The number of signed contracts to buy homes fell 1.5 percent in April, according to new numbers from the National Association of Realtors. The decline follows a nearly 4 percent increase in March. Lawrence Yun, NAR’s chief economist, says home sales numbers have yet to reflect favorable trends, such as lower mortgage rates and growing consumer confidence. That may soon change. “Though the latest monthly figure shows a mild decline in contract signings, mortgage applications and consumer confidence have been steadily rising,” Yun said. “It’s inevitable for sales to turn higher in a few months.” So why haven’t home sales risen yet, if buying conditions have become more favorable? Well, one reason is the fact that there are fewer homes available for sale in affordable price ranges than there are on the high end of the market. In fact, according to Yun, there are now nearly three times the number of homes available for sale over $1 million as there are homes $250,000 and below. As the market becomes more balanced, home prices will moderate further and provide more Americans an opportunity to buy. More here.
Archive for May 2019
Economic Concerns Keep Mortgage Rates Low
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week after four weeks of consecutive declines. In fact, rates for 30-year fixed-rate mortgages with conforming loan balances were unchanged from the week before, while rates for jumbo loans, loans backed by the Federal Housing Administration, and 15-year mortgages all fell slightly. But despite favorable mortgage rates, demand for loans declined 3.3 percent. Joel Kan, MBA’s vice president of economic and industry forecasting, said demand may have stalled due to economic uncertainty. “Purchase applications decreased for the third straight week, but remained more than 7 percent higher than a year ago,” Kan said. “It is possible that the trade dispute is causing potential homeowners to hold off on buying, with the fear that further escalation – or the lack of resolution – may have adverse impacts on the economy and housing market.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Why It’s Important To Price Your Home Fairly
When selling a house, there are a number of things you can do to make your listing more attractive to prospective buyers. Some obvious examples include staging and getting good photos. But the number one thing you can do to make sure your home gets a good response from buyers is to price it right. After all, even a perfectly staged house with professional photos isn’t going to sell quickly if it’s priced way too high. And, according to a recent analysis, lowering your price after your home’s been on the market a while isn’t necessarily as effective as setting the price correctly the first time. In fact, when comparing the number of online views a home gets the day it’s listed to the day of a price drop, the initial listing gets almost three and a half times the number of views. In other words, you’ll never get another chance to make a first impression. And the longer your home has been listed without selling, the more likely buyers will assume there’s a reason no one’s bought it yet. The good news is there’s an easy way to avoid falling into this trap. Simply follow the guidance of the pros you’ve hired to help sell your house. They’ll be able to give you an accurate assessment of your home’s current market value and help you avoid pricing it too high for interested buyers. More here.
Housing Market Outlook Grows Rosier
At the end of last year, the housing market looked like it might stall. Higher home prices and rising mortgage rates were making affordability conditions more challenging for buyers, especially first-time buyers and those looking for a suitable starter home. Since then, though, things have taken a turn for the better. The number of homes available to buyers has risen, which has caused prices to moderate somewhat. Additionally, mortgage rates have come back down and don’t look like they’re going to rise significantly any time soon. In fact, according to Fannie Mae’s Economic and Strategic Research Group, there is no expectation the Fed will raise rates again this year, or next. Doug Duncan, Fannie Mae’s chief economist, says that’s one of a combination of factors helping market conditions right now. “We revised upward our 2019 purchase and refinance mortgage origination forecasts amid continued strong demand and a boost to entry-level inventory, the pullback in mortgage rates, and slowing home price appreciation,” Duncan said. In other words, things are trending in the right direction for buyers and improving the outlook for the overall market. More here.
The New Home Market Is Trending Upward
Newly released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show new home sales fell nearly 7 percent in April. But the month-over-month results only tell part of the story. That’s because some of the reason sales were down from the month before is that the March estimate was revised much higher than originally reported. And, after the revision, the data showed new home sales reached their highest level since 2007 in March. Additionally, even after coming down from that high, new home sales are still up 7 percent from where they were at the same time last year. In other words, the new home sales market is trending upward and that’s good news for the housing market overall. Why? Well, when new home sales increase, builders are more likely to build more new homes. And, as more homes are built and for-sale inventory increases, home prices moderate and help affordability levels for all buyers. More here.
