U.S. Pending Home Sales Fall to Second-Lowest Level on Record But Double-digit U.S. Home Price Growth Streak Skids To An End

U.S. Pending Home Sales

U.S. Pending Home Sales Fall to Second-Lowest Level on Record But…

According to a statement released on Wednesday, the National Association of Realtors index pending home sales fell 4% this month to the lowest since before the pandemic for records dating back to 2001. Although the decrease exceeded all predictions from an economist survey conducted by Bloomberg, many feel that we are very close, if not already at the bottom of the market. This means that better times for housing may lie ahead in 2023.

The aggressive tightening effort by the Federal Reserve to control inflation has significantly affected the housing market in 2022. Home sales and, consequently, prices have been falling for months as borrowing costs have approximately doubled from where they were at the beginning of the year.

There are approximately two months of lag time between mortgage rates and home sales,” Lawrence Yun, NAR’s chief economist, said in a statement. “With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth.”

MBA Weekly Survey Dec. 21, 2022: Falling Rates Boost Refis for 2nd Straight Week

The Mortgage Bankers Association said Wednesday that its Weekly Mortgage Applications Survey for the week ending Dec. 16 showed an increase in refinancing activity for the second consecutive week due to the lowest interest rates since September.

Although the unadjusted refinance index rose 6% from the previous week, it was still 85% lower than the last week a year earlier. More mortgages were for refinances, from 29.4% the last week to 31.3 percent of all applications.

Double-digit U.S. Home Price Growth Streak Skids To An End

When mortgage rates spiked above 7% in October, and further limited demand, annual price growth in the U.S. housing market fell into the single digits for the first time in roughly two years, a pair of highly monitored surveys indicated on Tuesday.

The S&P CoreLogic Case Shiller national home price index saw its first single-digit gain since November 2020 in October, rising 9.2% as opposed to 10.7% in September. This is the index’s first non-double-digit gain since September 2020. The annual home price increase rate decreased to 9.8% in October from 11.1% in September, according to the Federal Housing Finance Agency.

The Fed’s aggressive interest rate increases, intended to lower high inflation by reducing demand in the economy, have negatively impacted the housing market. The Fed increased rates by half a percentage point this month, capping a year that saw its benchmark rate grow at the fastest since the early 1980s, from nearly zero in March to between 4.25% and 4.5%. In 2023, rates, according to Fed experts, will likely reach 5%.

The National Association of Realtors predicted earlier this month that existing home values, which comprise the vast majority of the market, will stay steady in 2023.

Next week’s potential market-moving reports are:

  • Monday, January 2nd – No Report
  • Tuesday, January 3rd – Construction Spending
  • Wednesday, January 4th – Job Openings, Quits, FOMC Minutes
  • Thursday, January 5th– – Initial and Continuing Jobless Claims, ADP Employment Report
  • Friday, January 6th – Unemployment Rate, Average Hourly Earnings

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

Mortgage Rates have Significantly Decreased Since mid-November but Home Delistings Hit Record High Existing Housing Inventories Skyrocket Upwards

Mortgage Rates

Home Delistings Hit Record High in November as Buyers and Sellers Retreated

During the 12 weeks ending Nov. 20, a record 2% of U.S. properties for sale were delisted weekly on average, up from 1.6% the previous year. Since then, the amount has somewhat decreased, falling to 1.9% during the 12 weeks ending Nov. 27, including the Thanksgiving holiday. Redfin’s research of MLS data from 43 of the 50 most populated U.S. metropolitan areas—those with enough data—shows that this is the case. 

Because they frequently receive no offers for the price they wish to sell for and occasionally no offers at all, sellers are pulling their properties off the market. This is due to a severe decline in demand from homebuyers brought on by rising mortgage rates and steadily rising housing prices. Although mortgage rates have significantly decreased since mid-November, this has not yet brought many buyers back into the market 

Existing Housing Inventories at 7-Year High

As dropping rates enticed some buyers back in, Redfin, a Seattle-based brokerage, said its Homebuyer Demand Index increased last week. Yet, with the average home for sale staying on the market longer and the number of homes for sale continuing to climb, many prospective buyers are waiting for cheaper rates and prices.

Based on the report, the number of homes for sale increased by 15% annually during the four weeks that ended on Dec. 4. This is the most significant increase since at least 2015. However, the number of new listings decreased by more than 20%, indicating that more people are choosing to wait it out while looking for a home while mortgage rates and home prices continue to fall from their peaks.

