The typical monthly mortgage payment applied for by borrowers spiked in January. In fact, according to the Mortgage Bankers Association’s Purchase Applications Payment Index – which tracks payment amounts – the median payment rose to $2,205 from $2,127 the month before. But even after the month-over-month jump, the MBA’s index shows payments just $71 higher than last year at the same time. Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America, says the MBA expects improvement this year, despite affordability challenges. “Home buyer affordability conditions declined further in January as volatile mortgage rates and high home prices continue to impact many prospective buyers’ purchasing power,” Seiler said. “Even with persisting affordability challenges, MBA is forecasting a small increase in purchase originations in 2025, with activity increasing 16 percent to $2.1 trillion.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week to the lowest level so far this year. Rates were down from one week earlier 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. The improvement helped push demand for home purchase loans 9 percent higher week-over-week. It also drove up refinance activity, which spiked 37 percent higher than the week before. Joel Kan, MBA’s vice president and deputy chief economist, says economic uncertainty has caused rates to decline. “Mortgage rates declined last week on souring consumer sentiment regarding the economy and the increasing uncertainty over the impact of new tariffs levied on imported goods into the U.S.,” Kan said. “Those factors resulted in the largest weekly decline in the 30-year fixed rate since November 2024 … The rate is now at its lowest level since December 2024.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Housing market conditions are largely determined by the balance of homes for sale and interested home buyers. When demand for homes outpaces the supply of homes, prices and competition increase. That’s been the story in recent years, as inventory hit historic lows while buyer demand soared. But, according to a new analysis from the National Association of Realtors’ consumer website, the dynamic may be changing, and it could benefit buyers. Danielle Hale, the website’s chief economist, says a combination of newly listed homes and home seller price cuts may be a sign. “While rates remain elevated, we are beginning to see green shoots in the market as sellers grow tired of waiting for significant changes in interest and mortgage rates,” Hale said. “If these trends continue for the next few months, we could see a market that is entering into more balanced terrain, with rising inventory and a potential future slowdown in price growth. While the market does not look like it did before the pandemic, we are moving away from the ultrahigh demand, low inventory period we saw in 2021 and 2022.” (source)

The housing market has been through some changes over the past five years. For one, home values have risen 45.3 percent since February 2020. That’s more than 10 years of typical price growth in half the time. Naturally, that’s had big impact on how much house you can buy for your money. Even $1 million doesn’t go as far as it did only a few years ago. So what can you buy for $1 million today? Well, one new analysis looked at the data. It found the typical million-dollar home is about 70 square feet smaller than it was in 2020. They still have four bedrooms and three baths but, at 2,388 square feet, million-dollar homes are smaller. In some locations, significantly so. For example, in Indianapolis, Hartford, and Nashville, the typical million-dollar house is more than 1,000 square feet smaller than it was just five years ago. But while the houses have gotten smaller, the number of them has grown. There are now 989,000 more homes worth $1 million or more than there were before the pandemic. (source)

During their pandemic-era peak in 2021, home prices were up 18.9 percent year-over-year at one point. Fortunately, for prospective home buyers, those days are over. Home prices these days are increasing at a much slower pace. But while they aren’t rising as fast as they were a few years ago, they are still climbing. In fact, according to the latest results from the S&P Case-Shiller Home Price Index, national home prices ticked up at the end of last year, posting a 3.9 percent annual gain in December after recording a 3.7 percent increase the previous month. That’s below-trend growth when compared to the more than 30-year history of the index but it’s still growth. Brian D. Luke, CFA, head of commodities, real & digital assets at S&P Dow Jones Indices, says today’s homeowners have done well. “Through this recent market cycle, the ability of Americans to grow wealth by participating in the upside of the U.S. housing market, particularly if done through a leveraged position by securing a mortgage, has proven to be historically beneficial,” Luke said. (source)

Sales of newly built single-family homes tumbled in January, falling 10.5 percent from the month before, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. That’s a significant decline but there may be more to the decrease than initially meets the eye. How so? Well, for one, new home sales are often volatile and frequently corrected. For example, last month’s totals were revised upward from the originally reported annual rate of 698,000 units to 734,000 units, making December’s increase even larger. Also, a look at regional numbers shows – much like residential construction data in January – the areas of the country that were hit by winter storms and frigid temperatures during the month saw bigger declines than were seen elsewhere. In fact, sales were down 20 percent in the Northeast but rose 7.7 percent in the West. What does this mean? It means January’s new home sales decline may not be an accurate reflection of the health of the new home market. Put another way, new home sales are just 1.1 percent lower than they were last year at the same time. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to the lowest level since mid-December last week. Rates were down from the week before across all loan categories, including 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. The drop, however, failed to spur demand for mortgage applications. “Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market. This pushed mortgage rates lower with the 30-year fixed-rate decreasing to … the lowest rate since mid-December,” Joel Kan, MBA’s vice president and deputy chief economist, said. “Applications were about one percent lower for the week, which included the President’s Day holiday, as purchase applications stayed flat from a week ago while refinance applications saw a small decline.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Buying a home that needs some work has appeal. Maybe it’s because of the popularity of home-remodeling shows or our desire to find a bargain, but fixer-uppers have generally been popular over the past 10 years. In fact, before the pandemic, listings that mentioned needing work, “TLC,” or having “good bones” were more likely to sell than those that didn’t. But that may be changing. In fact, according to one new analysis of keywords found in listings, “remodeled” is the hot term for home buyers these days, with potential buyers more likely to save a listing or share it with a partner if it’s a home that’s already had work done. Remodeled homes get 26 percent more daily saves and sell for a premium of nearly 4 percent. That’s an additional $13,000, the highest premium of any of the almost 400 terms included in the analysis. It’s also pretty good evidence that today’s shoppers are less interested in doing the work and more interested in finding a home that’s move-in ready. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook detailing what the group believes is ahead for the economy and housing market. According to the most recent release, the economy has started the year off strong and the group believes its momentum will carry forward. But changing trade policy has caused some uncertainty about where things will head from here. Kim Betancourt, Fannie Mae’s vice president of multifamily economics and strategic research, says mortgage rates, in particular, could go either way. “Ongoing uncertainty around trade policy adds risk to our GDP and inflation outlooks, which may have implications for mortgage rates, although the direction – up or down – would depend on a number of factors,” Betancourt said. “Higher mortgage rates would exacerbate the existing ‘lock-in effect’ and worsen affordability, which may then weigh on home sales and mortgage origination activity. Of course, if mortgage rates move lower, we’d likely see an improvement in affordability and a corresponding pickup in housing activity.” The group expects some volatility but ultimately believes rates will remain within a narrow range, ending the year just slightly lower than they are now. (source)

Sales of previously owned homes fell 4.9 percent in January, according to the National Association of Realtors. The month-over-month decrease included declines in the South, West, and Northeast. The Midwest was unchanged from the month before. Lawrence Yun, NAR’s chief economist, says affordability remains a challenge. “Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve,” Yun said. “When combined with elevated home prices, housing affordability remains a major challenge.” Despite the challenge, though, sales were above last year’s level in all regions but the South, which was unchanged. Overall, existing-home sales were 2 percent higher year-over-year in January, marking the fourth consecutive annual increase. Also in the report, total housing inventory was up nearly 17 percent from last year at the same time. (source)