Mortgage Rates Drop To 19-Month Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to their lowest level since May 2013 last week. Rates dropped across all loan categories, including 30-year fixed-rate loans with conforming and jumbo balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. Mike Fratantoni, MBA’s chief economist, said interest rates dropped sharply due to plummeting oil prices and heightened concerns regarding global economic growth. Despite the large drop in mortgage rates, however, demand for mortgage applications fell 3.3 percent from the previous week. The Refinance Index showed no change from one week earlier, though as a share of total mortgage demand refinance activity increased to 66 percent. The seasonally adjusted Purchase Index, on the other hand, slipped 7 percent. The unadjusted Purchase Index is now just 5 percent lower than the same week one year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

New Home Construction Falls In November

New home construction fell in November, according to new estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. Despite the drop, however, an upward revision of October’s estimate means the overall trend in residential construction remains positive. In fact, the decline follows two months of significant gains, including a 6.3 percent increase in September and a 4.2 percent jump in October. Analysts forecast even further improvement in the next year, as job growth and wage increases are expected to boost the number of young buyers entering the housing market. In November, however, housing starts – which refer to the number of new homes that broke ground during the month – were down 1.6 percent. Building permits also fell from October, dropping 5.2 percent. The decrease in the number of building permits – which are a forward-looking indicator of future housing construction – was mostly due to an 11 percent decline in multi-family permits. Single-family authorizations to build new homes, on the other hand, slipped just 1.2 percent from the month before. More here.

Builders Confident In New Home Market

Because builders have an unique perspective on the market for newly built, single-family homes, the National Association of Home Builders surveys them each month to gauge their perception of current buyer traffic and sales, as well as their expectation for sales over the next six months. Their responses are scored on a scale where any number above 50 indicates that more builders view conditions as good than poor. In December, the NAHB’s Housing Market Index fell one point to 57. The drop follows a four-point gain in November. David Crowe, NAHB’s chief economist, said the index has stabilized in the mid-to-high 50s after a sluggish start to the year. According to Crowe, the results are consistent with with the NAHB’s assessment that the new-home market is gradually climbing back to normal. This gradual upward trend is expected to continue into 2015. December’s dip in builder confidence was due to slight declines in the index components measuring current sales and future sales expectations, both of which dropped a point from the month before. Despite the drop, however, both components are still in the 60s, with future sales expectations registering a 65. The gauge of current buyer traffic was unchanged from the previous month. More here.

To Accumulate Wealth, Buy A House

According to research from Harvard’s Joint Center for Housing Studies, homeownership – though not without risk – is an effective way to build individual wealth. And, because of this, homeowners typically have a higher net worth than renters. In fact, the median net worth of homeowners was $195,400 in 2013, which is $190,000 more than the median for people who rented. The study comes after many questions about the viability of homeownership as a financial investment were raised following the housing crash. After home values plummeted, the traditional view that owning a home would lead to greater wealth was damaged and, subsequently, the number of renters has increased as the homeownership rate has fallen. But homeowners are forced to save money in a way that renters aren’t – if only for the fact that paying off a mortgage requires owners to pay down a portion of their mortgage principal every month. This is essentially forced savings, which ultimately buys a greater percentage of ownership over time. In addition, homeowners can gain wealth through home price appreciation and have the added benefit of the tax benefits and deductions that come with ownership. Though the ups-and-downs of the housing market do pose a risk to homeowners, research continues to find a link between owning a home and accumulating wealth. More here.

Gov’t Scorecard Finds Housing Progress

The U.S. Department of Housing and Urban Development’s monthly Housing Scorecard collects key housing data and details of the administration’s foreclosure prevention efforts. November’s report shows the residential real-estate market improving, with progress in vital areas such as new and existing home sales, home prices, and foreclosure starts and completions. For example, the report found sales of new homes up again in October and 15.4 percent higher than one year earlier. Sales of previously owned homes also rose, hitting their fastest pace in just over a year. The scorecard shows home prices, though still rising, are increasingly stable, according to the most recent data. In fact, year-over-year price increases continue to slow, reversing the previous year’s volatile price spikes. The Federal Housing Finance Administration says home prices are now just 5.8 percent below their previous peak and approximately at the same level they were in September 2005. Foreclosure starts and completions, on the other hand, continue trending downward on a year-over-year basis. Despite the overall trend, however, October saw an increase over September’s estimates, though that can largely be attributed to banks imposing foreclosure moratoriums over the holidays. More here.

