If you read real-estate news regularly, you may get the impression that homes right now are less affordable, buyers are less interested, and homeowners are less likely to sell than in the past. But, taking a big-picture view of where things are may give you a very different impression. Take Freddie Mac’s most recent monthly outlook, for example. According to the report, the housing market is on track to exceed last year on a couple of different fronts, including sales and the number of new homes that are being built. And that’s saying something because last year was the best year in a decade in both categories. Sean Becketti, Freddie Mac’s chief economist, says, though there have been some recent setbacks in the news, they are likely to be reversed. “After a strong March, the housing market, from housing starts to new and existing home sales, took a hit in April,” Becketti said. “The recent declines are likely to reverse as low mortgage interest rates and solid job gains boost the housing market.” In other words, while it’s true that challenges remain, it’s also true that conditions remain favorable in many ways. Mortgage rates, for example, have been more down than up in recent weeks and the labor market continues to add jobs, making it easier for Americans to feel confident and secure in their financial situation and ability to buy a house. More here.
Like any market, the housing market has its ups-and-downs. For the last several years, though, it’s consistently been on the rise with no sign of slowing down. That means, home buyers have increasingly been met with higher home prices and listings that sell more quickly with every passing month. On the other hand, homeowners who have recently sold a house have enjoyed all the benefits of a seller’s market. But for how long? One recent report says there are signs that prices may soon begin to moderate and surveyed Americans seem to agree. The research, from ValueInsured, shows consumers overwhelmingly feel now is a good time to sell a house but they are less sure about the future. In other words, there’s a feeling that prices may have peaked and things are going to begin to level off. And there’s evidence that’s already happening in a few areas of the country where the housing market rebounded more quickly than in others. However, like anything else, conditions can change from one neighborhood to the next and, while price increases may be starting to slow in one area, they may still be on the rise in another. More here.
Following news that sales of previously owned homes rose in May, the U.S. Census Bureau and the Department of Housing and Urban Development released their estimate of how many new homes were sold during the month. According to the report, new home sales were up 2.9 percent and are now nearly nine percent above last year’s level. The increase is welcome news after April sales experienced the largest one-month decline since last year. However, the report also contains news that new home prices are now at a record high. The median sales price of new homes sold in May was $345,800; the average price was $406,400. Price increases are largely being driven by a lower-than-usual number of homes for sale combined with high buyer demand. But why, if there are so many buyers, aren’t builders building more houses? Well, one reason is a lack of available building lots. The shortage of lots has been a consistent complaint among builders, who have been eager to take advantage of elevated buyer traffic. But despite fewer homes for sale, a strengthened labor market and still-low mortgage rates are keeping buyers interested and active in the market. More here.
Sales of existing homes fell in April but bounced back in May, according to new numbers from the National Association of Realtors. May sales of previously owned homes rose 1.1 percent and are now 2.7 percent higher than they were at the same time last year. Lawrence Yun, NAR’s chief economist, says home buyer interest continues despite some challenges. “The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” Yun said. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast past and the prevalence of multiple offers in some markets are pushing prices higher.” Homes are, indeed, selling quickly. In fact, the typical for-sale property in May sold in just 27 days, down from 29 days the month before. That’s the fastest recorded time since the NAR began keeping records six years ago. Also in the report, sales rose across all four regions of the country, particularly the Midwest and West. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates remained low last week. In fact, rates were mostly flat across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Low rates didn’t spur a spike in demand, though, as home buyers and homeowners looking to refinance largely stayed level from the week before. Still, though demand was relatively unchanged from one week earlier, the previous week ended at a new high for the year, which means demand for loans to buy homes remains 9 percent higher than at the same time last year. Lynn Fisher, MBA’s vice president of research and economics, told CNBC that lower rates are encouraging for Americans looking to make a move. “Both the 10-year Treasury yield and the 30-year conventional mortgage fixed rate held steady last week keeping rates well below the recent highs,” Fisher said. “The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance and to assist those ready to purchase.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
A newly released study from researchers at the University of Southern California looks at homeownership rates among young adults between the ages of 25 and 44. The study’s results show, among that age group, there’s been a 10 percent drop in the homeownership rate over the past 10 years. But does that necessarily mean young Americans are no longer interested in owning their own home? Well, no. The researchers point to a number of factors that have contributed to the decline in homeownership among people of typical prime home-buying age. Among them, the foreclosure crisis looms large. Because the past 10 years includes the years following the housing crash and economic crisis, some of that decline is better explained by the day’s economic conditions rather than a lack of desire to buy a house. And, in the years since, the recovery’s slow pace and weakened job market have made buying a home a struggle for many young Americans. However, more recently, home buyer demand has rebounded – as have home prices and the labor market. And, according to this particular study, so will the homeownership rate among young Americans, particularly if there’s a continued rise in education and income levels. More here.
