Mortgage Demand Is Up In Six Weeks, Despite Much Higher Interest Rates – Housing Construction Rebounds Seen in August While Existing Home Sales Fall


Housing Construction Rebounds In August While Permits Drop

According to the U.S. Census Bureau and Housing and Urban Development Department, residential building unexpectedly picked up in August, with home starts up 12.2% month over month to a seasonally adjusted annual rate of 1.58 million units.

Both multifamily and single-family starts increased during the month. The growth occurred even as the housing sector battles a slowdown brought on by the unpredictability of the economy and the climate of rising mortgage rates.

After falling for five consecutive months, single-family starts increased by 3.4% in August, perhaps as a result of some improvements in the supply of building materials. However, the single-family building is still insufficient by modern standards.

“Today’s housing starts report is more evidence that the housing recession is deepening for the single-family market, with the pace below 1 million for the last two months,” added Jing Fu, the NAHB’s director of forecasting and analysis. “Expected additional tightening of monetary policy from the Federal Reserve, falling builder sentiment, and a 15.3% year-over-year decline in single-family permits points to further weakening for the housing sector.”

Even while the August numbers are positive, the construction recovery might only be temporary. August saw a 10% drop in all building permits, with single-family permits falling by 3.5% and multifamily permits falling by 17.9%. The August reversal indicates that builders are still reducing production due to continued material cost concerns and muted demand. Permitting is a reliable predictor of future new-home supply.

Existing Home Sales Fall in August; Prices Soften Significantly

As the National Association of Realtors reported, sales of previously owned homes dropped 0.4% from July to a seasonally adjusted annualized rate of 4.80 million units. That is the lowest sales pace since May 2020, when the Covid epidemic’s beginnings temporarily caused activity to stall.

All price ranges saw a decline in sales, but the lower end saw the most significant drop. While sales of properties priced between $750,000 and $1 million were down just 3% from the previous year, those priced between $250,000 and $500,000 saw a 14% decline—a decline primarily due to supply, which is most scarce at the bottom end of the market.

Although there was a slight increase in single-family housing starts in August, the U.S. Census reports that homebuilders have been cutting back in response to declining demand. That might have been brought on by a momentary dip in mortgage rates that increased buyer interest. Building permits, a sign of upcoming construction, decreased since mortgage rates were anticipated to rise once more.

Mortgage Demand Is Up In Six Weeks, Despite Much Higher Interest Rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances—$647,200 or less—rose from 6.01% to 6.25%, with points for loans with a 20% down payment falling from 0.76 to 0.71 (including the origination fee).

Applications to refinance a home loan, often particularly susceptible to significant rate changes, actually increased 10% for the week. The prior week’s holiday adjustment might have impacted part of that. It’s also possible that the few remaining borrowers who could profit from a refinance finally decided to do so after realizing that rates might increase soon.

Despite an increase of 1% for the week, mortgage applications for home purchases were 30% fewer than during the same week last year. Since there is currently less competition in the expensive market, some buyers might act quickly. Even so, costs have not decreased much, and because interest rates are currently so high, affordability is historically poor. The slight weekly increase in mortgage demand does not accurately reflect the current severe decline in home sales.

A bank advertises that it offers mortgage loans with no interest.

Customer: “Hello, I’d like to apply for a mortgage.”

Bank Employee: “Yeah, whatever.”

Next week’s potential market moving reports are:

  • Monday, September 26 – Chicago Fed National Activity Index
  • Tuesday, September 27 – S&P Case Shiller and FHFA U.S. Home Price Index (SAAR), New Home Sales (SAAR)
  • Wednesday, September 28 – Pending Home Sales Index
  • Thursday, September 29 – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, September 30 – Core PCE Price Index, Real Consumer Spending, Chicago PMI

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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According to Fannie Mae’s most recent forecast, the housing market is likely to revert to a normal-ish level of price appreciation for the silent majority despite an abatement from the year’s dramatic price surge.

Case-Shiller Data Suggests that Home-Price Appreciation is Tapering

The S&P Case-Shiller U.S. National Home Price NSA Index reported an annual gain of 19.8% in August, indicating that home price growth is beginning to settle throughout the country. It is nearly the same increase as the previous month, marking the first time since early 2020 that the year-over-year increase in home prices hasn’t seen significant increases from one month to the next. The Case-Shiller 10- and 20-city composite indices, which track price increases in the country’s biggest cities, also mirrored the cooling. The 10-city index increased by 18.6%, while the 20-city index increased by 19.7%, slightly less than their July gain rates.

