Yearly Archives: 2022

Price growth has slowed (and in some cases reversed) in several parts of the country due to the confluence of multiple market forces. Overall, gains have remained strong, with the March 2022 increase being the largest on record, as per CoreLogic.

In March, CoreLogic’s Home Price Index (HPI) increased by 20.9 percent year over year, the biggest annualized gain since tracking began in 1976. This year’s rise was 9.8 percentage points more than the increase in March 2021.

Numerous cities continue to see significant price increases, with Tampa (32.5 percent) and Phoenix (30.4 percent) having the highest year-over-year increases among the country’s 20 largest metros. The states with the highest annualized home-price gains were Florida (31.4%) and Arizona (28.7%).

CoreLogic forecasts price growth to decrease in the coming year due to critical problems, including rising rates. Nonetheless, the company’s HPI estimate is for double-digit annualized growth for the rest of the year.

Residential Building Continues to Dominate Construction Spending

In March, residential construction spending increased by double digits, pushing total construction spending ahead of its 2021 pace. According to the US Census Bureau, total construction investment increased by 0.1 percent in March to $1.731 trillion, up 11.7 percent yearly. In the first three months of 2022, $376.337 billion has been spent, representing a 12.0% increase over the same period last year.

From February to March, private sector spending grew 0.2 percent to $1.380 trillion on an annual basis. The residential portion of that spending increased by 1.0 percent in March, compared to 0.7 percent in February. The yearly rate was $88.045 billion, rising 18.4 percent from March 2021. Although the non-residential component declined 1.2 percent from the previous month, it is still 8.5 percent higher than in March 2021.

According to Na Zhao of the National Association of Home Builders (NAHB), new single-family construction accounted for $472.6 billion in monthly residential investment, up 1.3 percent from February and 18.5 percent year over year, while multifamily spending fell 0.5 percent. Home improvement spending increased by 1.1 percent for the month.

Mortgage Rates Are Rising, But the Hot Housing Market Is Slow to Cool

The Federal Reserve is poised to raise interest rates by a half-percentage point on Wednesday, the most in more than two decades, as it tries to combat the highest inflation in 40 years and calm a housing market that the pandemic has fueled.

Experts think the housing market has a long way to go before it returns to normal. Real estate agents, buyers, and housing specialists have seen a slight slowdown, but the market is still moving. For example, a seller may only receive ten offers instead of 20. The Federal Reserve’s efforts to raise interest rates and shrink its massive balance sheet have already driven the 30-year fixed-rate mortgage average past 5%, up from 2.98 percent a year ago. Even while the market is still hot, higher mortgage rates are causing some symptoms of cooling. The Fed’s capabilities are limited as it attempts to stabilize the housing market. Zoning regulations and building costs have made it more difficult for builders to meet demand, which supply chain challenges and labor shortages have exacerbated.

“As housing costs continue to increase, housing will likely become an ever-larger share of household budgets,” Fed Governor Christopher J. Waller said in a March speech. “I will be looking even more closely at real estate to judge the appropriate stance of monetary policy.”

The Fed Interest Rate Decision

On Wednesday, the Fed raised the Fed Funds Rate (the rate the government charges banks for overnight loans) by ½%. This increase was in line with economist and investor expectations, but the stock market rallied on the post-meeting comments made by Fed Chair Jerome Powell.

Although the Fed is committed to taming inflation, Powell delivered a softer tone about future interest rate increases. Investors had feared that the Fed was considering raising rates aggressively in the future with a possible ¾% rate increase at one of the next two meetings. However, Powell quelled those concerns, indicating that a 75 basis point rate increase is not even under consideration at this time.

Next week’s potential market-moving reports are:

• Monday, May 9th – Wholesale Inventories
• Tuesday, May 10th – Small Business Index, Real Household Debt
• Wednesday, May 11th – Core CPI, Federal Budget
• Thursday, May 12th – Initial Jobless Claims, Continuing Jobless Claims, Producer Price Index
• Friday, May 13th – Consumer Sentiment Index, 5-year Inflation Expectations

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.

Resource – https://www.spokesman.com/stories/2022/may/03/mortgage-rates-are-rising-but-the-hot-housing-mark/

According to the S&P CoreLogic Case-Shiller national home price index, home prices grew 19.8% year over year in February, up from a 19.1% yearly gain in January, and is the index’s third-highest reading in its 35-year history.

