After the pandemic began in March 2020, there was an increase in the number of home shoppers looking to move to a new area. Remote work, affordability conditions, and a desire for more space all contributed to buyers’ desire to move further from home. But what about now? It’s been three years. Are Americans still looking to move away? According to the National Association of Realtors’ consumer website, they are. In fact, the website’s Q2 Cross-Market Demand Report shows 60 percent of listing views from the top 100 metros went to homes located outside the shopper’s current metro area. That’s up almost 1 percent from the first quarter and 4.1 percent year-over-year. Jiayi Xu, an economist for the site, says affordability is the main motivator pushing today’s buyers to expand their house hunt. “Housing affordability isn’t likely to improve anytime soon, so it’s not surprising to see that Americans are on the move and increasingly searching for homes in more affordable areas of the country where they can stretch their housing dollars further,” Xu said. “Sellers are much more likely to see interest from out-of-towners than in years past, and from where that interest is coming might be the most surprising.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from one week earlier. Rates were up across most loan categories, including 30-year fixed-rate loans with conforming balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. Jumbo loans saw a slight decline. Joel Kan, MBA’s vice president and deputy chief economist, says the increases slowed demand for mortgage applications week-over-week. “Mortgage rates edged higher last week … leading to another decline in overall applications,” Kan said. “The decline in purchase activity was driven mainly by weaker conventional purchase application volume, as limited housing inventory and rates … are crimping affordability for many potential home buyers.” Overall, mortgage application demand – including purchase and refinance activity – was down 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. (source)

The inventory of homes for sale has been low for years. In fact, supply has been an issue for most of the past decade. Then, it got worse during the pandemic. Low inventory has long been a frustration for home buyers – who have had to fight through the resulting affordability conditions, competition from other buyers, and a lack of choices when shopping for a home to buy. But according to a new survey of homeowners, there may be hope on the horizon. The survey found nearly a quarter of respondents say they are either listing their home for sale or considering selling their home in the next three years. That’s up from 19 percent during the first quarter of 2023 and 8 percent higher than last year at the same time. Additionally, 40 percent of respondents who said they’re considering selling say they think they’ll sell next year. That’s good news for buyers, as it’ll add much needed inventory to the supply of previously owned homes for sale. That’ll help calm price increases and offer buyers a better shot at finding their dream home. (source)

Among the many benefits of homeownership, equity is a big one. It refers to the amount of a home’s value that belongs to its owner. In other words, it’s the value of your home minus the amount still owed on the mortgage. Obviously, having equity is good – and these days homeowners have a lot of it. In fact, according to ATTOM Data Solutions’ most recent 2023 U.S. Home Equity & Underwater Report, 49 percent of mortgaged residential properties were considered equity rich during the second quarter – meaning their loan balance was no more than half the estimated market value of their home. That’s up from 47 percent during the first quarter and the highest it’s been in at least four years. Rob Barber, ATTOM’s CEO, says the market has bounced back and it’s benefiting homeowners. “The second-quarter market revival bestowed immediate benefits on homeowners around the nation in the form of better profits for sellers and rising equity for those staying put,” Barber said. “Equity levels were high even during the recent downturn, and now they are going back up and better than ever.” (source)

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes signed each month. The index is considered a good indicator of future home sales since most signed contracts lead to closed sales several weeks later. According to the most recent release, the index found pending home sales up month-over-month in June. It was the first increase since February. Lawrence Yun, NAR’s chief economist, says the housing recession is over. “The recovery has not taken place, but the housing recession is over,” Yun said. “With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out. Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.” The NAR expects home sales to bounce back next year after slowing in 2023. (source)

New estimates from the U.S. Census Bureau and the Department of Housing and Urban Development show sales of newly built single-family homes fell 2.5 percent in June from one month earlier. The decline was the first since February and follows a downward revision to May’s estimate. But while that may sound like discouraging news for the new home market, the long-term trend remains strong. How strong? Well, June’s estimate – while down from one month earlier – remains nearly 25 percent higher than at the same time last year. In other words, the market for newly built homes continues to grow, mostly due to a lack of previously owned homes for sale. Supply issues in the existing-home market have helped drive more buyers to look at new homes, which has supported more new residential construction. Also in the report, the median sales price of new houses sold in June was $415,400. The average sales price was $494,700. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with little change seen from one week earlier. Rates were unchanged for 30-year fixed-rate loans with conforming balances. Jumbo loans, those backed by the Federal Housing Administration, and 15-year fixed-rate loans all saw minor increases. Despite steady rates, demand for mortgage applications fell 1.8 percent from the week before. Joel Kan, MBA’s vice president and deputy chief economist, says purchase demand was driven down by a drop in FHA loan activity. “The 2.5 percent decline in purchase activity, partly driven by a 10 percent decrease in FHA applications, pushed the purchase index to its lowest level in over a month,” Kan said. “The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May.” The MBA’s weekly survey has been conducted since 1990 and cover 75 percent of all retail residential mortgage applications. (source)

The S&P Case-Shiller Home Price Indices is a closely followed monthly price report that has been tracking home values for nearly 30 years. The report is considered among the leading measures of U.S. home prices. According to their most recent release, S&P found national home prices up 1.2 percent in May, the last month included in the report. The gain is evidence home values remain strong and will continue to be in coming months. Craig J. Lazzara, managing director at S&P, says there’s reason for optimism. “Home prices in the U.S. began to fall after June 2022, and May’s data bolster the case that the final month of the decline was January 2023,” Lazzara said. “Granted, the last four months’ price gains could be truncated by increases in mortgage rates or by general economic weakness. But the breadth and strength of May’s report are consistent with an optimistic view of future months.” The strongest price gains, somewhat surprisingly, were found in cold-weather cities, including Chicago, Cleveland, and New York. (source)

When home sales slow down, it’s easy to assume the reason behind the decline is fewer buyers in the market. But according to the latest release from Fannie Mae’s Economic and Strategic Research group, buyer demand is not the issue in today’s market. In fact, it’s the opposite. The group – which releases a monthly outlook covering their expectations for the economy and housing market in the months ahead – says the lack of available homes for sale is the defining feature of today’s housing market. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the housing market’s supply issue isn’t new. “We began discussing our expectations of a supply shortage in late 2014, and it remains front and center in the housing market in 2023,” Duncan said. “The supply of existing homes is near the 2009 crisis low, and it’s showing no signs of easing. This puts the onus on home builders and can be seen in the construction data.” The low supply of previously owned homes for sale has slowed sales and kept prices high. It has also helped support more new home construction, which is encouraging for the market’s future. (source)

There are plenty of interested home buyers out there but the number of available homes for sale remains low. That creates challenging affordability conditions as it helps push home prices higher. It also creates an opportunity for home builders. Fortunately, it seems they’re answering the call. In fact, according to new residential construction numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, building permits for new single-family homes hit a 12-month high in June – rising 2.2 percent from the month before. That means home builders are ramping up construction of new homes to help meet demand from buyers. The increased supply will not only help new-home shoppers but also buyers of existing homes, as any increase in the total number of available homes for sale relieves upward pressure on home prices. (source)