The Refi Market is About to Bottom Out, says Black Knight while NAR Economist Predicts That Home Prices Won’t Decrease in 2023

NAR Economist

NAR Economist Predicts That Home Prices Won’t Decrease in 2023.

Lawrence Yun, the chief economist for the National Association of Realtors (NAR), examined the home market’s current position and provided his market forecast for 2023 on Friday at the NAR conference in Orlando.

Yun said that although high mortgage rates, slow home sales, and rising inflation have had a significant negative impact on the housing industry, it is unlikely that these problems will result in a decline in home prices in 2023. He also noted that even if mortgage rates remain at or close to 7%, we might see a further increase in home prices in 2023. Yun’s market predictions are counter to the majority of analysts. Most experts are predicting home values to decline by 15% or more.

Although Yun anticipates a 1% rise in the national median home price the following year, he pointed out that some markets will see price increases while others will see price drops.

Additionally, Yun anticipates a 7% drop in home sales in 2023. He projects a 10% increase in home sales and a 5% increase in the country’s median home price for 2024, leading to a significant resurgence in home sales.Whereas the view for 2023 was generally favorable, Yun voiced concern about the difference between mortgage and federal funds rates. “The gap between the 30-year fixed mortgage rate and the government borrowing rate is much higher today than it has been historically,” Yun said. “If we didn’t have this large gap, mortgage rates wouldn’t be 7%, they would be 5.8%. A normal spread would revive the economy. If inflation disappears, then we’d see less anxiety within the financial markets and lower interest rates, which would allow owners to refinance.”

The Refi Market is About to Bottom Out, says Black Knight

Mortgage loan rate locks have decreased significantly over the previous 12 months due to the slowing purchase and refinance activity brought on by the high mortgage rates, which ended October at 7.06%. The refinance market is getting close to the bottom despite the rising rates.

According to Black Knight, the decrease in rate lock volume was caused by a 25.1% drop in cash-out locks from September and an additional 15.7% drop in rate/term refi.

When property equity was close to all-time highs early in the year, cash-outs displayed some early resilience even as rates started to increase. However, rate/term refis have plummeted by a startling 92.6% year over year, and cash-out refis are currently down 83.6% compared to October 2021. 

Since Optimal Blue started monitoring the data in 2018, purchase mortgages account for the most significant percentage of rate locks at 86%. However, challenges to home affordability have continued to put downward pressure on purchase credit. By dollar volume, purchase locks declined 39% from October 2021 and 13% from September.

MBA Weekly Survey Nov. 16, 2022: Rates Fall; Applications Up 1st Time in 8 Weeks

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending November 11, mortgage applications increased for the first time in eight weeks as interest rates dropped below 7 percent. The outcomes for the week have been modified to account for Veterans Day.

On a seasonally adjusted basis, the Market Composite Index gained 2.7% over the previous week. The unadjusted Refinance Index dropped by 2%, and the number of mortgage applications for refinances fell from 28.1% the last week to 27.6% overall.

The seasonally adjusted Purchase Index went up 4% over the previous week. The share of FHA loans among all applications rose from 13.3% to 13.5%, and VA applications rose from 10.3% the prior week to 10.6%. The USDA’s percentage of all applications grew from 0.5% last week to 0.6%.

With points falling to 0.64 from 0.78 (including origination charge) for loans with an 80 percent loan-to-value (LTV), the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (more than $647,200) jumped from 6.50 percent to 6.51 percent on average.

Next week’s potential market-moving reports are:

  • Monday, November 21st – Chicago Fed National Activity Index
  • Tuesday, November 22nd – No Report
  • Wednesday, November 23rd – Initial Jobless Claims, New Home Sales (SAAR), FOMC Minutes
  • Thursday, November 24th – No Report
  • Friday, November 25th – No Report

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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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.

Resource:-

https://finance.yahoo.com/news/sharp-decrease-demand-driving-housing-130000580.html

California Platinum Loans

  https://californiaplatinumloans.com

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

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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 point 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.

Resource:-

https://www.cnbc.com/2022/09/21/mortgage-demand-rises-for-the-first-time-in-six-weeks.html

California Platinum Loans

  https://californiaplatinumloans.com