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

Property

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

HUD and the Census Bureau shares that May New Home Sales Jump 11%

HUD and the Census Bureau

May New Home Sales Jump 11%

In a month of generally negative housing data, May’s new home sales stood out as the only positive sign, up by over 11% from April, according to Friday’s HUD and the Census Bureau report. In May, new single-family home sales increased to a seasonally adjusted annual rate of 696,000, up 10.7 percent from the revised April pace of 629,000 but down 5.9 percent from a year earlier, according to the data.

The sales vary by region. In the most prominent area, the South, sales increased by 1.5 percent from last year to 413,000 units in May, while sales in the West increased by 0.5 percent and increased by 39.3 percent to 202,000 units from 145,000 units in April. Seasonally adjusted from 47,000 units in April to 23,000 units in May and down 42.5 percent from a year earlier, sales in the Northeast decreased by 51.1 percent. Sales in the Midwest fell by 37 percent from a year ago and 18.3 percent in May to 58,000 units from 71,000 units in April.

According to the data, the median sales price of brand-new homes sold in May dropped to $449,000. The average sales price decreased to $511,400. At the end of May, the seasonally adjusted estimate of new homes for sale increased slightly to 444,000, which, based on the current sales pace, represents a supply of 7.7 months.

Pending Home Sales Post Surprise Increase In May, Likely Due To Brief Pullback In Mortgage Rates

The National Association of Realtors reports that pending home sales—a gauge of contracts to buy existing homes—rose modestly in May, up 0.7 percent from April, disrupting a six-month trend of decreasing demand. However, sales were still 13.6% below May 2021 levels.

Mortgage rates have been on the rise for buyers since the beginning of the year, but in May, they started to decline slightly, which may be the cause of the increase in sales. The overall active inventory climbed as more supply entered the market, and some homes remained on the market for a long.

According to Mortgage News Daily, the 30-year fixed mortgage average reached a high of 5.64 percent in the first week before dropping to 5.25 percent by the month’s end. It increased once more to a little over 6 percent by mid-June.

As per Realtor.com, the number of homes for sale has finally started to increase, up 21 percent from a year ago. However, it is still only approximately 50% of pre-Covid levels. Additionally, the median listing price increased by around 17% last week, remaining stable for the third week.

Regionally, pending home sales in the Northeast increased by 15.4%% over the previous month and decreased by 11.9% over May 2021. Sales in the Midwest were down 8.8 percent from a year ago and were down 1.7 percent for the month. Sales in the South were up 0.2 percent month over month but down 13.8 percent yearly. The West, where homes are most expensive, saw the most significant drop in sales, down 5.0 percent for the month and 19.8 percent from the previous year.

Home Price Indices Approach, Exceed 20% Annual Rate

The S&P CoreLogic Case-Shiller Indices indicated annual home price appreciation at 20.4 percent, while the Federal Housing Finance Agency House Price Index reported yearly appreciation at 18.8 percent.

S&P DJI, which publishes the S&P CoreLogic Case-Shiller Indices, managing director Craig J. Lazzara, said April’s findings showed preliminary but erratic indicators of a slowdown in the growth rate of U.S. home prices. Lazzara pointed out that a more difficult macroeconomic situation might not be able to sustain an extraordinarily high home price rise for very long.

U.S. home prices increased 1.6 percent in April, according to FHFA. According to the agency’s estimate, house prices rose 18.8 percent between April 2021 and April 2022.

Will Doerner, Supervisory Economist of FHFA’s Division of Research and Statistics, stated, “House price appreciation continues to remain elevated in April,” said Will Doerner, Supervisory Economist of FHFA’s Division of Research and Statistics. “The inventory of homes on the market remains low, which has continued to keep upward pressure on sales prices. Increasing mortgage rates have yet to offset demand enough to deter the strong price gains happening across the country.”

