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Existing Home Inventories Inching Higher
Wed, 22 May 2024 19:17:00 GMT

The inventory of existing homes for sale increased from March to April, but the increased availability didn’t bolster sales. The National Association of Realtors® (NAR) said pre-owned single-family homes, townhomes, condominiums, and cooperative apartments sold at a seasonally adjusted annual rate of 4.14 million. This was a decline of 1.9 percent from sales in both March of this year and April 2024. At the end of April, there were 121 million units of housing available for sale, an increase of 9 percent from March and 16.3 percent year-over-year. This equates to a 3.5-month supply at the current rate of sales compared to 3.2 percent and 3.0 percent at the two earlier points in time. NAR says a six-month supply is typically necessary for a balanced real estate market. There was a big increase in higher-priced homes. The inventory of available homes listed at $1 million or more was 34 percent larger than a year earlier and sales in that tier increased 40 percent. Properties typically remained on the market for 26 days in April, down from 33 days in March but up from 22 days in April 2023. NAR’s chief economist Lawrence Yan said overall home sales changed little, but the upper end of the market is benefiting from the increase supply of homes. Single-family home sales fell 2.1 percent to a seasonally adjusted annual rate of 3.74 million, down from 3.82 million in March. Sales were 1.3 percent lower year-over-year.  Condo and co-op sales remained at their March level of 400,000 units, 30,000 fewer than the previous April.

Mini-boom in Refi Apps Continues
Wed, 22 May 2024 12:54:57 GMT

Interest rates hit a seven-week low last week, boosting the level of refinancing applications for the third straight week, but those for home purchases continued to recede. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, increased 1.9 percent on a seasonally adjusted basis during the week ended May 17. On an unadjusted basis, the Index increased 1.1 percent. The Refinance Index jumped by 7.0 percent compared to the previous week and was 21.0 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 34.0 percent of total applications from 32.0 percent week-over-week.  The Refinance Index has gained an aggregate of 17 points since April 25. [refiappschart] Purchasing activity declined for the second week, this time by 1.0 percent on a seasonally adjusted basis and 2.0 percent before adjustment. The index was 11.0 percent lower than the same week in 2024. [purchaseappschart] “The 30-year fixed mortgage rate declined for the third straight week, dropping to 7.01 percent – the lowest level in seven weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications . VA refinances had a double-digit increase for the third consecutive week, although the current level of refinancing is still well below its historical average. Purchase activity continues to lag despite this recent decline in rates, down 11 percent from a year ago, as potential buyers still face limited for-sale inventory and high list prices. ”

Builders Are Finishing More and More Homes, But Permits Have Been Flat
Thu, 16 May 2024 18:55:00 GMT

The latest data on new residential construction from the U.S. Census Bureau paints a somewhat mixed picture of the housing market. While housing completions surged in April, Housing starts only increased modestly and building permits declined both building permits slipped to the lowest level since last summer. The following bullet points break down the numbers in seasonally adjusted annual rates for the 3 phases of construction: Building Permits  1.44 million versus 1.48 million forecast and 1.467 last month Of that, 976k were single family permits and 408k were 5+ units Housing Starts (breaking ground phase) 1.36 million versus 1.42 million forecast and 1.29 million last month last month revised down from 1.32 million Of that, 1.031 million were single family  and 322k were 5+ Housing Completions 1.62 million versus 1.495 million last month, a 10.3 percent increase Of that, 1.092 were single family and 516k were 5+ We could attempt to over-analyze the month to month changes in this notoriously noisy data series, but in the bigger picture, permits and starts have been flat for more than a year while completions continue to improve. Zooming out a bit more, the takeaway isn't much different, but it adds context from the previous highs and also shows starts and permits remaining near pre-covid highs.

