January Builder Applications Up from December; Down from Year Ago

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January Builder Applications Up from December; Down from Year Ago

According to the Mortgage Bankers Association (MBA) Builder Application Survey, mortgage applications for new home purchases rose 10% in January from December but down 12.5 percent from last year earlier.

Conventional loans accounted for 77.0 percent of loan applications, while FHA loans accounted for 13.0 percent, RHS/USDA loans represented 0.5 percent, and VA loans counted for 9.5 percent. In January, the average loan size for new homes grew from $423,102 to $426,954.

Based on data from the BAS, the MBA estimated new single-family home sales at a seasonally adjusted annual rate of 821,000 units in January, the worst annual pace since last July and a 7.4 percent fall from December with 887,000 units.

Realtors Report Big Decline in Contract Signings

The Pending Home Purchases report from the National Association of Realtors was released this morning, and it measures signed purchase contracts rather than completed sales. As a result, it’s thought to be an early indicator of Existing Home Sales, which has generally been verified over time. It also means that the data on pending sales may be a little more unpredictable. The most recent data reflect this volatility, which showed the most significant month-over-month drop in 11 months. The index fell by 5.7 percent to 109.5 points. 

Geopolitical worries, Lawrence Yun, the National Association of Realtors Chief Economist, warned, might fuel safe-haven demand for Treasuries, putting downward pressure on mortgage rates. The good news is that the market usually does a decent job of pricing in potential Fed policy adjustments ahead of time. If prices adjust, inventory increases and rates remain stable; there is enough demand in this market to make the house sales prognosis better than many forecasts anticipate.

Homeowner Tenure Flattens After 10-Year Rise

According to Redfin, the average American homeowner spent 13.2 years in their home in 2021, down from 13.5 years in 2020. According to the survey, homeowner tenure fell last year, in part because so many Americans moved during the pandemic, and record-low mortgage rates encouraged purchasers to enter the market. Furthermore, pandemic-related remote work prompted a record number of Americans to relocate, often to more affordable places.

According to Redfin Chief Economist Daryl Fairweather, the migration trend is good for supply since more people moving equals more people selling their houses.

CoreLogic: Home Price Appreciation at 45-Year High

According to CoreLogic, the annual home price appreciation in January rose to the highest level in at least 45 years. The monthly Home Price Index reports that home prices grew 19.1% year over year in January, the highest rate since 1977. Home prices rose by 1.4 percent month over month. Detached properties increased at a rate of 20.3 percent per year, which was 5.1 percentage points greater than attached properties (15.2 percent ).

Consumers intending to purchase a home have remained hopeful in the new year, with more anticipating to buy in the next six months as rapid home price appreciation is expected to decelerate, said CoreLogic Chief Economist Frank Nothaft. Despite market and economic issues such as low inventory, ongoing buyer competition, and falling affordability, potential buyers are willing to buy now that mortgage rates are still low.

Next week’s potential market-moving reports are:

  • Monday, March 7th – Consumer Credit
  • Tuesday, March 8th –Foreign Trade Deficit, Wholesale Inventories
  • Wednesday, March 9th – Job Openings, Quits
  • Thursday, March 10th – Initial Jobless Claims, Continuing Jobless Claims, Federal Budget Deficit
  • Friday, March 11th – 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.