US Housing Prices Fall for First Time Since 2012 Market seeing a great deal of unfulfilled housing demand Homebuyers Relieved By Slightly Lower Mortgage Payments

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Homebuyers Relieved By Slightly Lower Mortgage Payments

The hot seller’s market is beginning to cool off, helping US homebuyers despite economic headwinds. In August, the national median mortgage payment dropped marginally to $1,839 from $1,849.

According to the Purchase Applications Payment Index (PAPI) of the Mortgage Bankers Association, which gauges how new monthly mortgage payments change over time – relative to income – homebuyer affordability improved for the third consecutive month in August.

The national PAPI decreased to 157.9 in August, a 0.3% decrease from July and an increase of 36.5% from the previous year. As a result, new mortgage payments use an average person’s salary less quickly. The national mortgage payment between July and August 2022 remained constant at $1,210 for borrowers applying for lower-payment mortgages (the 25th percentile).

In August, the median loan amount was $313,500, down from a peak of $340,000 in February, according to Seiler. Edward Seiler, MBA’s AVP of housing economics and executive director of the Research Institute for Housing America.

US Housing Prices Fall for First Time Since 2012

The S&P CoreLogic Case-Shiller index revealed on Tuesday that a national index of prices in 20 major cities dropped 0.44% in July, the first decline since March 2012. The most recent real estate crash ended in 2012, kicking off ten years of price increases that were followed by a two-year pandemic purchasing frenzy.

However, the Federal Reserve quickly ended the celebration in its fight against inflation. Mortgage rates doubled this year, pricing out many potential purchasers and triggering a decline in sales.

Values are currently declining. San Francisco (-3.6%), Seattle (-2.5%), and San Diego (-2%) experienced the most significant month-over-month drops in July.

Yes, prices are still very high. In July, the Case-Shiller national index increased 15.8% year over year. However, it was the weakest advance since April 2021, and the index’s regression from the 18.1% increase in June was the biggest ever.

There are indications that there is a great deal of unfulfilled housing demand. According to government data released Tuesday, new home sales in the US unexpectedly increased in August. The rate of new home sales was at its highest since March, possibly due to purchasers racing to beat additional hikes in borrowing prices and take advantage of price reductions by some builders. All regions saw an increase in new house sales, with the South seeing the most significant increase of 29.4% this year.

Compared to the two-year epidemic frenzy, characterized by many offers and a scarcity of listings that compelled buyers to make giant bids, the falloff appears dramatic. Fewer properties are entering the market, which might help maintain prices high. Due to the decreased demand, postings are now staying on the market longer, increasing the available inventory.

Humor of the Week

I really wish I could find out what happened with my friend that couldn’t pay his mortgage.

You know, just for closure.

Next week’s potential market-moving reports are:

  • Monday, October 3rd – Construction Spending
  • Tuesday, October 4th – Job Openings, Quits 
  • Wednesday, October 5thADP Employment Report, Pending Home Sales Index
  • Thursday, October 6th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 7th – Unemployment Rate, Average Hourly Earnings

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.