Check out how moving price and interest rate affect affordability. Is the rate of building new homes affecting inventory? Existing Home Sales Fall 4th Straight Month; Median Sales Price Breaks $400,000

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The National Association of Realtors announced Tuesday that existing home sales decreased in May by 3.4 percent from April, the fourth consecutive monthly decline. May existing-home sales fell by 3.4 percent from April to a seasonally adjusted annual rate of 5.41 million. May also saw a decrease in single-family home sales to a seasonally adjusted annual rate of 4.80 million, down from 4.98 million in April and 7.7 percent a year earlier.

Existing home sales have now fallen back to their pre-pandemic pace,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “Higher prices and rising interest rates have reduced affordability.” He also added that a lack of inventory had been a significant obstacle. Nevertheless, the data indicated some progress: inventories increased to 1.16 million in May, up roughly 13 percent from April but still down 4.1 percent from a year earlier.

Median existing-home prices continue to rise. In May, they increased to $407,600, up 14.8% from the same month last year ($355,000).

MBA Weekly Survey: Applications on a Winning Streak Despite Nearly 6% Interest Rates

Mortgage Bankers Association announced that applications increased for the week ending June 17th. This is the second consecutive week of application increases after more than a month of consistent declines. It is great to see applications increasing even when mortgage rates have been rising.

The Market Composite Index climbed by 4.2 percent over the previous week on a seasonally adjusted basis. Purchase applications led to the weekly uptick, with the Index rising 8% over the previous week. 

Refinances keep dropping. The Refinance Index fell 3% from the prior week and was 77% lower than it was during the same week a year prior. Refinance applications comprised 29.7% of all mortgage activity, down from 31.7% the week before. At the same time, 10.6 percent of all applications were for adjustable-rate mortgages.

U.S. Housing Market Cooling As Building Permits Tumble, Starts Fall

As rising mortgage rates add to decreased affordability for entry-level and first-time buyers, future U.S. homebuilding permits fell to a five-month low in April, suggesting the housing industry was slowing. However, the headlines number of the declines do not tell the entire story. The Commerce Department’s data on Wednesday also revealed a backlog of homes still to be built, meaning the moderation in homebuilding would be minimal.

The number of building permits fell by 3.2 percent in April to 1.819 million to the lowest level since last November. According to economists surveyed by Reuters, building permits were expected to decline to a rate of 1.812 million units, but the market is still performing better than some predictions. The single-family housing market saw the most significant drop, with permits falling 4.6 percent to 1.110 million units, the lowest level since last October. 

Last month, housing starts decreased by 0.2% to 1.724 million units. Single-family housing starts, which make up the majority of new construction, fell 7.3% to 1.100 million units, which is also their lowest level since last October. Homebuilding is still supported by a record low housing supply even though overall starts have fallen for two consecutive months. The number of houses approved for construction yet to be started rose 0.7% to an all-time high of 288,000 units in April. The backlog for single-family dwellings was at its highest level since June 2006.

Next week’s potential market moving reports are:

  • Monday, June 27th – Pending Home Sales Index
  • Tuesday, June 28th – S&P Case-Shiller U.S. Home Price Index
  • Wednesday, June 29th – Gross Domestic Income Revision (SAAR)
  • Thursday, June 30th – Initial Jobless Claims, Continuing Jobless Claims, PCE Inflation
  • Friday, July 1st – Construction Spending, ISM Manufacturing 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.

 

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Redfin says Homebuyer Demand is Slowing, Home Prices Start to Stabilize

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Homebuyer Demand is Slowing

The housing market continues to show signs of slowing. Although Redfin is not the only real estate company in the country, they seem to be reporting the most about the changing housing market versus other national real estate firms. Redfin reported another double-digit decline in homebuyer demand when compared to the same time last year. This is the second time they have reported a decline in the last three weeks.

