Two top home price indices reported that home prices dropped significantly again in August, Landlords are being forced to pull back on significant increases due to a sudden drop in tenant demand US Economy Likely To Enter Recession in 2023

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Home Prices Fell Even Faster in August, But Still Up Big Year-Over-Year

The two top home price indices reported that home prices dropped significantly again in August. The Federal Housing Finance Agency (FHFA) reported a fall of 0.7% – a slight increase from the 0.6% decline in July. The S&P Case Shiller 20 city index also reports a decrease of 1.3% from 0.7% in the previous month.

Does this imply that prices are dropping? In theory, absolutely. A home that sold for $397k in June would have sold for about $392k in August, citing FHFA as an example. In addition, the change from gains to losses has been extremely rapid. 

Even while year-over-year growth is less than it was a few months ago, it is still relatively encouraging. Home prices are normally monitored in terms of actual year-over-year changes, despite the rapid shift in the monthly direction. In essence, the house that sold for $392k in August of this year would have sold for about $350k in August of the prior year. This represents a 12% change from year to year. It is likely that the 12% figure will drop further in the upcoming months. What creates part of the challenge of looking at these numbers is that rising prices in the past will be used to compare pricing in the coming months. The market is behaving very differently right now, so it is difficult to compare numbers from year to year.

Mortgage Rates Will Fall To 5.4% As US Economy Likely To Enter Recession in 2023

As stated by the Mortgage Bankers Association, mortgage rates could decrease to 5.4% by the end of next year since the Federal Reserve‘s aggressive interest rate increases will cause the US economy to enter a recession. This is an educated guess, and nothing is close to a guarantee. Interest rate predictions from the MBA, Fannie Mae, and even the National Association of Realtors have been – not even close to accurate for over 12 months. With all of the possible events that could impact rates, predicting their future has never been more difficult.

The US housing market is already beginning to feel the effects of the Fed’s aggressive battle against inflation, as mortgage applications reached their lowest level since 1997. Home sales have also been affected, with existing home sales falling 24% in September.

Renters Hit Breaking Point in a Sudden Reversal for Landlords

America’s tenants have had it with record-high housing costs and rising expenditures for everything from food to energy. Due to a sudden drop in tenant demand, landlords are being forced to pull back on significant increases. In many areas of the US, rent increases are slowing, causing an end to a years-long boom that has made housing unaffordable from across the country.

Instead of moving out on their own, young individuals who may do so are staying with their parents or sharing apartments with several other people.

Next week’s potential market-moving reports are:

  • Monday, October 31st – Chicago PMI
  • Tuesday, November 1st – Jobs Openings, Quits, Construction Spending 
  • Wednesday, November 2nd – FOMC Announcement, Fed Chair Jerome Powell Press Conference
  • Thursday, November 3rd – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, November 4th – 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.

California Platinum Loans

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Fannie Mae Home Price Index Shows Growth Slow Down in Q3 Millennials are Likely to Buy Property in the next Two Years Due to an Improvement in Their Financial Situation

Home Price Growth

Home Price Growth Slowed Down in Q3

The Fannie Mae Home Price Index (FNM-HPI) measures the average quarterly price change for all single-family homes in the United States, excluding condos. It is a national index based on repeat transactions. According to the FNM-HPI, which was announced on Monday, home price growth decreased from 19.1% in Q2 2022 to 13.2% in Q3 2022 as mortgage rates increased and housing inventories rose. 

Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement that the third-quarter slowdown in year-over-year home price growth resulted from rising mortgage rates and decreasing housing affordability. “Furthermore, the supply of completed, new single-family homes for sale has begun to rise, suggesting that homebuilders may also need to begin offering greater price concessions to move inventory. We expect these trends to continue in the coming months,” Duncan said.

Millennials versus Homeownership

The fastest-growing demographic in terms of homebuyers, millennials make up about one-fifth of the American population. They account for 43% of all new home purchases. However, compared to older generations, fewer millennials are purchasing homes. 

