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.

Busting Mortgage Myths: Between Market Spins and The Real Estate Pulse

Hold onto your wallets, Californians! Today’s bulletin will traverse the media’s spin cycle, where sometimes economic seasons make things look chillier than they are. But fear not; California Platinum Loans is here to warm your understanding with some heated insights. Grab your morning brew, and let’s dive in.A Media Mirage on Housing Appreciation?

A Media Mirage on Housing Appreciation?

The financial arena echoed with a slight tremor yesterday, with mortgage bonds experiencing turbulence. If we were to take a leaf out of an aviation book, we’d say, “Expect some turbulence, but keep your seatbelts fastened for a smooth landing.” Why, you ask? Despite the negative rumble about housing, the actual value of homes continues to appreciate.

So, here’s a spin tale: Black Knight recently released a report. And while Daniel decided to pick the non-seasonally adjusted number (up by a mere .23%), it translates to roughly 3% inflation if we delve deeper. Putting it in layman’s terms, for those who put down a mere 10%, that’s a handsome 30% return on their investment. And here’s the kicker – they interpreted this as an indicator of an impending decline in home values. Aren’t statistics fun? One can show a storm on the horizon, while another reveals sunny days ahead.

The Fed’s Song & Dance: What’s Next on The Playlist?

Have they ever tried reading tea leaves? Interpreting the Fed’s next move feels a lot like that. As the grand September 20th meeting looms, there’s anticipation in the air. Will they hike? Will they pause? If only we had a crystal ball!

But here’s a silver lining. Loretta Mester from Cleveland’s Fed and Philly’s Patrick Harker have sprinkled some insights. It’s like a sneak peek into the upcoming blockbuster, where inflation and rates are leading. The overarching message? The Fed no longer relies on past data but gauges the road ahead.

Of Oil Prices and a Slippery Slope

Ah, oil! The lifeblood of our cars and, sometimes, the bane of our wallets. Recent data shows a 10% hike, pushing oil to $87 a barrel. This hike comes as Russia and Saudi Arabia play a little complicated with their production cuts. And what does this mean for our dear friend, gasoline? The prices remain stable, hovering around $3.80 per gallon. But, with the strategic petroleum reserves dwindling, any hike in oil prices could trigger a surge at the pump.

To wrap up today’s bulletin with a neat bow, while mortgage bonds took a slight hit, the true essence of the market showcases promise and resilience. The housing market remains robust, the Fed is looking ahead, and oil prices… well, keep an eye on your gas tanks.

Stay optimistic, financially savvy Californians! Plenty of opportunities are on the horizon between the ebb and flow of the market. Until next time, keep your real estate compass pointed towards prosperity, and remember, California Platinum Loans has your back in every twist and turn!


Discover The Meaning of Real Estate Secret Words For Instance: Fannie Mae, Freddie, Conforming Loans And So On Today

If you’re looking for a new home to buy or investigating home mortgage loan choices, you’ve probably run into some friendly, upbeat people who want to help you achieve your home ownership dreams or maximize the value of your home buying potential. However, some of these people sure talk funny! The real estate industry does have its own lingo. Just like any industry, sometimes the pros forget that everyone doesn’t know every single specialized term or abbreviation. So, we thought we’d put together a short list of some common terms you’ll hear, and what they stand for.

  • Conforming Loan: A conforming loan is a mortgage that fits Fannie Mae and Freddie Mac (see below) guidelines for the size of loan and loan underwriting criteria. In November 2019, the FHFA (Federal Housing Finance Agency) announced that the maximum 2020 conforming loan limit for a single-family house would be $510,400.
  • Conventional loan: A conventional loan is a home mortgage that isn’t provided through or guaranteed by a government organization. So, a mortgage that is offered by a private lender or a bank/credit union that isn’t a VA, USDA, FHA, or other government sponsored loan is a “conventional” mortgage.
  • Escrow: Escrow is an unusual word, but it just stands for the third party and time period where the money and contracts in a real estate transaction are verified and the property title is transferred.
  • Fannie Mae and Freddie Mac: These two people aren’t a married couple. They’re two different home mortgage associations that are chartered by the Federal government. Freddie Mac stands for the Federal Home Loan Mortgage Corporation. Fannie Mae stands for the Federal National Mortgage Association.
  • FHA: FHA stands for the Federal Housing Association, which was established as part of “New Deal” programs in the 1930s, and is part of the U.S. Department of Housing and Urban Development.

There are a lot of other specialized terms in the real estate and home mortgage industry. One of the advantages of working with an RE and mortgage professional is their ability to explain these terms to you, so you can understand what your choices are in homes to buy and loans that you can qualify for.