Fannie Mae’s Economic & Strategic Research Group releases a monthly outlook forecasting upcoming economic and housing market growth. In their most recent release, the group says the U.S. economy has been strengthening through the second half of the year and is poised to continue its gains in 2015. This, along with several buyer-friendly trends in residential real estate, has the group predicting next year will be the best year for total home sales since 2007 – before the financial crisis and recession. Doug Duncan, Fannie Mae’s chief economist, said they are cautiously optimistic that ongoing job market improvements, low mortgage rates, rising for-sale inventory, and some easing of lending standards should boost home sales by roughly 5 percent next year. Still, Duncan warns that it will not be the breakout year some analysts are expecting. Instead, he expects the housing market to continue along its steady, upward grind. Fannie Mae is forecasting overall home sales to end this year weaker than 2013, mostly due to 2014′s slow start. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week, with rates dropping on 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. With rates down over the past four weeks, refinance activity has surged. In fact, last week’s results show a 23 percent increase from the week before, which brought the refinance share of total mortgage activity up to 65 percent. Mike Fratantoni, MBA’s chief economist, said refinance application volume reached the highest level since November of last year and the average loan balance on refinance applications increased to $306,400, which is the highest level in survey history. Unfortunately, demand for loans to buy homes hasn’t seen the same improvement. The seasonally adjusted Purchase Index decreased 5 percent last week from the week before and is now 9 percent lower than the same week a year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Sales of previously owned homes rose 2.4 percent in September, according to the National Association of Realtors. Sales – which include single-family homes, townhomes, condominiums, and co-ops – are now just 1.7 percent below last year’s level and at their highest pace yet this year. Lawrence Yun, NAR’s chief economist, said low mortgage rates and stabilizing prices led to the increase. Yun also said, because there are fewer investors searching for houses to buy, traditional home buyers are finding a less competitive market. But though this is a good time for buyers, falling inventory through the winter will likely affect the number of available choices. In fact, the total number of homes for sale at the end of September was down 1.3 percent from the month before, though it is still 6 percent higher than last year. Also in the report, the median price of previously owned homes sold in September was $209,700. Regionally, sales were up in the Northeast, West, and South and down in the Midwest. More here.
Each month, the U.S. Census Bureau and the Department of Housing and Urban Development collect estimates of both the number of new homes that began construction and the number of building permits authorized during the month. In September, both housing starts and permits increased from the month before. In fact, new residential construction was up 6.3 percent and is now nearly 18 percent above last year’s level. Permits – which are an indicator of future home construction – rose 1.5 percent. New home construction has been somewhat volatile this year. But, despite a slow start, housing construction reached a post-recession high in July and remains well above last year’s estimates. Also in the report, single-family housing starts were up 1.1 percent in September while permits to build single-family homes remained relatively flat. This indicates that much of the month’s gains were due to improvement in the multi-family sector. More here.
The most recent Housing Market Index from the National Association of Home Builders found builders less optimistic about the market for newly built single-family homes than they were in September. The index – which measures builders’ confidence on a scale where any number above 50 indicates more builders view conditions as good than poor – fell five points to a reading of 54 in October. David Crowe, NAHB’s chief economist, said the decline wasn’t surprising. The index was at a nine-year high in September, making the drop somewhat expected. But, according to Crowe, builders are still positive about the housing market and the combination of historically low mortgage rates, steady job gains, and significant pent up demand all point to continued growth. In October, however, all three components of the index registered losses, including current sales conditions, future sales, and traffic of prospective buyers. Regionally, three-month moving averages show the Northeast and Midwest flat, the West down a point, and the South up two points. More here.
A new analysis of the 2013 Census Bureau Survey of Construction looks at the various types of new single-family homes being built across the country and breaks down the popular preferences, price differences, and design features by region. The study, from the National Association of Home Builders, found a great deal of variance in the types of homes people prefer in different areas of the country. For example, though porches are the most popular outdoor house feature nationwide, patios are more popular in the West and West South Central region and decks are the top choice for single-family homes built in New England. Siding was another area where there were vast differences in preference depending on region. Nationally, vinyl siding is used in close to 31 percent of new homes but brick is more popular in the South and stucco was the most popular material in the West. Kevin Kelly, NAHB’s chairman, said it’s fascinating to see how newly built homes can vary significantly not only in design features and building materials, but also in terms of lot size, financing methods, and price from region to region. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week, dropping for the third-consecutive week and hitting their lowest level since June 2013. Mortgage rates were down across all loan categories but 30-year fixed-rate loans with conforming loan balances and mortgages backed by the Federal Housing Administration saw the most significant declines. Michael Fratantoni, MBA’s chief economist, said growing concerns about weak economic growth in Europe likely caused the sharp drop in interest rates. Refinance activity benefited from the drop, though, climbing 11 percent from the week before. Demand for applications for loans to buy homes also rose, increasing 1 percent from one week earlier. Altogether, total mortgage loan application volume was up 5.6 percent for the week. The MBA’s weekly survey has been conducted since 1990 and covers more than 75 percent of all U.S. retail residential mortgage applications. More here.
Following the financial crisis and housing crash, home prices fell and mortgage rates dropped to historic lows. This, of course, boosted affordability conditions and led to a very attractive market for potential home buyers. Since then, however, prices have rebounded. In fact, according to recent data, the median home price for a single-family home is now $220,600, up from $160,000 a few years ago. But, despite the rise in home prices, mortgage rates have remained low and, because of this, buying a home is still quite affordable for prospective home buyers. The National Association of Realtors says the typical monthly mortgage payment for home buyers purchasing a middle-priced home with a 20 percent down payment is $867. This is 15.9 percent of monthly gross family income, which is a significant drop compared to the 21.3 percent average over the past three decades. In short, this means that the typical monthly mortgage payment is more affordable now than it has been for most of the past 30 years, making now an excellent time to buy a house. More here.
Over the past several months, home prices have been rising at an ever slower pace. And, though the majority of metropolitan areas are still experiencing price increases, those increases are becoming smaller as the housing market continues to stabilize. At the same time, the cost of renting has also been rising in markets all across the country. In fact, according to Trulia’s most recent Price and Rent Monitors, apartment rent was up nearly 7 percent year-over-year, with some cities seeing increases of up to 15 percent. Home prices, on the other hand, rose just 0.8 percent in September from the month before. And, though they are up 6.4 percent from last September, that’s a significant drop from the 10.4 percent gain registered in September 2013. In other words, though housing affordability has been affected by the price increases of the past few years, the rental market has also been experiencing sharp gains. And now, apartment rent increases are accelerating at a faster pace than the cost of a single-family home. More here.
Most Americans view homeownership as an achievement and feel now is a good time to buy, according to a new survey conducted on behalf of Wells Fargo. But, despite this, there are several misconceptions about the home buying process that are holding potential buyers back. The survey, titled “How America Views Homeownership,” found that, though 74 percent of respondents said they understand the financial process involved with buying a home, many of their responses indicated otherwise. For example, 30 percent of participants believed that only people with high incomes can get a mortgage and 64 percent said that having a “very good” credit score was a requirement. Nearly half of respondents said they knew very little or nothing about closing costs and just as many said they didn’t feel there were homes available that would fit their budget. Another common misconception was that a 20 percent down payment was required in order to buy a house – despite the fact that there are available financing options that don’t require 20 percent down. Overall, the survey revealed that many potential home buyers aren’t entering the market based on easily corrected misconceptions about the buying process. Informing potential buyers about their options is the key to helping more Americans realize their goal of one day owning a home. More here.