Coming up with a down payment is among the biggest challenges for prospective home buyers, especially if it’s their first time. While move-up buyers can use the money made from selling their current home, first-time buyers have to save the money from scratch. The good news is, depending on the terms of your loan, you’ll have options, regardless of whether it’s your first or fifth time buying. For starters, you don’t necessarily have to come up with a full 20-percent down payment. In fact, the average down payment is around 6 percent. However, with home prices rising, so have down payments. And, according to newly released numbers from ATTOM Data Solutions, the median down payment is now at its highest level in more than 15 years. Their data shows that, during the third quarter of this year, the median down payment on a single-family home reached $27,500 – that’s up from $26,000 during the second quarter and $19,502 last year at the same time. But where you’re looking to buy will make a big difference in how much you’ll need to save. For example, the highest down payment amounts were found on the coasts, with half of the top 10 in California. (source)

The housing market has been out of balance for a while now. Too many home buyers have been active in a market with too few homes for sale. That’s the reason prices have been rising. It’s also the reason homes have been selling so quickly. It’s a problem with no quick solutions. Adding to the housing stock requires more new homes to built and more current homeowners to put their homes on the market. But while there aren’t any easy answers, there are encouraging signs that next year will be a little better than this year’s been. For one, the number of building permits for single-family homes has been rising and home builder confidence is high. Another positive sign is the number of forecasts predicting an increase in the number of existing homes that will be listed for sale in the coming year. For example, the National Association of Realtors’ consumer website just released an outlook saying that existing-home inventory will actually show a slight increase in 2022, after suffering steep declines in 2021. Danielle Hale, the site’s chief economist, says the market will remain competitive but should improve. “With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth at a more sustainable pace than in 2021,†Hale said. (source)

The list of things home buyers consider important when deciding to move stays fairly consistent. Years go by without much change to buyers’ wish lists. But like most everything else, the pandemic has led buyers to reconsider the things they’re looking for in their next neighborhood. Not surprisingly, the quality of the neighborhood still ranks highest. Everybody wants to live in a nice area. The second slot, however, saw a change, as proximity to family and friends surpassed commute to work and affordability, which both ranked higher on last year’s list. The data, from the National Association of Realtors’ annual Profile of Home Buyers and Sellers, shows the pandemic’s impact on how we think about where we want to live and the type of house we’re looking to buy. “Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce, or a new job,†Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said. “The pandemic has impacted everyone, and for many this became an impetus to sell and make a housing trade.†(source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week for 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. It was the third consecutive week rates have increased. But despite rising rates, home buyers remained active. In fact, the MBA’s Purchase Index was up 5 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says most of the activity came from buyers of newer, more expensive homes. “Despite higher mortgage rates, purchase applications had a strong week, mostly driven by a 6 percent increase in conventional loan applications,†Kan said. “As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed.†The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes that are signed each month. Because it measures contract signings, which precede closings by a number of weeks, it can be a good indicator of future existing-home sales. In October, the index saw a significant spike, rising 7.5 percent from the month before. Lawrence Yun, NAR’s chief economist, says it’s a sign that buyer demand remains high. “Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,†Yun said. “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.†Regionally, the Midwest and South saw the most activity, with the Midwest up 11.8 percent and the South rising 8 percent. (source)

In a seller’s market – when there are more home buyers than there are homes for sale – competition is common. A good listing will attract multiple offers and, more often than not, the house will be sold to the highest bidder. This year’s market has been particularly competitive, as the number of homes for sale has been lower than normal while buyer demand has remained elevated. Fortunately, though, the housing market has cooled somewhat after a hot spring and summer. But while it has slowed down a bit, newly released numbers show that bidding wars are still a factor for buyers. In fact, 60.3 percent of home offers in October faced competition. That’s about the same as it was in September – though significantly lower than in April when they peaked at 74.5 percent. In other words, while the number of bidding wars has fallen, the majority of homes for sale are still getting more than one offer. That means, fall and winter buyers should expect there to be multiple interested buyers competing for available listings, especially if the home is move-in ready and selling at an affordable price. (source)

Shopping for a house to buy involves many choices. One of the most obvious is whether you want to buy a new house or an existing home. But before you choose, you should know that market conditions can be very different between the two. For example, though the overall supply of homes remains low, there’s actually a pretty good stock of new homes available for sale. In fact, according to recently released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, there was a 6.3-month supply of new homes for sale in October at the current sales rate. Comparatively, there was just a 2.4-month supply of existing homes. In other words, new home shoppers may find more options to choose from. Finding an affordable one may be more challenging, though. In October, the median sales price of new homes was $407,700, while the median existing-home price was nearly $60,000 less. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes continued to climb last week, rising 5 percent from one week earlier. It was the third consecutive week of increases. Together with a slight uptick in refinance activity, the gains pushed total mortgage application demand 1.8 percent higher than the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the improvement could be a sign that borrowers are trying to lock in low rates – which increased week over week – before they move any higher. “Despite the increase in rates, refinance applications rose slightly, driven by a 2 percent gain in conventional refinances,†Kan said. “Borrowers continue to lock in mortgages in anticipation of higher rates in the future.†Whatever the case, the housing market remains strong going into the holiday season, which typically sees mortgage loan demand slow down. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook forecasting what they think is ahead for the economy and housing market. In November, their outlook is largely positive, with economic growth projected to remain fairly consistent and housing activity continuing its momentum into next year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, doesn’t see any major changes ahead. “Economic growth continues to slow, but not precipitously; and as rates have not yet reacted strongly, housing and mortgage activity remain very strong,†Duncan said. According to the release, the group has revised upward their expectation for total home sales this year and believes the current supply-side issues holding home building back will begin to ease in the months ahead. In fact, they expect new-home construction to rise nearly 5 percent next year, leading to a 13.9 percent increase in sales of new homes. And while they do expect mortgage rates to rise, their forecast is only for slight increases in 2022 and 2023, which means rates will remain low by historical standards. (source)

One of the big challenges for home buyers this year is how quickly homes have been selling. It hasn’t been uncommon to see a good listing go up midweek and sell before the following Sunday. That doesn’t leave much time for interested buyers to get out to see it, consider their options, and make a solid offer. But while new numbers from the National Association of Realtors show homes are still selling quickly, there was a slight improvement in October. In fact, the time the typical home for sale was on the market bumped up to 18 days from 17 days the month before – the first improvement in months. And while 82 percent of homes sold in less than 30 days, that’s 5 percent fewer than did in August, for example. In other words, autumn home shoppers still need to be prepared to act fast, but may have a little more time than buyers did this summer. Lawrence Yun, NAR’s chief economist, says the challenging conditions haven’t slowed buyer demand . “Home sales remain resilient, despite low inventory and increasing affordability challenges,†Yun said. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.â€