30-Year Rate Now At Lowest Level In Over A Year
According to the Mortgage Bankers Association’s Weekly Applications Survey, average rates for 30-year fixed-rate mortgages with conforming loan balances fell again last week. Rates for jumbo loans, loans backed by the FHA, and 15-year fixed-rate mortgages remained mostly flat from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the average 30-year fixed-rate is now at its lowest point in more than a year. “Mortgage rates fell for the fourth straight week, with the 30-year fixed-rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances,” Kan said. And while it’s true that there was an 8 percent increase in refinance activity last week due to decreasing rates, purchase activity was actually down from the week before. Kan says home buyers may be delaying their search due to economic uncertainty. But though demand for loans to buy homes was down from the week before, it remains 7 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Report Shows Buying Conditions Are Improving
The National Association of Realtors most recent existing-home sales report shows sales were essentially flat in April, falling 0.4 percent from the month before. But though flat sales to begin the spring selling season may seem like trouble, a closer look at the data shows conditions are gradually improving for home buyers and may lead to more activity. Lawrence Yun, NAR’s chief economist, says he believes the improvements will soon help spur more sales. “First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions,” Yun said. “Also, job creation is improving, causing wage growth to align with home price growth, which helps affordability and will help spur more home sales.” Additionally, inventory continues to improve, with the number of homes available for sale up nearly 2 percent from last year at the same time. However, though the market is becoming more favorable for buyers, it’s still competitive. In fact, 53 percent of homes sold in April were on the market for less than a month. More here.
Do Occupied Homes Sell Better Than Empty Ones?
If you’re a homeowner getting ready to sell, you’re likely thinking about how to get the best price for your house. Naturally, getting a good offer is going to be top priority. The other big issue is timing. Homeowners who are using the sale of their home to fund the down payment on their next place have to time it right. But could the timing of your move affect the price your home gets? Well, according to new research that compared the sale price of occupied versus vacant homes, it might. In fact, the research showed that homes whose owners had already moved out sold for $11,000 less and spent six more days on the market than comparable homes that were still occupied. Why would this be? Well, one reason is that buyers looking at an empty house assume its owners aren’t as eager to sell, since they’ve already moved on. Another reason is furnishings can sometimes help a home show better. However, there are a lot of factors to consider. For example, a home with less attractive décor can sometimes drag its price down just as much as being vacant. More here.
Homeowners With Equity Influence Renters To Buy
It’s hard not to be influenced by your family and friends. After all, their opinions hold more weight because you trust them. When someone you love recommends something, you’re probably more likely to consider it than had you heard it from another source. It doesn’t matter if it’s a restaurant, a new movie, or a vacation destination, if a friend tells you it’s good, you’ll likely believe them. This is also true when deciding to buy a house. At a panel convened by the National Association of Realtors, Dr. Johannes Stroebel – an associate professor of finance at New York University – talked about why that is. According to Stroebel, a recent paper looked at how the positive experiences of people close to us can influence our decision to buy. The research showed that having a Facebook friend who experienced a 5 percent increase in their home’s value over the past two years increased the probability that a current renter would purchase a home over the next two years. “Individuals do discuss property value with their friends, and this changes behavior,” Stroebel said. In short, if you have a friend who’s seen their home’s value rise, you’re more likely to believe buying a house is a good investment. More here.
Builders Say Conditions Are Good For Buyers
The number of new homes being built can be a good gauge of the housing market’s health. After all, home builders wouldn’t be building homes unless they felt confident that those homes would sell. And buyers wouldn’t be interested in buying a new home unless the housing market and economy were doing well. For this reason, the National Association of Home Builders’ Housing Market Index is an important indicator. Released monthly, the survey measures builders’ confidence in the new home market on a scale where any number above 50 indicates more builders view conditions as good than poor. In May, the index was up, rising three points to 66. Among its components, those measuring current sales conditions and expectations for the next six months were both at 72. Robert Dietz, NAHB’s chief economist, says conditions are improving for home buyers, with lower mortgage rates and a strong economy leading the way. “This lower-interest rate environment, along with ongoing job growth and rising wages, is contributing to a gradual improvement in the marketplace,” Dietz said. More here.