Low Mortgage Rates Fuel Spike in Demand

Over the past few weeks, mortgage rates have been falling, even setting new lows for the year. But despite low interest rates, mortgage activity hadn’t shown much significant improvement. Now, according to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage demand has rebounded, spiking 7.3 percent last week due to a 13 percent jump in refinance activity. The improvement also included a 1 percent increase in demand for loans to purchase homes. Despite last week’s gains, however, purchase demand is still 4 percent below year-before levels. Mortgage rates, on the other hand, were a mixed bag last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances was up from one week earlier, but rates on jumbo loans and loans backed by the Federal Housing Administration fell. Average mortgage rates on 15-year fixed-rate mortgages also increased. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

What Millennial Buyers Want In A Home

A new analysis of data from the 2013 American Housing Survey breaks down the types of homes millennial buyers buy, how they finance their purchase, and what they’re looking for in a house. Among the highlights of the report, three of four millennials – young adults roughly between the ages of 18 and 34 – are first-time buyers. Because they often have little or no savings, these buyers, more than older buyers, are likely to let financial reasons influence their choice of homes and are typically financing their home purchase out of their current income. That means, the homes they buy tend to be older, smaller, and less expensive. In fact, half of all homes sold to buyers in this age range averaged less than 1,650 square feet and cost less than $148,500. Millennial home buyers are also less likely to buy new homes but are more likely to buy a condo. Their most common reason for buying a home is a desire to establish their own household, though younger buyers also said they wanted more living space and wanted to own their own home. Compared with older buyers, millennials are more likely to pay attention to how close a house is to their workplace and to the quality of the school district. Still, older and younger buyers both agree that finding the right house is the biggest influence on their decision whether or not to buy a particular home. More here.

More Americans Say Now Is The Time To Buy

Fannie Mae’s monthly National Housing Survey tracks Americans’ attitudes toward buying and selling homes, the economy, mortgage rates, and their personal financial situation. According to the most recent results, 68 percent of Americans feel now is a good time to buy a house, a 3 percent increase from the month before. Respondents who said it was a good time to sell fell to 39 percent from 44 percent in October. Doug Duncan, Fannie Mae’s chief economist, said November’s results follow this year’s often sporadic trend of gradual improvement across a range of indicators that measure consumer attitudes toward the housing market. However, Duncan feels the more encouraging trend is consumers’ assessment of their personal finances. The November survey found 46 percent of Americans expecting their financial situation to improve in the next year. That is nearing an all-time survey high and bodes well for the real estate recovery. As people become more confident in their employment and income, Duncan believes their feelings about entering the housing market will also improve, leading to a more robust recovery. Still, this growing optimism is largely dependent on continued improvement in the job market and meaningful gains in household income. More here.

Down Payments & The First-Time Buyer

According to a new survey from NeighborWorks America, a national nonprofit community development corporation, 70 percent of Americans don’t know down-payment assistance programs are available for middle-income home buyers. Marietta Rodriguez, vice president of Homeownership Programs at NeighborWorks America, said down-payment assistance programs make home purchasing more accessible for first-time buyers and, because many of these programs require home-buyer education, these buyers tend to be more successful when it comes to maintaining a budget and staying on top of their monthly mortgage payment. In fact, the hundreds of millions of dollars available for down-payment assistance can be especially helpful for young buyers that are worried about affordability due to student loan debt. In recent years, the percentage of younger Americans active in the real estate market has lagged. One of the chief obstacles for first-time buyers is coming up with a down payment. More here.

The Newest Must-Have Home Feature

A new survey conducted by HGTV found nearly half of all consumers believe it’s important that their home is equipped with smart home technology. Products providing automated climate control, energy management, remote home monitoring, and lighting control systems are popular not only with buyers but also with sellers who feel it would make their home more desirable to home buyers. Charlie Young, CEO of the real estate company who sponsored the survey, said smart home enhancements have the potential to increase savings, safety, and re-sale value. And they’re especially popular with younger homeowners and buyers. In fact, more than half of Millennials said they’d consider installing smart home technology and 70 percent said it was important to them that the technology integrates with their smart phone. Young believes a smart home is one that is well-positioned for the future and aligns with a growing reliance on mobile technology. Also among the results, participants of all ages said they’d upgrade their thermostats before automating their lighting or security systems. More here.