As 2014 came to a close, positive economic reports lead many real estate analysts to forecast a solid spring selling season and continued housing improvement throughout 2015. The rosy outlook was based on falling unemployment numbers, historically low mortgage rates, and pent-up buyer demand. The combination of these factors was supposed to help balance the market and lead to improved sales and new home construction. But, so far this year, housing data has shown a slower-than-expected start to the year, due in part to harsh winter weather across much of the country. Despite the slow start, however, analysts still expect a strong spring. For example, Freddie Mac’s most recent Multi-Indicator Market Index found a slight month-over-month decline in the housing market’s strength but their deputy chief economist, Len Kiefer, still believes the residential real-estate market will heat up along with the weather. “Housing markets weakened slightly this month, which is no surprise considering the harsh winter and slowdown in economic activity at the outset of 2015,” Kiefer said. “While single-family purchase applications dipped a bit across the board from December to January, they are still up nearly 3 percent from last year. Improving employment and attractive mortgage rates should help to support increased purchase applications, particularly as weather warms up and we head into the spring home buying season.” More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates dropped last week 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. The drop was the second in as many weeks and caused a spike in demand for mortgage applications. In fact, the Market Composite Index – which measures both refinance and purchase demand – was up 9.5 percent from the week before. The refinance index jumped 12 percent from the previous week, bringing the refinance share of total mortgage activity up to 61 percent from 59 percent one week earlier. The purchase index – which is a good indicator of future home sales – was also up, rising 5 percent compared to a week earlier. Demand for home purchase loans is now 3 percent higher than the same week one year ago. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
New estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development show sales of new single-family homes up 7.8 percent in February from the month before. The sales surge beat economists’ expectations and pushed sales to their highest level since February 2008. At a time when many housing market indicators are showing slower-than-expected activity, the improvement was welcome news. It was also contrary to conventional wisdom. In February, much of the country was impacted by severe winter weather, which many analysts believe responsible for dampened housing activity during the month. But, according to the new sales numbers, February’s gains were largely located in the South and Northeast – the region most heavily battered by snow and frigid temperatures. The Midwest and West both suffered declines from the previous month. Also in the report, the median sales price of new homes sold in February was $275,500; the average sales price was $341,000. With February’s improvement, new home sales are now nearly 25 percent higher than at the same time last year. More here.
Sales of previously owned homes rose in February, according to new numbers from the National Association of Realtors. In fact, existing-home sales – which include single-family homes, co-ops, condominiums, and townhomes – increased 1.2 percent from the previous month and are now 4.7 percent above year-before levels. The modest improvement may have been more significant if not for inventory issues across the country and severe winter weather in some regions. Lawrence Yun, NAR’s chief economist, said there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” Yun said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.” And, though prices were 7.5 percent above last February, total housing inventory also rose slightly, which should help to balance rising prices. Regionally, the Northeast saw a 6.5 percent decline in sales during the month – likely due to harsh weather – while other areas of the country, such as the South and West, saw increases, with sales in the West up 5.7 percent from the month before. More here.
According to a new analysis, last year’s average home buyer put 14 percent down on their house, making last year’s average down payment $32,141. The analysis, conducted by RealtyTrac, looked at nearly 1.5 million home purchase loans in 386 counties across the country. The results reveal a number of things, especially which local real estate markets are most likely to see rising numbers of first-time buyers. “This analysis shows that first-time home buyers have a better shot at buying a home in low-priced markets, not just because of the lower price point but because on average buyers are putting down just 12 percent in those markets compared to 24 percent in high-priced markets,” said Daren Blomquist, RealtyTrac’s vice president. Blomquist also noted that many of the markets that are drawing more young Americans are the same areas that have above-average down payment percentages. However, as the housing market normalizes and conventional buyers replace the real estate investors that dominated the market in the early years of the recovery, down payment averages will likely fall. Among the 25 least expensive markets, the average down payment was $8,239; the most expensive markets had an average down payment of $138,547. More here.
A new survey of mortgage lenders finds increasing optimism about the outlook for mortgage demand and credit availability in the months ahead. The results of Fannie Mae’s first quarter 2015 Mortgage Lender Sentiment Survey show that senior mortgage executives across the country have a more positive view compared with the previous quarter or the year before. In fact, more respondents said they expect mortgage demand to grow over the next three months and the share of lenders reporting that credit is easing is now higher than the share that say it’s tightening. Doug Duncan, Fannie Mae’s chief economist, said the results mirror those of the American public, who have been expressing increased optimism about the economy and housing market in recent months. “The first quarter results mirror a similar trend among American households, as shown in our recently released National Housing Survey data,” Duncan said. “These results are consistent with our view that an improving economy, strengthening employment, and increasing consumer confidence should support a modest housing expansion in 2015, after an uneven and disappointing year for housing activity in 2014.” More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. Last week’s drop follows an increase the previous week that slowed total mortgage application demand. But despite the fact that average rates fell last week, demand was still down, according to the most recent survey. In fact, the Market Composite Index – which measures both refinance and purchase activity – slipped 3.9 percent from one week earlier. The decline included a 5 percent decrease in refinance demand and a 2 percent dip in the number of people seeking a loan to purchase a home. After falling again last week, refinance demand reached its lowest level since October of last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
New estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development show privately owned housing starts – which measure the number of new homes that began construction during the month – fell in February. The 17 percent plunge brought construction levels to their lowest point in a year. But, despite the decline, many real estate analysts say the drop is only a temporary setback, mostly due to the harsh winter weather that battered much of the country during the month. In fact, regional data shows that new residential construction dropped 56.5 percent in the Northeast and 37 percent in the Midwest, both areas where bitterly cold conditions lingered for much of February. On the other hand, the number of permits authorized to build new homes rose 3 percent from the month before. Permits are generally a good indicator of future new home construction and last month’s increase may be evidence that construction activity will rebound from February’s slowdown in the months ahead. More here.
Builder confidence slipped two points in March, according to the National Association of Home Builders Housing Market Index. The index measures builders’ perception of the market for new homes on a scale where any number above 50 indicates more builders view conditions as good than poor. Despite the drop, however, the index remains in positive territory at 53. David Crowe, the NAHB’s chief economist, said the decline in confidence is largely due to supply chain issues, including lot and labor shortages. But Crowe expects the market to overcome these issues based on renewed strength in the economy. “We are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates, and pent-up demand,” Crowe said. And a closer look at the numbers reveals most builders agree with Crowe. In fact, among the three components of the index measuring current buyer traffic, current sales, and sales expectations for the next six months, only the gauges of current conditions fell, while expectations for future sales remained unchanged from the month before at 59. This indicates that, though builders may have had a slow winter, most are expecting the market to improve during the spring and summer seasons. More here.
According to new data from the National Association of Realtors, Americans age 34 and younger made up the largest group of home buyers in the past year. In fact, millennials accounted for 32 percent of all buyers, which was up 1 percent from the year before. Buyers between the ages of 35 and 49 were the second largest group at 27 percent. But, despite being the largest group of recent buyers, younger Americans have been less active in the housing market over the past few years compared to historical norms. This, according to Lawrence Yun, NAR’s chief economist, is about to change. “Even though the share of first-time buyers has fallen to its lowest level since 1987, young adults in general are more mobile than older households,” Yun said. “The return of first-time buyers to normal levels will eventually take place in upcoming years as those living with their parents are likely to form households of their own, first as renters and then eventually as homeowners.” As the millennial generation enters its peak buying years, Yun expects them to represent an even larger percentage of total home purchases. Historically, the number of first-time home buyers has been closer to 40 percent. More here.