Mortgage Applications Down 2nd Straight Week in December National Housing Survey says Homebuying Sentiment is Readjusting

MORTGAGE APPLICATIONS

Homebuying Sentiment is Readjusting

The Home Purchase Sentiment Index (HPSI) for Fannie Mae had its first upward movement in nine months in November, suggesting some hints that homebuyers might be accepting the new reality of housing prices and interest rates. The index, which is a summary of responses to six questions from the National Housing Survey (NHS) conducted each month, increased by 0.6 points from its all-time low in October. At 57.3 right now, it is still 17.4 points behind where it was a year ago.

Consumers’ views toward buying and selling a property, which makes up the index’s two main components, both slightly improved from their October levels but remained double-digits lower than in November of 2021. Positive responses to whether this was a good or poor time to buy a house grew by one point. Still, the net positive result—the sum of the positive and negative responses—was a negative 63% or 28 points less annually.

High mortgage rates continue to make housing unaffordable, and 62% of respondents anticipate further increases over the coming year, compared to only 10% who expect a decrease. The net of -53% is 1 point higher annually and 7 points higher than in October.

CoreLogic: Annual Home Price Growth Slows to Half of Spring Peak

According to CoreLogic, year-over-year home price growth in October was 10.1%. The index fell, and it is the lowest growth level since early 2021.

According to the company’s Home Price Index for October, several factors contributed to the slowing appreciation. Among these is the continued lack of inventory on the market. However, the lack of inventory is not due to buyer demand. Instead, it is more likely related to homeowners not wanting to sell due to the desire to keep their low-interest rate mortgage they probably obtained during the pandemic refinance and purchase craze. Additionally, the loss of purchasing power and the current state of the economy also contributed to lower housing demand.

Selma Hepp, interim lead of the Office of the Chief Economist with CoreLogic, noted that “while some housing markets have seen significant recalibration since the spring price peak and are likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.

MBA Weekly Survey Dec. 7, 2022: Applications Down 2nd Straight Week

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending December 2, mortgage applications decreased by over 2%. However, refinance applications increased due to dropping interest rates.  The outcomes from the previous week have been modified to account for Thanksgiving Day.

On a seasonally adjusted basis, the Market Composite Index dropped by 1.9% from one week earlier. The unadjusted refinance index rose by 5% from the prior week. From 26.1% the previous week, the refinance portion of mortgage activity grew to 28.7% of all applications. Meanwhile, the seasonally adjusted Purchase Index fell by 3%.

Next week’s potential market-moving reports are:

  • Monday, December 12th – NY Fed Inflation Expectations, Federal budget
  • Tuesday, December 13th – Consumer Price Index, Core CPI 
  • Wednesday, December 14th – Federal Funds Rate Announcement, Fed Chair Jerome Powell News Conference
  • Thursday, December 15th – – Initial and Continuing Jobless Claims
  • Friday, December 16th – 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.

Related Post

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.

Related Post

We are seeing a Decline in Home purchases due to economic uncertainty: National Association of REALTORS and Commerce Department agrees

sale

Existing-Home Sales Slid 5.4% in June

According to the National Association of REALTORS®, existing-home sales decreased for the sixth consecutive month in June. In addition, sales fell month over month in three of the four major U.S. areas, while one region saw no change.

Single-family homes, townhomes, condominiums, and co-ops made up the majority of completed existing-home sales, which fell by 5.4 percent from May to a seasonally adjusted annual pace of 5.12 million in June.

The good news is that inventory is finally growing. Although available homes for sale are still deficient, we are seeing a trend of growth which hopefully will begin to offer relief to the relentless increase in home prices. At the end of June, there were 1,260,000 registered housing units, up 2.4 percent from the previous year and 9.6 percent from May. (1.23 million). At the current sales rate, unsold inventory has a 3.0-month supply, up from 2.6 months in May and 2.5 months in June 2021.

As prices rose across the board, the median existing-home price for all property types in June was $416,000, a 13.4% rise from June 2021 ($366,900). This increase represents the longest-ever string of year-over-year growth.

U.S. Housing Starts Drop To Nine-Month Low In June

The number of new homes being built in the U. S. fell to a nine-month low in June, and permits for new construction projects also fell. This is the most recent sign of a slowing housing market, as rising mortgage rates make homes less affordable.

While activity in the single-family category fell to a two-year low, multi-family construction activity increased as rising rents enhanced the attraction of apartment complexes, cushioning the total decline. As a result, the second quarter’s U.S. gross domestic product is anticipated to be impacted by the changes in the housing market.

The Commerce Department said on Tuesday that housing starts dropped by 2 percent last month to a seasonally adjusted annual rate of 1.559 million units, the lowest level since September 2021. The rate for May’s data was increased from the previously reported 1.549 million units to 1.591 million units.

The number of homes whose construction has been approved but has not yet begun rose by 1.1% to 285,000 units. The backlog for single-family homes decreased by 1.3 percent to 147,000.

For the fourth consecutive month, the number of homes under construction but not yet finished reached a record high of 1.68 million units, highlighting the challenges contractors face in completing jobs on time when labor and materials are in short supply.

Higher Mortgage Rates, Economic Uncertainty Behind Declining Home Purchase Applications

According to the Mortgage Bankers Association’s (MBA) builder application survey, new home purchase applications decreased 12 percent year over year in June due to rising mortgage rates and general economic anxiety. Application volume decreased by 10% from one month to the next.

Fewer properties were available for home buyers from March through May due to a decline in new residential construction and permitting activity. Moreover, MBA reports that a seasonally adjusted annual rate for new single-family home sales in June was estimated to be around 620,000, representing a 15% decrease, or more than 100,000 units, from May.

Next week’s potential market moving reports are:

  • Monday, July 25th – No Report
  • Tuesday, July 26th – S&P Case-Shiller National Home Price Index, New Home Sales
  • Wednesday, July 27th – Pending Home Sales Index, Fed Funds Target Rate
  • Thursday, July 28th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, July 29th – PCE Inflation Index, Real Disposable Income, Employment Cost 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.

Related Post