Following the ups-and-downs of the housing market can be difficult for the average home buyer or seller. Because of this, many Americans get in the market without a basic understanding of the forces currently driving home prices, mortgage rates, demand, etc. However, it can be beneficial to have a big-picture understanding of where things are and where they’re headed before you make a move. These days, if you want a better grasp of what’s happening in real estate, you have to start with inventory. So far this year, a lower than normal number of homes for sale has been the primary factor influencing home prices and overall sales. Take the most recent outlook from Fannie Mae’s Economic & Strategic Research Group, for example. According to their forecast, inventory remains the big story, as it has been for the past year. “The narrative for the housing market hasn’t changed over the past year,” Doug Duncan, Fannie Mae’s chief economist, says. “A labor shortage continues to restrain homebuilding, and tight inventory is constraining sales and boosting home prices.” Despite those challenges, Duncan says the group expects mortgage rates will stay low enough to support buyers and home sales should rise 3.2 percent this year. More here.
When considering home improvement projects that can add value to your home or even help it sell faster, don’t forget to pay some attention to your lawn and landscaping. Good landscape design can help you get a better price when it’s time to move but will also help beautify your neighborhood and please your neighbors in the meantime. If you aren’t that handy in the garden, start with your lawn. A recent article from Freddie Mac lays out a number of tips to help you get started. Among them, it’s good to first identify what type of grass you have. This will help you know what seed to buy if you need to fill any dead spots. You should also be careful not to cut your lawn too short or give it too much water. Grass needs a little length to help it absorb sunlight and maintain healthy roots. Too much watering can also damage roots and will cause more weeds to grow. Another tip is to be careful with fertilizers and pesticides. Break fertilizer applications up throughout the season rather than doing it all at once. And be careful with pesticides, as they may be more trouble than they’re worth. According to the article, lawn issues are more likely going to be the result of water, weather and lawn mower damage than pests. Following these simple rules should help you achieve a greener and more luscious lawn. More here.
The National Association of Home Builders has been tracking builders’ view of the new home market for 30 years. Their Housing Market Index measures how builders feel about current and future conditions as a way of predicting the health of the overall market going forward. Obviously, when builders feel confident that buyers are interested, more new homes get built. And, as more new homes get built, the added inventory has a ripple effect throughout the entire housing market. That’s because, more new homes mean more choices for buyers and fewer price increases. In June, the NAHB’s index scored a 67 on a scale where any number above 50 indicates more builders view conditions as good than poor. Granger MacDonald, NAHB’s chairman, says builders have been fairly consistent so far this year. “Builder confidence levels have remained consistently sound this year, reflecting the ongoing gradual recovery of the housing market,” Granger said. But though builders have consistently voiced optimism about the level of buyer demand this year, they’ve also expressed concern that a lack of available lots has held back the number of new homes being built in many markets. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes is now eight percent higher than it was at the same time last year. But, though that’s good news and indicates a strong level of interest from prospective home buyers, it doesn’t tell the whole story. That’s because, at the same time that demand is up from a year ago, it is lower than it should be considering the number of interested buyers and the fact that mortgage rates remain relatively low. Last week, for example, average mortgage rates fell again and are now at seven-month lows. Joel Kan, an MBA economist, told CNBC that low mortgage rates didn’t inspire an increase in purchase demand last week but it did rally refinance activity. “From a borrower’s perspective, rates held steady at seven-month lows last week providing some borrowers an opportunity to refinance,” Kan said. “Over the last two weeks refinance applications have increased 13 percent and the average loan size increased to its largest since September 2016, reflecting the tendency for jumbo borrowers to be more sensitive to rates than those with smaller loan balances.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential loan applications. More here.