The Homeownership Rate & Middle-Aged Buyers

New data released by the U.S. Department of Commerce’s Census Bureau shows the homeownership rate was 64.7 percent during the second quarter of 2014. That’s down from an all-time high of 69.2 percent in 2004 and slightly lower than last year at this time. According to the official data and many media reports, the homeownership rate’s recent decline has been particularly focused among young adults and first-time buyers. The theory is that the housing market’s recovery has been slowed by a lack of young home buyers forming households of their own. However, a new analysis from Trulia’s chief economist, Jed Kolko, shows that it may, in fact, be middle-aged Americans – not millennials – who are missing from the homeownership equation. According to Kolko, when compared to the pre-bubble years of the late 1990s, homeownership levels among young adults are relatively unchanged and the rate among Americans between 35 and 54 years old has dropped. This is primarily due to the fact that younger Americans are getting married and starting families later in life. Because of this, the homeownership level among 18-to-34 year olds – though lower than the historical average – may represent the new normal. Middle-aged homeowners, on the other hand, would’ve been the first-time buyers of 10 years ago. And, because they would’ve been buying homes at the peak of the housing bubble, they would’ve been hardest hit by the subsequent crash. According to Kolko, this explains the decline in homeownership among middle-aged Americans. More here.

Mortgage Rates Largely Unchanged Last Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate on 30-year fixed-rate mortgages with conforming loan balances remained unchanged last week from the week before. Rates were also flat on loans backed by the Federal Housing Administration and 15-year fixed-rate mortgages. Mortgage rates increased slightly on jumbo loans. With rates largely unchanged from the week before, demand for loans to buy homes rose 0.2 percent on a seasonally adjusted basis. On an unadjusted basis, purchase demand was up 1 percent. Refinance demand, on the other hand, fell 4 percent, after rising 4 percent the previous week. Because of the drop, total mortgage demand was down 2.2 percent for the week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Home Price Increases Continue Slowdown

The S&P/Case-Shiller Home Price Indices – considered the leading gauge of U.S. home prices – show increases continuing to slow. According to the most recent release, home prices rose 9.3 percent year-over-year, down from the 10.8 percent increase reported in the last release. David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said home prices rose at their slowest pace since February of last year. The slowing pace of price increases is due, in part, to rising inventory levels as more homeowners put their homes up for sale. Still, Blitzer says recent housing data has been mixed, with prices and existing-home sales showing improvement while new home sales and construction lag behind. However, with continued improvement in the broader economy and job market, most analysts believe housing activity is going to pick up through the end of the year. On a month-to-month basis, home prices were up 1.1 percent. Also, all 20 cities included in the index posted increases for the second-straight month. More here.

Pending Sales Slip But Remain Above Average

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed each month. In June, the index dropped 1.1 percent, though it remains above 100 – which is considered an average level of contract activity. The decline follows three straight months of improvement. Lawrence Yun, NAR’s chief economist, said the housing market is stabilizing and activity is notably higher than earlier this year. According to Yun, price appreciation has decreased to its slowest pace since 2012 as inventory levels have increased. Because of this, Yun expects home sales to pick up during the second half of the year with more potential buyers considering homeownership as prices normalize and rent continues to rise. However, there are still areas of the country where inventory is low and conditions may deter potential buyers from taking advantage of today’s favorable mortgage rates. Regionally, pending sales were up in the Midwest, flat in the West, and down in the Northeast and South. More here.

Economic Forecast Sees Housing Gains Ahead

The first quarter of 2014 was the worst in five years, according to Fannie Mae’s Economic & Strategic Research Group. That, combined with only a moderate pickup during the second quarter of the year, means economic growth was essentially flat for the entire first half of this year. But despite the slower than expected first half of 2014, economic and housing market activity is expected to pick up through the end of the year. Doug Duncan, Fannie Mae’s chief economist, says housing data continues to point to a modest rebound in the market. According to Duncan, the spring and summer sales season has contributed to recent improvements in housing activity but, despite the gains, the group expects total home sales will not be able to overcome the slow start to the year. Fannie Mae has forecast that total home sales will decline by about 2 percent this year from last year’s totals. Still, an expected increase in economic activity and consumer spending, combined with improvement in the labor market and personal income, bodes well for continued acceleration in growth for both the general economy and housing market. More here.