Persistently High Rates Quash Builder Confidence
Wed, 15 May 2024 17:54:38 GMT

Builders’ confidence in the new home market retreated this month , the first decline since last November. The National Association of Home Builders (NAHB) reports that the NAHB/Wells Fargo Housing Market Index (HMI) lost 6 points from its April level, falling to 45. Derived from a monthly survey that NAHB has been conducting for more than 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor” and asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” A score above 50 for the HMI or any of its components indicates that more builders view sales conditions as good than poor. All three HMI component indices declined decisively in May. The HMI index charting current sales conditions in May fell 6 points to 51, the component measuring sales expectations in the next six months fell 9 points to 51 and the gauge charting traffic of prospective buyers declined 4 points to 30. NAHB economist Robert Dietz stated that the reason for the decline is the persistently high mortgage interest rates which have remained above 7 percent for the last four weeks. Dietz said, “The market has slowed since mortgage rates increased and this has pushed many potential buyers back to the sidelines. A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment. The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”

Refi Index Takes Advantage of Rate Drop
Wed, 15 May 2024 12:21:38 GMT

Lower interest rates gave a lift to refinancing activity for the second week but failed to do the same for those financing home purchases. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, increased 0.5 percent on a seasonally adjusted basis during the week ended May 10. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week. The Refinance Index rose 5.0 percent week-over-week and was 7.0 percent higher than the same week one year ago. Refinancing accounted for 32.0 percent of total applications, up from 30.6 percent the prior week. [refiappschart] Applications for home purchase financing fell back 2.0 percent on both an adjusted and unadjusted basis. The unadjusted index was 14.0 percent lower than the same week in 2023.   [purchaseappschart] “Treasury yields continued to move lower last week and mortgage rates declined for the second week in a row, with the 30-year fixed rate down 10 basis points to 7.08 percent, the lowest level since early April,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The decline in rates led to a small boost to refinance applications, including another strong week for VA refinances. However, the overall level of refinance activity remains low. Purchase applications decreased, driven largely by a 9 percent drop in FHA purchase applications. Conventional home purchase applications were down around one percent. 

Economic Data Cools Rates, Boosts Application Volume
Wed, 08 May 2024 12:16:15 GMT

Lower interest rates allowed mortgage activity to rise modestly during the week ended May 3. It was the first increase in three weeks. The Mortgage Bankers Association said its Market Composite Index, a measure of the volume of mortgage applications, rose 2.0 percent on a seasonally adjusted basis compared to the prior week and 3.0 percent before adjustment. The Refinance Index increased 5.0 percent from the prior week but was 6.0 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 30.6 percent of total applications from 30.2 percent the week before. [refiappschart] The Purchase Index ticked up 2.0 percent on both an adjusted and unadjusted basis but was still 17.0 percent lower than the same week in 2023. [purchaseappschart] “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7 percent for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5.0 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance application volume remains about 6 percent below last year’s already low levels.”

ARM Loan Share Rises as Borrowers Seek Affordability
Wed, 01 May 2024 13:00:59 GMT

Rising interest rates continue to constrain mortgage borrowing. The Mortgage Bankers Association says its Market Composite Index, a measure of loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.4 percent compared with the previous week. The Refinance Index decreased 3.0 percent from the previous week and was 1.0 percent lower than the same week one year ago. Refinancing accounted for 30.2 percent of applications, down from 30.8 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index was down by 2.0 percent from the one week earlier. The unadjusted Purchase Index decreased 1.0 percent compared with the previous week and lagged the volume during the same week in 2023 by 14.0 percent. [purchaseappschart] “Inflation remains stubbornly high, and this trend is convincing markets that rates, including mortgage rates, are going to stay higher for longer. No doubt, this is a headwind for the housing and mortgage markets, with the 30-year fixed mortgage rate increasing to 7.29 percent last week, the highest level since November 2023,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Application volume for both purchases and refinances declined over the week and remain well below last year’s pace. One notable trend is that the ARM share has reached its highest level for the year at 7.8 percent. Prospective homebuyers are looking for ways to improve affordability, and switching to an ARM is one means of doing that, with ARM rates in the mid-6 percent range for loans with an initial fixed period of 5 years.”