It’s worth noting that the 20-city composite index continues to climb faster than the 10-city index. Because the latter index only includes prices in the most populous U.S. metro areas, the 20-city’s higher gain indicates price growth in smaller, more inexpensive regions where migration from more expensive cities has aided price rises. Phoenix continued to lead all cities with annual price gains of 33.3%. It was the 27th straight month that the Arizona capital topped this category. San Diego (26.2%) was second, followed by Dallas (24.6%) and Seattle (24.3%).

Fannie Mae Forecasts Housing Market Cool Off In 2022

According to Fannie Mae’s most recent forecast, median home prices will increase 7.9% between the fourth quarter of 2021 and the fourth quarter of 2022. While this would be a slowdown from the year’s dramatic price surge, it would still be robust growth by historical standards. (Since 1987, the average yearly increase in property prices in the United States has been 4.1 percent.) At least in the eyes of Fannie Mae, the housing market is likely to revert to a normal-ish level of price appreciation.

“Mortgage rates may rise in response to the tighter environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong house price appreciation through at least 2022, limiting interest rate effects on home sales and home prices,” wrote Doug Duncan, chief economist at Fannie Mae, in its latest 2022 outlook.

New Home Sales Post Double-Digit September Gain

The U.S. Census Bureau and the Department of Housing and Urban Development report that newly constructed single-family homes sold at a seasonally adjusted annual pace of 800,000 units this month. This surge was a 14.0% increase over August’s pace of 702,000 units. Earlier reports put the figure at 740,000 units. Sales of 971,000 units were sold at a seasonally adjusted rate of 17.6 percent higher in September 2020 than in September 2019. Analysts polled by both Econoday and Trading Economics had a consensus forecast of 760,000 in sales.

The median price of a home sold in September was $408,800 compared to $344,400 last year. The average prices for the two periods were $451,700 and $405,100, respectively.

There were an estimated 379,000 new homes for sale at the end of September. At the current rate of sales, this amounts to a 5.7-month supply. In August, the inventory was good for 6.5 months, while in September 2020, it was only enough for 3.5 months.

The majority of the sales growth in September came from two regions: the Northeast with 32.3 percent, and the South with a 17.8 percent increase in sales compared to August.

Next weeks potential market moving reports are:

  • Monday, November 1st – Construction Spending
  • Tuesday, November 2nd – Homeownership Rate
  • Wednesday, November 3rd – ADP Employment Report, Federal Reserve Statement
  • Thursday, November 4th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, November 5th – Consumer Credit, 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

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Are Young Homebuyers Priced Out of the Market? Investigate How to Buy Your First Dream Home in Your 20s

If you’re in your 20s and thinking about buying a house, it’s easy to understand how you could be confused and overwhelmed. According to a study by the National Association of Realtors, people under 35 with student loans are postponing home buying by an average of 8 years. But buying a home while in your 20s is not only a possibility, you’ve got a lot of resources that could make it happen for you. First, we’d like to dispel a few myths about home buying that could have been keeping you out of the home market.

Student loans will prevent you from buying a home

The problem of student loan debt is finally on the national agenda, and lawmakers are seriously discussing reducing the interest on student loans or even forgiving some or all student loan debt. Although this plan is still under discussion, some homebuilders and the majority of states offer home buying assistance programs for people whose student loan debt is preventing them from buying a home.

California offers the CalHFA “My Home” first time homebuyer assistance program which provides down payment and closing cost assistance. CalHFA also works with counties to offer tax credits to make mortgage payments more affordable for first-time homebuyers. A first-time homebuyer is anyone who has not purchased a home during the past three years. So, even if you’ve bought and sold a home before, you could be eligible for one of these programs as long as it hasn’t been during the past three years.

Work on your credit score

These days, you can sign up to monitor your credit score via dozens of apps and financial programs. The majority of credit cards and financial institutions offer free or very low cost credit score monitoring. Learn how your credit score works and work to increase it. Your debt-to-income ratio and credit use ratio will affect your credit score, along with any late payments.

You’ll want to increase your credit score as much as possible: ideally to 660 or better. However, some mortgage programs, including FHA home mortgages, can offer loans to people with credit scores as low as 580.

Work with a knowledgeable realtor and mortgage broker

Everyone is online and connected, and you can shop for homes using your mobile device — even apply for a mortgage. But many home loan programs still work through mortgage brokers. And, not every home for sale is a featured listing on an online home search service. The personal touch still matters — it might matter more than ever these days. You can learn what your alternatives in home buying really are by working with a mortgage and home buying professional.


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