Redfin’s homebuyer demand index was down 12% annually for the week of June 5, compared to a 9% decline for the last week of May and a 12% decline from the week before that. This is the largest index drop since the pandemic’s early days.

It is clear that more and more sellers are no longer in control of home prices with bidding wars. Repeatedly, we hear stories of sellers reducing their home prices to increase traffic.

However, let’s not assume that the housing boom is over. Despite home prices declining and mortgage rates rising, we are seeing some buyers return to the market. Housing inventory is increasing, offering purchasers more homes to choose from. It has been quite some time since buyers have had this many homes to choose from and not have to enter a bidding war.

Mortgage Rates, Home Prices Expected To Stabilize, Forecast Says

The housing and stock markets have been troubled by the quick rise in mortgage rates and inflation since 2022. Fears of a recession and general economic instability have caused analysts to adjust their year-end estimates to account for these changes.

The housing market is projected to alter in the coming year, but not all changes will be unpleasant. Some respite may be on the way for purchasers who have been dismayed by the shortage of available homes and fierce competition. Furthermore, while mortgage rates and property prices are unlikely to fall, they are predicted to steady and may relieve purchasers who have been trying to keep up with escalating costs and rates.

As demand cools and supply rises, Realtor.com updated its home market projection for 2022 and concluded that calmer waters might be ahead. According to the revised prognosis: Mortgage rates will average 5 percent in 2022, rising to 5.5 percent by the year’s conclusion. This compared to an initial projection of a 3.3 percent average increase and a 3.6 percent increase. Moreover, buyer demand is projected to decline over the summer, but most markets will continue to favor sellers.

Fed Hikes Interest Rate Benchmark By 0.75 Percentage Point, The Biggest Increase Since 1994

The Federal Reserve took its most aggressive stance against inflation yet on Wednesday, boosting benchmark interest rates by three-quarters of a percentage point, the most significant increase since 1994.

The Federal Open Market Committee, which sets interest rates, raised its benchmark funds rate to 1.5 percent -1.75 percent, the highest level since just before the Covid epidemic began in March 2020. After the decision, stocks were unstable, but they rose when Fed Chairman Jerome Powell spoke at his post-meeting news conference.

“We want to see progress. Inflation can’t go down until it flattens out,” Powell said. “If we don’t see progress … that could cause us to react. Soon enough, we will be seeing some progress,” Powell said. Based on one widely cited metric, FOMC members projected a significantly steeper path of rate increases to stop inflation from reaching its highest level since December 1981.

According to the midpoint of the goal range of individual members’ views, the Fed’s benchmark rate will end the year at 3.4 percent. This represents a 1.5 percentage point increase above the March estimate. The committee predicts that the rate will rise to 3.8 percent in 2023, an entire percentage point more than the March forecast.

Next week’s potential market moving reports are:

Monday, June 20th – No Report
Tuesday, June 21st –Existing Home Sales
Wednesday, June 22nd – No Report
Thursday, June 23rd – Initial Jobless Claims, Continuing Jobless Claims
Friday, June 24th – Consumer Sentiment Index, New Home Sales

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.

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Average property has increased 9% since the start of 2022: US Housing Market Starting To Shift Back To Buyers today

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According to Redfin, the housing market is showing minor but significant signs that the balance is swinging back to buyers from sellers. During the week ending May 29th, its seasonally adjusted Homebuyer Demand Index fell 9% year over year. The index, which tracks requests for tours and other home buying services from Redfin agents, fell for the eighth day in a row. One of the critical reasons for customers’ withdrawal from the market is the rise in mortgage rates.

Meanwhile, the number of homes for sale increased to 608,841 in May, a record high for the year. However, this was a 10.1 percent drop from last year, and a minor dip since April 2020, when the pandemic began. Redfin also reports that the median sales price for the four weeks ending May 29 was $400,999, up 16 percent year over year. Newly listed properties had a median asking price of $412,450, up 17 percent. We can add property value increase to another reason for buyer demand falling. Read More

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