National Association Of Realtors Reaches $418M Deal That Changes Compensation

The National Association of Realtors has agreed to pay $418 million to settle broker commission claims brought on behalf of home sellers. Under the terms of the agreement, NAR continues to deny any wrongdoing in connection with the Multiple Listing Service cooperative compensation model rule. They will pay the multi-million sum over the course of approximately four years, according to a press release. Although cooperative compensation remains a choice for consumers when buying or selling a home, NAR has agreed to put into place a new rule prohibiting offers of broker compensation on the MLS. Instead, sellers will be expected to negotiate with real estate professionals. MLS participants working with buyers will be required to enter into written agreements with…

Rates Move Down For A Second Week

Buyers lucked out last week as rates continued to decline, pulling down the cost of purchasing a home. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.74%, down from the week prior’s 6.88%. A year ago at this time, the 30-year FRM averaged 6.60%. This is the second decline after a month-long stretch of increases, which broke last week. Mortgage applications saw a bump in response. The 15-year fixed also fell, dropping to 6.16% from 6.22%. A year ago, it averaged 5.90%. “The 30-year fixed-rate mortgage decreased again this week, with declines totaling almost a quarter of a percent in two weeks’ time,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite the recent dip, mortgage rates…

Young Buyers Willing To Accept Higher Rates

Young homebuyers tolerate high mortgage rates better than their older counterparts. Gen Z and Millennial respondents to a new survey say they will accept rates as high as 6.3% and 6.2%, respectively, in order to buy a home in 2024. Gen X and Baby Boomers, in comparison, won’t accept any rate above 6%. The survey, ServiceLink’s State of Homebuying Report, focused on Americans who bought or tried to buy a home in the last four years. Younger buyers also expressed more determination to buy this year, with 63% of Gen Z respondents and 59% of Millennials saying they plan to, compared to 45% of Gen X and 21% of Baby Boomers. Taken together, 47% of all respondents plan to purchase…

Purchase Locks Rose At The Start Of Spring Buying Season

Mortgage purchase locks increased at the start of the spring homebuying season despite ongoing challenges, setting the stage for more activity. Rate lock volume increased by 5% from January to February despite rising rates, leading to a net rise in origination activity, according to Optimal Blue’s latest Originations Market Monitor report. Purchase activity drove the surge, climbing 8.3% from January and buoying the numbers even as refinances tanked. Purchase lock counts were up 7% from the month prior but decreased 7% YOY. It is the smallest such decrease since the Federal Reserve began its inflation fight in March 2022. Rate/term refis were down 22.5% month-over-month, while cash-outs dipped by 3.1%. All in all, 86% of last month’s originations were purchase…

Rates Cool Down, Increasing Demand

Mortgage rates broke a month-long upward streak, deflating for the first time in weeks and resulting in a purchase demand boost. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.88%, down from the week prior’s 6.94%. A year ago at this time, the 30-year FRM averaged 6.73%. This is the first decline in four weeks. The 15-year fixed also fell, dropping to 6.22% from 6.26%. A year ago, it averaged 5.95%. “Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates,” said Sam Khater, Freddie Mac’s Chief Economist.  Mortgage loan applications were up nearly 10% from…

Q4 2023 Brought Fewer Underwater Homes

The number of underwater homes in the U.S. dropped in Q4 2023 as home prices continued soaring, adding to the property wealth of American homeowners. Equity rose by approximately $24,000 YOY for the average borrower, according to new data from CoreLogic. A home is underwater if it has negative equity – that is, if it’s worth less than the homeowners owe. Quarter-over-quarter, the number of homes with negative equity slipped by 1.1%, accounting for just 1.8% of all mortgaged properties, the lowest number ever recorded by CoreLogic.  Annually, underwater mortgages were down by 15%. “Rising home prices continue to fuel growing home equity, which, at $298,000 per average borrower remained near historic highs at the end of 2023,” said Dr.…

Applications Picked Up Last Week, Reversing Downturn

Mortgage applications pulled back from a weeks-long stretch of declines, increasing last week across the board. The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index—a measure of mortgage loan application volume—increased by 9.7%, reversing the week prior’s 5.6% dip. Adjusted purchase applications rose by 11%, while the unadjusted index was up by 13% and was 8% lower YOY. The data is adjusted to include the President’s Day holiday. Rates moved down slightly but not by much, reaching 7.02%. This is elevated from the beginning of the year, but rate-sensitive buyers may be inclined to lock in here before they move any higher. “The latest data on inflation was not markedly better nor worse than expected, which…

February Brought More Affordable Listings To The Market

As sellers are forced to adjust to the housing market’s new normal, more affordable inventory is cropping up.  The share of available homes in the $200,000 to $350,000 price range saw the biggest growth of any price category in February, up 20.6% YOY, Realtor.com reported. Though inventory remains tight, money-minded buyers may see an uptick in affordable homes as they shop this spring. Inventory overall saw a boost last month, with the number of homes actively for sale on a typical day up 14.8% from last year. This is the fourth straight month of annual inventory growth. “The first couple of months of 2024 have proven to be positive for inventory levels, as the number of homes actively for sale…

New Listings Down 15% Compared To Last Year

Listings are down more than 15% from last year, another pain point on the market ahead of the typically zippy spring buying season. HouseCanary’s February Market Pulse Report found that net new listings were 15.3% lower than in February 2023. Overall, inventory is up 11.7% YOY but remains generally constrained, limiting new activity. This is yet another example of market pressures as spring approaches, usually a busy homebuying season. “In January, we saw net new listings and contract volumes trend at multi-year seasonal lows. Although those metrics are slightly up versus last month, the housing market is still facing significant pressures. The Federal Reserve has all but confirmed that rates will continue to hover around the 7% mark, continuing to…

First-Time Buyers Took Out Record Number Of GSE Loans In 2023

First-time homebuyers accounted for a record number of GSE purchase loans in 2023, while originations sunk to new lows, according to ICE’s latest Mortgage Monitor. They made up 55% of agency purchases last year, the highest share ever recorded by ICE in the ten years it has been tracking this metric. “The market in which these folks purchased their first home was one of record house prices, ballooning down payments, rising rates, and elevated DTIs,” Andy Walden, ICE Vice President of Enterprise Research Strategy, said. “Given record exposure to first-time homebuyer loans, it’ll be worth watching the performance of this cohort very closely moving forward, particularly for those invested in 2023 agency MBS.” First-timers and repeat buyers differed greatly in…