AEI Housing Center Releases Positive Predictions For Home Price Appreciation

By SCOTT KIMBLER Home price appreciation will continue to climb throughout 2024, according to the latest analysis by leaders at AEI Housing Center. Tobias Peter, co-director and senior fellow at AEI, spoke during a presentation earlier this month and said even though purchase volume is down, data suggests home price appreciation will rise over the course of this year. Peter said because buyers are well qualified and there is continued competition due to the strong sellers’ market, HPA is expected to be around 5% by December. Those numbers can vary. A bullish projection shows an increase of between 6% and 8%. A bearish projection ranges from 0% to -2%. Data from February showed month-over-month HPA was up 1.1%, a reversal…

Existing Home Sales Slip

Existing home sales dropped in March as the cost of homebuying continues to worsen. Sales fell by 4.3% in March to a seasonally adjusted annual rate of 4.19 million. They were down 3.7% YOY. The median existing sales price was up 4.8% YOY to $393,500, the highest price ever recorded for the month of March and the ninth consecutive monthly price gain. “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said NAR Chief Economist Lawrence Yun. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.” Buyer demand metrics do appear to be up, though, with home tours…

Homebuying Costs Hit Another Record High

The cost of buying a home hit another record high as rising rates intersected with home price growth. The median U.S. home sale price increased 5% YOY to $380,250 during the four weeks ending April 14. This is just a few grand below June 2022’s all-time high. At the same time, mortgage rates have jumped up over 7% in recent weeks as inflation data forced the Central Bank to walk back its talk of rate cuts. Some analysts who previously predicted three cuts from the Fed in 2024 now say there may be none at all. “I think we’re still expecting a couple but clearly we continue to kick the can down the road on rate cuts, and it wouldn’t…

Good Jobs Report Means Bad News for Borrowers, Experts Say

Americans watching cable news might have been cheered when they saw the latest jobs report: the United States added 303,000 new nonfarm jobs in March and unemployment fell to 3.8%. Both numbers exceeded expectations. But viewers who are also shopping for a mortgage may have had a different reaction. Economics and housing experts say less unemployment means more pressure on Federal Reserve Chair Jerome Powell to keep interest rates high. And the result has been an uptick in rates. Powell has made it clear his priority is getting inflation under control. His target number for rising prices is a 2% annual rate. Instead, prices have been rising nearly twice that fast, and the inflation rate has been higher than expected…

Prices Rose Quarterly, YOY In Q1 2024

Single-family home prices soared in the first quarter of 2024, starting the year off with an unaffordable pop. Prices were up 7.4% from Q1 2022 to Q1 2024, according to Fannie Mae’s latest Home Price Index. Fannie Mae measures the average, quarterly price change for all single-family properties in the United States, excluding condos. The index also measured a quarterly increase of 1.7%, effectively the same as the growth registered in Q4 2023. “Home prices continued to rise in the first quarter as the housing market remained seriously supply constrained,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. Duncan noted that stabilizing rates brought some buyers and sellers off the sidelines in January, providing a demand boost…

Starts, Permits Plummet As Rates Stabilize Near 7%

Residential construction reversed gains in March, clocking its biggest dip since August 2023 as builders watch rising rates. Starts and permits both slipped in March, according to data from the U.S. Census Bureau. Starts tumbled by a stunning 14.7% month-over-month to a seasonally adjusted annual rate of 1,321,000. This is below all estimates in a Bloomberg survey of economists. Permits were down 4.3% to an adjusted rate of 1,458,000. Both single- and multi-family projects were impacted, with multi-family construction slipping to their lowest point since the beginning of the pandemic. This is a reversal from the month prior’s boost, the result of a wave of construction resuming after winter weather restrained builders at the beginning of 2024. With milder weather,…

Mortgage Rate ‘Lock-In’ Effect Keeping Sellers Back, Report Says

Analysis from the Federal Housing Finance Agency finds that, while U.S. mortgage rates are not historically high, the gap between the rates existing homeowners are paying and would-be home buyers are facing has reached a point not seen in decades. The result is a “lock-in effect” that’s keeping the housing supply extremely tight, a problem that President Joe Biden’s proposed subsidies are unlikely to fix. The findings are in a March 2024 working paper entitled “The Lock-In Effect of Rising Mortgage Rates” by Ross M. Batzer, Jonah R. Coste, William M. Doerner, and Michael J. Seiler. “People can be ‘locked-in’ or constrained in their ability to make appropriate financial changes,” the authors write, pointing to obstacles like “being unable to…

West Coast Hubs See Home Values Soar

A new report from Zillow found that inventory is a critical factor in how hot individual markets are, with West Coast hubs feeling the biggest burns. Home values are rising the most in expensive cities, concentrated on the West Coast. Home price appreciation is up 3.3% month-over-month in San Jose, the highest of any city. Seattle, San Francisco, San Diego, and Los Angeles followed it, all experiencing 2% or higher appreciation from February. “[Competition] has kept prices ticking upward in most areas, despite affordability challenges. There are places where new construction relieved some pressure, and where homeowners are less locked into their mortgage, but not in the nation’s most expensive metros. In costly areas, homeowners hold extensive mortgage debt at…

Rates March Toward 7% On Sticky Inflation Data

Mortgage rates are marching towards 7% again as inflationary pressures threaten their stability. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.88%, up from the week prior’s 6.82%. A year ago at this time, the 30-year FRM averaged 6.27%. The 15-year fixed rate increased from 6.06% to 6.16%. A year ago, it averaged 5.54%.  Rates have primarily stuck between 6.5% and sub-7% as they moved up in the first quarter. Freddie Mac Chief Economist Sam Khater noted that rates moved up as inflation stayed sticky and the Central Bank’s monetary policy shifted. “While newly released inflation data from March continues to show a trend of very little movement, the financial market’s reaction paints a far different…

Foreclosures Up 3% In Q1 2024

Foreclosures increased nationwide in Q1 2024 as mounting affordability pressures push homeowners into situations where they are unable to pay their mortgages. According to ATTOM’s latest Foreclosure Market Report, a total of 95,349 U.S. properties had foreclosure filings during the first quarter. This is up 3% from Q4 2023, but down under 1% YOY. “Q1 2024’s foreclosure data reveals a market in transition, with slight increases in filings and starts, alongside a notable decrease in REO properties,” explained Rob Barber, CEO at ATTOM. “While foreclosures remain relatively stable, we’re closely monitoring these trends. Homeowners continue to hold significant equity, contributing to a persistently hot housing market.” REOs were up 7% from the previous quarter but plummeted by 20% YOY. Foreclosure…