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.

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