The housing market has a pattern and it’s fairly easy to spot. It follows the seasons. Things start heating up in the spring and early summer, then begin to cool off beginning around September. Fall and winter are typically slower, with fewer homes to buy and fewer buyers active in the market. Of course, just like the seasons, sometimes things veer off track and we’ll have an unusually hot winter market or a cool summer, with slower sales and less competition. Generally speaking, though, the housing market has its pattern. This year looks to be no different. In fact, according to one report, the market is already showing signs of a late-summer slowdown. For one, price increases have slowed. From June to July, the typical home climbed 0.9 percent, after rising 1.4 percent the previous two months. Homes are also spending a little longer on the market, with the typical home going under contract two days later than it did in April and May. A combination of lower prices and less competition is good news for home buyers looking to make a move in the months ahead. But while there are encouraging signs, buyers still need to be prepared. Active inventory remains 44 percent below 2019 levels. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates moved higher 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. Joel Kan, MBA’s vice president and deputy chief economist, says there were a few reasons for the increase. “Treasury yields rates rose last week and mortgage rates followed suit, due to a combination of the Treasury’s funding announcement and the downgrading of the U.S. government debt rating,†Kan said. Higher rates led to a slowing of mortgage demand, including a 3 percent decline in the number of prospective home buyers applying for loans to buy homes. Purchase loan activity is now 27 percent below where it was 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)

Fannie Mae’s Home Purchase Sentiment Index measures how Americans feel about their personal financial situation, the overall economy, and the housing market. Based on a monthly survey, the index asks respondents for their perception of home prices and mortgage rates, whether they feel secure in their job and finances, and whether they think it’s a good time to buy or sell a home. July’s results show Americans feeling more confident in their personal financial situation, with the share saying they aren’t concerned about losing their job up 6 percent and 71 percent saying their household income is steady. Housing market measures, on the other hand, show Americans are still concerned about affordability. “While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,†Doug Duncan, Fannie Mae’s senior vice president and chief economist, says. Still, a majority of survey participants say it’s a good time to sell a house and a rising number see mortgage rates decreasing over the next year.

There are a number of reasons buying a home has gotten more expensive over the past few years. First, the lack of homes for sale caused home prices to skyrocket, then the Federal Reserve began raising interest rates to help battle inflation. As a result, mortgage rates climbed higher and affordability became more challenging – especially for first-time home buyers. First-time buyers, because they don’t have the proceeds of a home’s sale to help them cover the upfront costs of buying a home, have to come up with a down payment and the money to cover closing costs mostly from scratch. That can be difficult in an evolving market. These days, especially so. In fact, according to one recent analysis, a first-time home buyer needs to earn an average of $64,500 to afford the typical starter home, which is now selling for $243,000. That doesn’t make homeownership unattainable, but it does mean first-time buyers need to be prepared with plenty of savings, if they hope to succeed in today’s market. (source)

As a homeowner, your mortgage payment will likely be among your biggest monthly bills. That’s why it’s a good idea for prospective home buyers to know what the typical mortgage payment looks like these days, and whether they’re getting more or less affordable. The Mortgage Bankers Association tracks median mortgage payments each month. Its Purchase Applications Payment Index – which is based on applications for loans to buy homes – can give home buyers a good read on overall affordability conditions and also what to expect when they find a house to buy. According to the most recent results, the median mortgage payment was essentially unchanged in June, falling to $2,162 from $2,165. For borrowers applying for lower-payment mortgages, payments dropped to $1,459. Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America, says affordability is still challenging but stabilizing prices may help buyers. “The median purchase application amount fell from $330,000 to $326,000 in June, which is one positive sign that home prices are stabilizing,” Seiler said. “An ongoing combination of flattening home prices and lower rates would offer reprieve for households who are looking to buy a home.” (source)

After the pandemic began in March 2020, there was an increase in the number of home shoppers looking to move to a new area. Remote work, affordability conditions, and a desire for more space all contributed to buyers’ desire to move further from home. But what about now? It’s been three years. Are Americans still looking to move away? According to the National Association of Realtors’ consumer website, they are. In fact, the website’s Q2 Cross-Market Demand Report shows 60 percent of listing views from the top 100 metros went to homes located outside the shopper’s current metro area. That’s up almost 1 percent from the first quarter and 4.1 percent year-over-year. Jiayi Xu, an economist for the site, says affordability is the main motivator pushing today’s buyers to expand their house hunt. “Housing affordability isn’t likely to improve anytime soon, so it’s not surprising to see that Americans are on the move and increasingly searching for homes in more affordable areas of the country where they can stretch their housing dollars further,†Xu said. “Sellers are much more likely to see interest from out-of-towners than in years past, and from where that interest is coming might be the most surprising.†(source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from one week earlier. Rates were up across most loan categories, including 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 decline. Joel Kan, MBA’s vice president and deputy chief economist, says the increases slowed demand for mortgage applications week-over-week. “Mortgage rates edged higher last week … leading to another decline in overall applications,†Kan said. “The decline in purchase activity was driven mainly by weaker conventional purchase application volume, as limited housing inventory and rates … are crimping affordability for many potential home buyers.†Overall, mortgage application demand – including purchase and refinance activity – was down 3 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. (source)

The inventory of homes for sale has been low for years. In fact, supply has been an issue for most of the past decade. Then, it got worse during the pandemic. Low inventory has long been a frustration for home buyers – who have had to fight through the resulting affordability conditions, competition from other buyers, and a lack of choices when shopping for a home to buy. But according to a new survey of homeowners, there may be hope on the horizon. The survey found nearly a quarter of respondents say they are either listing their home for sale or considering selling their home in the next three years. That’s up from 19 percent during the first quarter of 2023 and 8 percent higher than last year at the same time. Additionally, 40 percent of respondents who said they’re considering selling say they think they’ll sell next year. That’s good news for buyers, as it’ll add much needed inventory to the supply of previously owned homes for sale. That’ll help calm price increases and offer buyers a better shot at finding their dream home. (source)

Among the many benefits of homeownership, equity is a big one. It refers to the amount of a home’s value that belongs to its owner. In other words, it’s the value of your home minus the amount still owed on the mortgage. Obviously, having equity is good – and these days homeowners have a lot of it. In fact, according to ATTOM Data Solutions’ most recent 2023 U.S. Home Equity & Underwater Report, 49 percent of mortgaged residential properties were considered equity rich during the second quarter – meaning their loan balance was no more than half the estimated market value of their home. That’s up from 47 percent during the first quarter and the highest it’s been in at least four years. Rob Barber, ATTOM’s CEO, says the market has bounced back and it’s benefiting homeowners. “The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put,†Barber said. “Equity levels were high even during the recent downturn, and now they are going back up and better than ever.†(source)

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes signed each month. The index is considered a good indicator of future home sales since most signed contracts lead to closed sales several weeks later. According to the most recent release, the index found pending home sales up month-over-month in June. It was the first increase since February. Lawrence Yun, NAR’s chief economist, says the housing recession is over. “The recovery has not taken place, but the housing recession is over,†Yun said. “With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out. Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.†The NAR expects home sales to bounce back next year after slowing in 2023. (source)