Rising Rates Propel Surge in Refinancing
The week of January 28th had the highest non-holiday-related increase in mortgage volume since the last week of March 2020, after a 7% drop the previous week. According to the Mortgage Bankers Association (MBA), its Market Composite Index, which measures mortgage loan application volume, jumped 10.0 percent from a week earlier.
The Refinance Index gained 18 percent from the previous week. Refinancing accounted for 57.3 percent of applications, up from a 55.8 percent share the last week. It appears that the recent rise in mortgage rates has spurred a new round of homeowners rushing to take advantage of the still-low rates before they increase further.
Single-Family Construction Spending Rose by One-Third Last Year
In 2021, construction spending reached $1.599 trillion, up 8.2% over the previous year’s $1.470 trillion. With a 22.9 percent increase, public and private residential expenditures were the only sectors with double-digit growth, while several other categories saw spending decline.
According to the US Census Bureau, all types of construction investment increased by 0.2 percent in December from November to $1.640 trillion, up 9.0 percent over the previous month.
“There was strong growth of spending on single-family and multifamily construction, while spending on improvements slipped. Single-family construction spending increased to a $435 billion annual pace in December, up by 2.1 percent over the upwardly revised November estimates,” said Na Zhao, an analyst with the National Association of Home Builders (NAHB).
Home Price Appreciation Update Including 2022 Forecast
In the 12 months ending in 2021, home prices increased by 15% year over year, compared to a 6.0 percent increase in 2020. Compared to the previous December, CoreLogic’s Home Price Index (HPI) was up 18.5 percent.
This year’s price projection from CoreLogic predicts a ten percent increase in the first three months, followed by a gradual decline to 3.5 percent by December 2022. After that, on average, the increase will be 9.6% per year.
At 28.4 percent, Arizona is still the state with the most significant increase, followed by Florida at 27.1 percent and Utah at 25.2 percent. At 37.6 percent and 35.7 percent, respectively, two Florida communities, Naples and Punta Gorda saw the highest gains among metro regions.
Next week’s potential market moving reports are:
- Monday, February 7th – Consumer Credit
- Tuesday, February 8th – Small Business Index, Real Household Debt
- Wednesday, February 9th – Wholesale Inventories
- Thursday, February 10th – Initial Jobless Claims, Continuing Jobless Claims, Federal Budget
- Friday, February 11th – Consumer Sentiment Index, 5-Year Inflation Expectations
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.