Realtors. The decline was mostly due to a more than 5 percent drop in the South. The West and Northeast both saw increases, while the Midwest was relatively flat from the month before. The numbers are more evidence that the spring market has been slower than expected. Lawrence Yun, NAR’s chief economist, thinks we may be at a turning point. “The market is at an interest point with rising inventory and lower demand,†Yun said. “Supply and demand movements suggest easing home price appreciation in upcoming months … In the second half of 2024, look for moderately lower mortgage rates, higher home sales, and stabilizing home prices.†If he’s right, it’ll be good news for prospective home buyers, getting ready to start shopping homes for sale. (source)

The U.S. Census Bureau and the Department of Housing and Urban Development released their monthly New Residential Sales report for May. The report, which tracks the number of new homes sold during the month, found sales down significantly from April. In fact, new home sales fell 11.3 percent month-over-month. The decline was likely due to mortgage rates, which spiked at the end of April and may’ve caused buyers to hesitate. But though the latest numbers were disappointing, the report came with a revision to April’s sales numbers, which now show sales up rather than down, as initially reported. Also in the report, the median sales price of new houses sold in May was $417,400. The average sales price was $520,000. There is currently a 9.3-month supply of available new homes for sale – a 16-year high. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly down last week. Rates declined from the previous week for 30-year fixed-rate loans with both conforming and jumbo balances. They also fell for 15-year fixed-rate loans, though FHA loans and 5/1 ARMs saw increases from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says rates are now at a three month low. “Mortgage rates were mostly lower last week, with the 30-year fixed rate declining slightly to … the lowest level in more than three months,†Kan said. As a result, demand for loans to buy homes increased, with FHA and VA loans seeing gains of more than 2 percent. Purchase activity remains lower than last year, though, with demand from buyers now 13 percent below the same week one year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Coming up with a down payment can be an obstacle for some buyers, especially in the aftermath of pandemic-era price increases. Buying a home has gotten more expensive over the past few years and affording the upfront costs requires a plan. Fortunately, home buyers have options. For one, they don’t have to have a full 20 percent down payment in order to purchase a home. In fact, according to one recent survey, 48 percent of recent buyers put down less than 20 percent when buying their home. Additionally, home buyers don’t have to do it all on their own. The same survey found 43 percent of buyers said they used a gift from family or friends for at least part of their down payment. That’s not uncommon, especially among first-time home buyers. But the share of home buyers who used a gift as part of their down payment has been rising. It’s now the highest it’s been since 2018. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook covering its expectations for the economy and housing market. In June, the group adjusted its forecast for total home sales this year, lowering expected annual gains to 1.3 percent from a previous projection of 2.8 percent. But while the group sees weaker than expected home sales ahead, it also says the economy is showing signs of slowing – which could help lower mortgage rates and improve overall affordability. “The economy appears to be slowing, and recent readings offer hope that inflation is cooling after progress on that front stalled in the first quarter – a trend that will likely need to be sustained for the Fed to feel comfortable cutting rates,†Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. Additionally, the group notes that the number of homes for sale is rising and the trend should lead to decelerating home price growth. In short, affordability challenges remain but prospective home buyers may soon see relief as the market gains better balance. (source)

New numbers from the National Association of Realtors show the inventory of homes for sale was up another 6.7 percent in April, pushing available supply 18.5 percent higher than it was last year at the same time. Lawrence Yun, NAR’s chief economist, says that’s good news for buyers. “Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” Yun said. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.” But while rising inventory is undoubtedly good for buyers, the market is still challenging. Median prices hit an all-time high in May while sales were largely unchanged from April. Overall, sales of previously owned homes fell 0.7 percent month-over-month and are now down 2.8 percent from year-before levels. (source)