Home Prices Apparently Don't Care About High Rates
Tue, 30 Apr 2024 16:24:00 GMT

Home price increases continued to accelerate in February even as interest rates also moved higher. Both the S&P CoreLogic Case-Shiller Indices and the Housing Market Index (HMI) produced by the Federal Housing Finance Agency (FHFA) showed annual price growth in the 7 percent range. Case-Shiller’s U.S. National Home Price Index, which covers all nine U.S. census divisions, reported a non-seasonally adjusted 6.4 percent annual gain in February, compared to a 6.0 percent rise the previous month. The 10-City and 20-City Composites rose 8.0 percent and 7.3 percent respectively, up from 7.4 percent and 6.6 percent increases in January. San Diego continued to report the highest year-over-year appreciation among the 20 cities at 11.4 percent followed by Chicago and Detroit, each posting 8.9 percent growth.  Portland still holds the lowest position at 2.2 percent. The three non-seasonally adjusted indices posted monthly gains for the first time since November. The National Index rose 0.6 percent, the 20-City was up 0.9 percent, and the 10-City Composite grew 1.0 percent.  After seasonal adjustment, the increases were 0.4 percent for the National Index and 0.6 percent for each of the composites.   “U.S. home prices continued their drive higher,” says Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices. “Our National Composite rose by 6.0 percent in January, the fastest annual rate since 2022.   For the third consecutive month, all cities reported increases in annual prices, with  four currently at all-time highs: San Diego, Los Angeles, Washington, D.C., and New York. On a seasonal adjusted basis, our National, 10- and 20- City Composite indices continue to break through previous all-time highs set last year.”

Mortgage App Volume Declines Across the Board
Wed, 24 Apr 2024 12:36:59 GMT

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, fell back for the first time in three weeks during the week ended Aril 19 as interest rates continued to rise.  The Index declined 2.7 percent on a seasonally adjusted basis from one week earlier and was 2.0 percent lower before adjustment. The Refinance Index decreased 6.0 percent from the previous week and was 3.0 percent higher than the same week in 2023. The refinance share of applications was also down, declining to 30.8 percent from 32.1 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index decreased 1.0 percent, the fifth decline in the last six weeks. The unadjusted Purchase Index did increase fractionally but was 15 percent lower than during the same week one year ago. [purchaseappschart] “Mortgage rates continued to move higher last week, reaching their highest levels since late 2023 and putting a damper on applications activity. The 30-year fixed rate increased for the third consecutive week to 7.24 percent, the highest since November 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Purchase applications declined, as home buyers delayed their purchase decisions due to strained affordability and low supply. T he ARM share of applications increased to 7.6 percent, consistent with the upward trend in rates, as buyers look to reduce their potential monthly payments.”

Spring New Home Sales Prove Resilient to Higher Rates
Tue, 23 Apr 2024 16:47:34 GMT

Existing home sales posted strong gains in February while sales of new homes slipped slightly. In March each category switched directions. The U.S. Census Bureau and the Department of Housing and Urban Development said newly constructed homes sold at a seasonally adjusted annual rate of 693,000 compared to 668,000 in February while the National Association of Realtors® (NAR) reported that existing home sales fell from a rate of 4.38 million units the prior month to 4.19 million. The increase in new home sales put those transactions up 8.8 percent compared to February and 8.3 percent higher than the March 2023 pace. Sales of previously owned single-family homes, townhouses, condos, and cooperative apartments were down 4.3 percent and 3.7 percent compared to the two earlier periods. [newhomesall] Existing single-family home sales also declined 4.3 percent in March to a 3.97-million-unit sales pace while condo and cooperative apartment sales were down 4.9 percent to 390,000 units.  Single-family sales were 2.8 percent and multi-family sales were 11.4 percent lower year-over-year. New home sales rose by 10,000 units from February to 67,000 on a non-seasonally adjusted basis. Analysts polled by Trading Economics had expected new home sales to remain at February’s 668,000 level and had expected a smaller 2.2 percent decline in existing home sales to 4.2 million units. The inventory of new homes remains healthy with 477,000 unsold homes , an estimated 8.3-month supply at the current rate of sales and a monthly increase of 5.7 percent. The number of existing homes available for sale did increase by 4.7 percent to 1.11 million units but remains anemic at a 3.2-month supply.

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