Next week’s potential market-moving reports are:

  • Monday, July 4th – No Report
  • Tuesday, July 5th – Factory Orders
  • Wednesday, July 6th ISMServices Index, Job Openings, Quits
  • Thursday, July 7thADP Employment Report, Initial Jobless Claims, Continuing Jobless Claims
  • Friday, July 8th – Unemployment Rate, Labor Force Participation 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.

Blazing-Hot Housing Market Cooling Down: 1 in 5 U.S. home sellers lowered their price at some point in May

housing marketing

Mortgage Demand Falls To Lowest Level Since December 2018

According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications for home purchases declined 1% last week compared to the previous week. Despite a slight drop, mortgage rates are still much higher than at the beginning of the year – this, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.33% from 5.46%, with points dropping to 0.51 from 0.60 (including the origination fee) for loans with a 20% down payment.

Rising interest rates and rapid increases in housing prices are putting a strain on affordability. Because there is still so little supply on the market, prices are continuing to rise, but various levels of purchasers see different pictures. Refinance applications, which are more susceptible to rate changes than purchase applications, declined 5% this week and were 75% lower than last year. Although rates have dropped from their highs in recent weeks, refinance demand has remained flat because many borrowers took advantage of the low rates last year.

Factors That Could Influence Sellers’ Behavior

The “rate lock-in effect,” as economists define it, occurs when we bind ourselves to the low mortgage rates we received when we bought or refinanced our homes. So, we stay put even though we want to move up, downgrade, or relocate.

Rate lock-in is not without risk (and should not be confused with “locking” an interest rate before closing on a mortgage). It takes properties off the market when demand for housing outstrips supply, driving up prices and encouraging brutal competition. Because they don’t have any equity to transfer into down payments, first-time home purchasers are particularly disadvantaged. Is rate lock-in, however, a real thing? How many moves does it obstruct? For more than 40 years, economists have debated the topic. 

Quigley and others discovered more evidence of the lock-in effect in the 2000s and 2010s, but experts disagreed on its significance. Rate lock-in is challenging to quantify because consumers relocate or stay for various reasons. And no one pays attention to it until mortgage rates rise dramatically.

House Hunters Take Note: The Blazing-Hot Housing Market Is Finally Cooling Down

A blazing hot housing market is beginning to chill across the United States, giving potential homeowners optimism after months of searching for a new house amid the most challenging conditions in decades. 

According to analysts, rising mortgage rates and surging property prices have caused some homebuyers to abandon the market entirely, reducing competitiveness. Because fewer people are competing for the same house, asking prices and the number of properties sold has dropped significantly.

People don’t like that today’s mortgage rates add hundreds of dollars to monthly payments. This week, the average interest rate on a fixed 30-year mortgage was 5.3 percent. Realtor.com Chief Economist Danielle Hale told CBS News that this is a 13-year high.

Although the dream of homeownership has been pushed out of reach for many middle-class Americans this spring, analysts say the summer may be a better time for those who want to stick it out.

Real estate tracker data released this month indicates that the market is cooling. For instance:

  • The number of existing homes sold fell 2.4% last month, the third straight month of declines, the National Association of Realtors said. 
  • According to data from the Mortgage Bankers Association, mortgage applications dropped 1% last week and 11% the week before that. 
  • According to Redfin, about 1 in 5 U.S. home sellers lowered their price at some point in May, the highest number of drops since October 2019. Rochester, New York; Detroit, Michigan; and Toledo, Ohio, have seen some of the most significant price drops, according to Realtor.com.
  • According to U.S. Census data released this week, sales of newly built homes fell 16.6% in April. 
  • The realtors association said Thursday that pending home sales fell almost 4% between March and April.   

Next week’s potential market-moving reports are:

  • Monday, June 6th – No Report
  • Tuesday, June 7th –Consumer Credit
  • Wednesday, June 8th – Wholesale Inventories Revision       
  • Thursday, June 9th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, June 10thConsumer Price Index, Core CPI, Federal Budget Balance

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.