The cities in the Sun Belt continued to enjoy the most growth. The 10-city composite annual growth increased to 18.6% in March, up from 17.3% the previous month, while the 20-city composite was up 20.2% from 18.9%. Annual home price increases of 32.9%, 32.6%, and 29.7% were recorded in Phoenix, Tampa, Florida, and Miami. The minor price increases were in Minneapolis, New York, and Washington, D.C., though they were still in the double figures.

“As we move through the spring housing market, we are seeing clear signs of cooling demand. Many buyers are deciding to take a step back and re-evaluate their budgets and timelines,” said George Ratiu, manager of economic research at Realtor.com. Realtor.com calculates the monthly payment for a median-priced property financed with a 30-year loan is $550 greater than a year ago, a 46 percent rise.

Housing Market Predictions For 2022

The property market has been a whirlwind for potential purchasers, and 2022 will not provide much relief. Mortgage rates are rising at their quickest pace in over 40 years, and growing prices and rising mortgage rates are already putting off would-be homebuyers.

Danielle Hale, Chief Economist of Realtor.com, outlined the obstacles and possibilities that purchasers would encounter shortly:

Buyers will have limited options: Although it lags, the number of homes for sale has already exceeded its seasonal low. She also mentioned that homes for sale are selling fast.

Rising rents hurting first-time buyers: Due to the rising cost of necessities, first-time buyers don’t see their home equity, as well as wealth, grow. Right now, there is an increased “motivation to get into a home and lock in housing costs to prevent having to pay higher future rents,” Hale said. 

The housing market will cool – but slowly: Prices and the rate at which properties are put under contract will slow as fewer sales and more sellers bring more balance to the market. Nonetheless, “the intensity of the imbalance, driven in part by a decade’s worth of under-building, could mean that the housing market cools slowly,” she continued.

In Welcome News for U.S. Home Buyers, Bidding Wars Are Showing Signs of Easing

After months of bidding wars, property buyers in the U. S. saw less competition in March as mortgage rates soared. A Redfin report released Monday indicates that 65% of home buyers faced competitive offers compared to 66.7 percent in February. Even though the drop in competitiveness was not significant, it was the first time it had happened in six months.

“Most homebuyers are still encountering bidding wars, but competition is beginning to cool because surging mortgage rates and home prices are prompting some Americans to back out or put their buying plans on hold,” Daryl Fairweather, Redfin chief economist, said in the report. 

The effects of the recent increase in mortgage interest rates are expected to be felt in the following months. Bidding wars occurred in nearly three out of every four townhouses sold in March in the United States, making townhouses the most competitive property type. Single-family homes were followed by multi-family structures, which received 68.1 percent, and condos and co-ops, 62.6 percent.

First-Quarter New-Home Sales Revised Upward, But March Figures Take Tumble

According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new single-family home sales fell 8.6% from February to 763,000, a sharp decline from February’s pace. 

Rising interest rates, quick housing price hikes, high inflation, poor supply, and geopolitical uncertainty all stifle affordability and hamper sales during the month. Even with the lower estimates, experts polled by Reuters projected an annualized pace of 765,000 units, indicating that the March figures were disappointing. However, sales projections for the prior three months were revised upward, bringing 131,000 units.

The 10.2 percent reduction in new-home sales in the South was mainly responsible for the drop in new-home sales between February and March. Although the number of new homes for sale increased at the end of March, for-sale inventory remains a concern nationwide. At 407,000 homes, this figure was up 3.8 percent from the previous month, implying a 6.4-month supply at the current sales pace. Material shortages are also driving up new-home prices. In March, the median price of a new home rose 3.6 percent month over month and 21.4 percent year over year to $436,700.

Next week’s potential market-moving reports are:

• Monday, May 2nd – Construction Spending
• Tuesday, May 3rd – Job Openings, Quits
• Wednesday, May 4th – Employment Report, ISM Services Index, FOMC Statement
• Thursday, May 5th – Initial Jobless Claims, Continuing Jobless Claims
• Friday, May 6th – Unemployment Rates, 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.

MBA Weekly Applications Survey April 20, 2022: Rising Mortgage Rates Push Down Applications

Mortgage application activity fell last week due to the highest mortgage rates in more than a decade, according to the Mortgage Bankers Association’sAssociation’s Weekly Mortgage Applications Survey for the week ending April 15TH.

The Market Composite Index fell 5.0 percent from the previous week on a seasonally adjusted basis. The refinance share of mortgage activity decreased to 35.7 percent of total applications from 37.1 percent as Refinance Index dropped by 8 percent. Moreover, the seasonally adjusted Purchase Index also fell by 3 percent. Read More