New Data Shows a Sharp Decrease In Demand Driving Housing Market Cooldown Private Sector Adds 208,000 Jobs Home Price Appreciation Lose Steam

Sharp Decrease In Demand Driving Housing Market Cooldown

HouseCanary Inc., a nationwide brokerage renowned for the accuracy of its real estate valuations, published its most recent Market Pulse report on Wednesday. It covered 22 measures obtained from listings and compared data between September 2021 and September 2022. According to their new survey, the number of homes being taken off the market and price reductions has dramatically increased as mortgage rates climb.

The ongoing lack of housing inventory over the past year has been mostly caused by frequent interest rate increases by the Federal Reserve to combat escalating inflation. Due to the record-high mortgage rates, the post-pandemic housing market has undergone a dramatic turnaround, according to HouseCanary.

As per Jeremy Sicklick, HouseCanary co-founder and CEO, the significant increases in listing removals and price drops are driven by declining demand.

A net of 3,179,129 new listings has been added to the market since September 2021, a 7.6% reduction from the preceding 52 weeks. Monthly new listing volume decreased by 19.2% compared to last year.

Over the last 52 weeks, 3,194,231 properties have gone into contract, representing an 11.1% decrease in the same period in 2021.

Home Price Appreciation Losing Steam

Although U.S. home prices resumed their 127-month consistent annual growth in August, they slowed for the fourth consecutive month to 13.5%, according to CoreLogic’s monthly Home Price Index and HPI Forecast. Since April 2021, the slightest yearly appreciation has been observed.

Similar discoveries were published on Monday by Black Knight, Jacksonville, Florida. According to its monthly Property Price Index, the median home price declined by 0.98% in August, slightly better than the monthly decline of 1.05% in July, which had been upwardly revised. The report also shows the months of July and August saw the most significant monthly price drops since January 2009.

As per Selma Hepp, interim head of CoreLogic’s Office of the Chief Economist, the August results partially reflect continued cooling in buyer demand brought on by rising mortgage rates and changing housing trends sparked by the conclusion of the COVID-19 outbreak. With nearly three-quarters of states reporting drops from July, the 0.7% month-over-month price decrease also points to a decline in homebuyer enthusiasm.

ADP: Private Sector Adds 208,000 Jobs; Annual Pay Up 8%

According to ADP, Roseland, New Jersey, the private sector added 208,000 jobs in September, which released the second of four significant jobs reports this week. However, annual pay growth slowed to just under 8 percent.

The ADP National Employment report indicates small businesses (those with 1–49 people) added 58,000 jobs in September, followed by medium-sized businesses (those with 50–499 employees), which added 90,000 jobs, and big enterprises, which added 60,000 jobs. According to the data, employers in the service sector created 237,000 new positions in December, while companies that manufacture goods lost 29,000 jobs overall.

“There are signs that people are returning to the labor market,” said Nela Richardson, chief economist with ADP. “We’re in an interim period where we’re going to continue to see steady job gains. Employer demand remains robust, and the supply of workers is improving–for now.”

According to the survey, job changers’ pay declined in September after experiencing double-digit year-over-year improvements since the summer of 2021. The worst slowdown in the three-year history of ADP data occurred in their annual salary, which increased by 15.7 percent instead of the revised 16.2 percent advance in August. In September, the yearly salary increase for those who kept their jobs was 7.8%, up from a revised 7.7% in August.

Humor of the Week:

What is a mortgage officer’s favorite Mexican food?

Refied beans

Next week’s potential market-moving reports are:
Monday, October 10th – No Report
Tuesday, October 11th – NY Fed 5-year Inflation Expectations
Wednesday, October 12th – FOMC Minutes
Thursday, October 13th – Cofre CPI, Initial Jobless Claims, Continuing Jobless Claims
Friday, October 14th – Retail Sales, UMich Consumer Sentiment 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 (800) 216-1047.


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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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Has Spring has sprung? New Home Sales Jump 11% in May but is showing a slow decline in the last few months

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May New Home Sales Jump 11%

In a month of generally negative housing data, May’s new home sales stood out as the only bright spot. New home sales jumped by over 11% from April, according to 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.

The sales vary by region: the largest area, the South, increased by 1.5 percent from a year earlier to 413,000 units after being adjusted from 366,000 units in April. Sales in the West increased by 0.5 percent from a year earlier and increased by 39.3 percent to 202,000 units up from 145,000. Meanwhile, the Northeast declined 42.5 percent from a year earlier. Sales in the Midwest fell by 37 percent from last year and 18.3 percent in May to 58,000 units from 71,000 units in April.

“There was a surge in completions of single-family homes in May reported in the housing starts data earlier this month, which we believe was driven by buyers racing in to lock in mortgage rates before rates rose even higher,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “Sales of new homes under construction accounted for the largest share of May’s increase, although sales of homes where construction has not yet started and sales of completed homes also rose last month.”

June Sees Big Home-Price Deceleration Coupled With Record Inventory Jump

Home Sale

Recent homebuyers have experienced a severe double blow of rising interest rates and sky-high home prices, but Black Knight’s most recent Mortgage Monitor report might provide some hope for purchasers.

Annual home price growth fell sharply from 19.3% in May to 17.3% in June. According to Black Knight Data & Analytics President Ben Graboske, the reduction in the price growth rate of over two percentage points was the most significant deceleration observed by the company since at least the early 1970s. The real estate analytics firm found that although prices are rising, they are doing so at a noticeably slower rate. This deceleration is likely to continue in the near future.

A further indication that high prices and rising rates are eventually slowing the previously overheated housing market is that the price growth rate slowed down for the third month in a row in June. Another promising development for prospective buyers was that the decline in rate hike in June was accompanied by the biggest month-to-month gain in inventory in the previous 12 years. According to Black Knight’s research, on a seasonally adjusted basis, the number of homes offered for sale increased by 22 percent for the last two months, or nearly 114,000 new listings.

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

According to the National Association of Realtors, pending home sales—a gauge of contracts to buy existing homes—rose modestly in May, up 0.7 percent from April. That ended a six-month trend of dropping demand. 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 longer.

As per, 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 in a row.

Next week’s potential market moving reports are:

  • Monday, August 8th – Construction Spending
  • Tuesday, August 9th – Job Openings, Quits
  • Wednesday, August 10th – Rental Vacancy Rate, Homeowner Vacancy Rate
  • Thursday, August 11th – Initial Jobless Claims, Continuing Jobless Claims, Trade Deficit
  • Friday, August 12th – 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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