New Home Sales Fall In June

New estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development show sales of new single-family homes fell 8.1 percent in June. The drop was the largest in a year and put new home sales 11.5 percent below last June’s levels. Following two consecutive months of improvement and an 18.6 percent sales surge in May, the new estimates indicate that the housing market, though continuing to make progress, is still susceptible to an occasional month-to-month setback as it rebuilds momentum. Also in the report, the median sales price of new homes sold in June was $273,500; the average sales price was $331,400. The number of new homes available for sale rose 3.1 percent during the month, reaching its highest level since October 2010. At the current sales pace, there was a 5.8-month supply of new houses for sale at the end of the month. More here.

Mortgage Rates Mixed, Demand Rising

According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances was unchanged last week from the week before. Mortgage rates on 30-year loans with jumbo balances and those backed by the Federal Housing Administration fell slightly, while the average rate on 15-year fixed-rate loans was up. With rates mostly flat from the week before, demand for mortgage applications increased 2.4 percent. The increase was the first in many weeks and was largely due to a bump in refinance activity. In fact, the Refinance Index rose 4 percent and, as a share of total mortgage activity, refinance demand accounted for 54.4 percent of all applications. The Purchase Index, on the other hand, only gained 0.3 percent from one week earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Existing Home Sales Hit 8-Month High

In June, sales of previously owned homes reached their fastest pace this year, climbing to a projected annual pace of 5 million sales for the first time since October 2013. The estimates, released by the National Association of Realtors, show existing-home sales up 2.6 percent from the month before and just 2.3 percent below year-before levels. Lawrence Yun, NAR’s chief economist, said housing fundamentals are moving in the right direction. According to Yun, home sales should continue improving in the coming months as inventory rises and price gains continue to moderate, giving potential home buyers more choices and more favorable affordability conditions. In fact, the number of homes currently available for sale is at its highest point in more than a year and home prices are just 4.3 percent above last June. Also in the release, sales increased in all four regions of the country, though the Midwest saw the biggest gains with a 6.2 percent improvement from the month before. The June sales report joins other recently released data detailing an improving outlook for the housing market after a tough first half of the year. More here.

What Home Buyers Want More Than Location

Among today’s home buyers, nearly half would sacrifice location for desirable in-home features, according to a new survey from one of the nation’s largest homebuilders. The surprising survey results indicate that buyers are searching for move-in ready homes complete with key features and amenities and a significant number of them are willing to give up on proximity to entertainment and shopping and even better schools in order to get them. A representative for the homebuilder said today’s buyer isn’t just looking for the biggest home on the block. Instead, they are interested in efficient use of space and homes with feature-filled kitchens, bedrooms, and bathrooms. In fact, the kitchen was the most important room in the home when deciding to buy a new house. A large eat-in area was the highest ranked feature, though a kitchen island came in a close second. Master bedrooms with his-and-her closets were cited as important to 31 percent of participants, while a home with at least one bathtub was named by 54 percent of respondents. Regionally, screened-in porches were popular in the Southeast, while Northeastern buyers wanted rooftop terraces and accordion-style glass doors were popular in the Southwest. More here.

Permits To Build New Homes On The Rise

Permits to build new single-family homes rose 2.6 percent In June, though overall permits were down 4.2 percent. The increase in authorizations to build new homes was a bright spot in an otherwise disappointing report. The estimates, released by the U.S. Census Bureau and the Department of Housing and Urban Development, showed housing starts down 9.3 percent overall, with a significant drop in the South. Housing starts – which measure the number of new homes that began construction during the month – were up in the West, Northeast, and Midwest. Economists could not explain why starts dropped so dramatically in the South, though they believe they will rebound in July. The rising number of building permits for single-family homes, on the other hand, is one of several recent improvements, including increasing builder confidence and new home sales, that indicate future gains in residential construction and the market for new homes. More here.