According to a Fannie Mae survey from 2019, more than half of millennials and Gen Zers (55%) believe housing is out of their price range. In addition, when compared to earlier generations, millennials are less likely to purchase homes for the following reasons:

Low mortgage rates, housing shortages, inflation, and growing building material costs put high housing costs at the top of the list. The National Association of REALTORS reports that the typical price of an existing home has increased to over $350,000—an all-time high.

Next is the substantial debt load that many millennials have. Sadly, more than 75 percent of millennials are also dealing with debt, which makes it extremely difficult to have enough money for a down payment on a house.

Finally, stricter loan requirements deter millennials from buying a home. According to a report from the Mortgage Bankers Association, mortgage credit availability decreased in June 2021. The Mortgage Credit Availability Index dropping by 8.5% in June of last year is another sign that lending criteria are tightening.

Millennials stated they are likely to buy a property in the next two years due to an improvement in their financial situation, which is consistent with healthy household balance sheets and rising incomes in the United States, according to the 2022 Millennial Home Improvement Survey.

Next week’s potential market-moving reports are:

  • Monday, October 24th – Chicago Fed National Activity Index, S&P U.S. Services PMI
  • Tuesday, October 25th – S&P Case-Shiller U.S. Home Price Index, FHFA U.S. Home Price Index
  • Wednesday, October 26th – New Home Sales (SAAR)
  • Thursday, October 27th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 28th – Employment Cost Index (SAAR), Pending Home Sales 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 310-905-5587.

California Platinum Loans

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Consumer Price Index rose! Shook the Financial Markets in September, Meantime New Mortgage Applications Experienced a Minor Downward trend Considering Rate Hikes while MBA Sees Job Numbers as Positive for Housing Market

  • 14 Oct 2022
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Consumer Price Index

Inflation Increased 0.4% in September, Despite Rate Hikes

In September, consumer prices for a wide range of goods and services increased more than anticipated as rising costs continued to drag on the U.S. economy.

According to the Bureau of Labor Statistics, the consumer price index rose 0.4% for the month, more than the 0.3% Dow Jones prediction. The report first shook the financial markets, sending Treasury rates higher and stock market futures falling as traders increased their expectations for future, more aggressive interest rate increases from the Federal Reserve. However, in the morning trade, the earlier losses were reversed, and by 1:30 p.m., the Dow Jones Industrial Average had risen more than 800 points. ET. 

The cost of food increased significantly, elevating the headline figure. Like August, the food index rose 0.8% for the month and was up 11.2% from the previous year. 

This increase somewhat offset a 2.1% drop in energy prices, including a 4.9% drop in gasoline. According to AAA, the cost of regular gasoline at the pump increased by about 20 cents in October compared to the previous month.

Despite the Federal Reserve‘s intense efforts to rein in price increases and slowdowns in specific important sectors that officials are monitoring, inflation is increasing.

Rates Aside, MBA Sees Job Numbers as Positive for Housing Market

Last week, the number of mortgage applications decreased again, but the reductions were minor compared to the double-digit losses in all indexes on September 30. The Mortgage Bankers Association (MBA) reported that its Market Composite Index, a gauge of the volume of mortgage loan applications, fell 2.0 percent during the week ending October 7 on both a seasonally adjusted and unadjusted basis. The Refinance Index likewise decreased by 2.0 percent from the previous week. At 29.0 percent, the refinance portion of mortgage activity remained constant from last week. The unadjusted and adjusted Purchase Indices decreased by 2.0 percent weekly. 

“The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand. However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist.

Next week’s potential market-moving reports are:

  • Monday, October 17th – No Report
  • Tuesday, October 18th – NAHB Home Builders’ Index, Capacity Utilization Rate
  • Wednesday, October 19th – Building Permits, Housing Starts
  • Thursday, October 20th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
  • Friday, October 21st – Index of Common 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.forbes.com/sites/qai/2022/10/11/what-does-a-recession-mean-for-the-housing-market/?sh=d40a4d85fe5b

California Platinum Loans

  https://californiaplatinumloans.com