However, as mortgage rates continued to fall from their peak in early November, the Redfin Homebuyer Demand Index recovered from its low point, rising 5% from a week earlier. The typical American homebuyer now pays around $50 less per month for housing, thanks to falling rates.

Among 11 of the 50 most populous U.S. metro areas, six of which are in California, home sale prices decreased from a year earlier. Prices in San Francisco dropped 7.8%, San Jose 3.6%, Los Angeles 2.2%, Detroit 1.4%, Sacramento 1.2%, and Pittsburgh 1.1%. In Oakland, Anaheim, Austin, Philadelphia, and Phoenix, they decreased by less than 1%.

Mortgage Rates Drop After CPI Report, Housing Market Still In Trouble

According to Mortgage News Daily, the 30-year fixed mortgage’s average rate decreased to 6.28% on Tuesday. It is presently at its lowest point since the middle of September. The dip happened after the consumer price index for November, a widely followed indicator of inflation, came in lower than predicted. Investors poured into the U.S. as a result of the report. Treasury bonds decreased yields. Mortgage rates roughly follow the yield on the 10-year Treasury.

Mortgage rates began to climb at the outset of this year and picked up speed in the spring and summer. By the end of October, the 30-year fixed rate had increased from about 3% to well over 7%, which caused an early deep freeze in the housing market. According to the most recent data from the National Association of Realtors, sales of existing houses have decreased for nine months and were down 24% in October compared to the same month last year.

But after the CPI report for October showed that inflation was slowing, rates then dropped significantly in November, which ended at a rate of 6.63%. Some speculated, if warily that the rate decrease may be luring buyers back into the market. 

Next week’s potential market-moving reports are:

  • Monday, December 19th – NAHB Home Builders’ Index
  • Tuesday, December 20th – Building Permits (SAAR), Housing Starts (SAAR)
  • Wednesday, December 21st – Consumer Confidence Index, Existing Home Sales (SAAR)
  • Thursday, December 22nd – – Initial and Continuing Jobless Claims
  • Friday, December 23rd – New Home Sales (SAAR), PCE Price Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

Housing market is beginning to show signs of affordability returning in November Mortgage Refinance Demand Surged 6%

signs of affordability

First Indications of Affordability Emerged in November

The market is beginning to show signs of affordability returning. As mortgage rates declined in November and rents decreased by the most in at least seven years, the cost of a new mortgage decreased by 4.8%.

According to Zillow’s most recent Market Report, housing market activity has been at its most relaxed since the epidemic started. According to the data, a typical U.S. home’s monthly mortgage payment decreased by around $100 due to falling home values and lower mortgage rates.

It’s “unlikely affordability will significantly improve anytime soon,” according to Zillow, but the news from November is encouraging because it suggests that affordability may stabilize in 2023.

Housing Market Shows Signs of Balancing

The housing market is regaining equilibrium as buyers and sellers are on more equal footing at the current time. Neither buyers nor sellers appear to have the upper hand in negotiations. The November RE/MAX National Housing Report supports that. In the 53 surveyed metro areas, the data showed prices moderating and a 12% decrease in home sales from October’s figures.

The number of new listings fell to its lowest level of the year, down 21.4% from October. Also, houses for sale remain on the market for an average of 39 days. That was a full week more than November 2021 and four more days than October. The median sales price fell to $394,000, a 1.3% decrease from October but a 3.7% increase from November 2021.

According to the report, November’s inventory had a 2.5-month supply, up from 2.3 in October and more than double the 1.2 from a year earlier. The close-to-list price ratio was 98% on average in November, meaning residences typically sold for 2% less than the asking price. The percentage is unchanged from October 2022 and was 101% a year ago.

Mortgage Refinance Demand Surged 6%

While the latest decline in mortgage interest rates did little to increase demand from homebuyers, it prompted some homeowners to explore ways to reduce their monthly payments.

The Mortgage Bankers Association‘s seasonally adjusted index shows that the number of applications to refinance a mortgage increased by 6% last week compared to the week before. However, volume was still 85% lower than it was during the same period the previous year.

The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession,” said Mike Fratantoni, MBA’s chief economist. “However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.

Next week’s potential market-moving reports are:

  • Monday, December 26th – No Report
  • Tuesday, December 27th – US Home Price Index (SAAR)
  • Wednesday, December 28th – Pending Home Sales Index
  • Thursday, December 29th– – Initial and Continuing Jobless Claims
  • Friday, December 30th – Chicago PMI

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.