Rates Stay Above 7%

Mortgage rates stayed above 7% again last week. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.19%, up from 7.18%. A year ago at this time, the 30-year FRM averaged 6.29%. The 15-year fixed-rate rose to 6.54% from 6.51%. A year ago, it averaged 5.44% “Mortgage rates continue to linger above 7% as the Federal Reserve paused their interest rate hikes,” said Sam Khater, Freddie Mac’s Chief Economist.  “Given these high rates, housing demand is cooling off and now homebuilders are feeling the effect. Builder sentiment declined for the first time in several months and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply.” August’s inventory…

Existing Home Sales Slipped In August

Existing-home sales slipped overall in August, though activity in the Midwest and Northeast remained hot. Sales fell by 0.7% to a seasonally adjusted annual rate of 4.04 million, according to the latest data from the National Association of Realtors. Year-over-year, sales are down 15.3%. “Home sales have been stable for several months, neither rising nor falling in any meaningful way. Mortgage rate changes will have a big impact over the short run, while job gains will have a steady, positive impact over the long run,” said NAR Chief Economist Lawrence Yun. Poor performances in the South and West overshadowed neutral activity in the Northeast and a spike in the Midwest. Yun noted that the South’s performance is an improvement over…

Flipping Rate Falls, But Profits Soar

Home flipping rates are falling as profit margins soar, according to new data from ATTOM. Flipped homes accounted for 8.9% of all U.S. home sales in Q2 2023, down 1% from the prior quarter and nearly the lowest rate since 2021. In total, 84,350 single-family homes and condominiums were flipped in the second quarter. At the same time, raw flipping profits increased 18% from Q1, the largest spike in the past decade. Typical profits also increased at the fastest quarterly pace in three years. The profit upswing comes on the heels of an “extended slump” that cut profits in half in the last two years. Though they remain far below 2021’s peaks, last quarter’s profits represent a rebound for home…

Applications Spike Despite Rate Rise To 7.31%

Mortgage applications spiked last week as both purchase and refinance loans saw a boost. The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – jumped by 5.4%, wiping out the week prior’s 0.8% decrease. Adjusted purchase applications rose by 2%, while the unadjusted index increased by 12% from the week before and was 26% lower YOY. The results included an adjustment for the Labor Day holiday. Refinances also improved, rising 13% and making up 31.6% of total applications. In the past decade, refis averaged 58% of total activity. Meanwhile, the average interest rate for a 30-year fixed loan increased to 7.31%, its highest level in a month. MBA VP…

Housing Starts Tank, But Permits Offer Hope

Housing starts slipped in August as multifamily construction sank, though permits for single-family homes accelerated. New U.S. home construction fell by 11.3% last month, according to data from the U.S. Census Bureau, to an annualized rate of 1.28 million. Single-family starts were down 4.3% from July. Permits for new construction rose to their fastest pace in nearly a year, however, up 6.9% to 1.54 million. Permits offer an indication of how many homes will be built in the coming months. Permits for single-family homes in particular soared to their fastest pace since May 2022. This suggests that builders are optimistic about demand moving forward. But they’ve recently taken a hit from the high-rate environment, leading to depressed homebuilder sentiment. The…

Rates “Anchored” Above 7%

Mortgage rates increased last week, and despite a two-week streak of declines, will likely remain above 7%. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.18%, up from 7.12%. A year ago at this time, the 30-year FRM averaged 6.02%. The 15-year fixed-rate mortgage slipped, however, down to 6.51% from 6.52%. A year ago, it averaged 5.21%. “Mortgage rates inched back up this week and remain anchored north of seven percent. The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated,” said Sam Khater, Freddie Mac’s Chief Economist.  The consumer price index saw its biggest monthly gain this year in August, coming in hotter than expected at +0.3% month-over-month. This heightens the…

Terrified Americans Expect Student Loan Repayments To Further Impact Their Finances

As the student loan forbearance program comes to an end, Americans are terrified that resuming payments will force them into greater debt. That’s according to a new survey of student loan borrowers by digital personal finance company Achieve. Student loan repayments were put on pause in March 2020 as a response to the pandemic. Payments will resume in October. Nearly half of respondents are extremely or very stressed about resuming their payments, while 28% say they will have to take on new debt to manage their personal finances. 45% of respondents paid down other expenses rather than making advance payments on their student loans during forbearance, with 27% using their extra cash for mortgage or rent payments. More than 60%…

Mortgage Activity Suffered Under High Rates In August

Mortgage activity dipped in August as rates reached new highs and inventory remained low, according to Black Knight’s latest Mortgage Monitor report. The 30-year conforming soared above 7.25% last month, its highest level in more than 20 years, before cooling down to 7.07%. As a result, overall rate lock volumes sank for a third straight month, down 1.5% from July.  “August was another rough month for mortgage borrowers from an interest rate perspective,” said Andy Walden, VP of enterprise research and strategy at Black Knight. “Rates did edge down toward the end of August, but prospective homebuyers still face the least affordable housing market in nearly 40 years.” The biggest driver was purchase volume, which fell almost a full 2%…

Homeowners Renovating Rather Than Moving

As mortgage rates are locking homeowners in their current houses, many are investing in renovations rather than moving. A new survey from LendingTree found that 68% of homeowners started or completed a home improvement project in the last 12 months, while 63% plan to begin one in the next year. Interior painting, landscaping, and bathroom remodeling are the most common projects, but homeowners have diverse reasons for renovating. Of the more than 2,000 respondents, 36% say they need the repairs because their house is aging, 27% say their improvements are relatively small, and 21% say they want to spruce up their home to sell. Millennials homeowners are poised to take on the most DIY, with 78% engaged in renovation in…

In-Person Work, Quality Of Life Affects Americans On The Move

By ERIN FLYNN JAY Return to the office mandates and the continued desire for a better quality of life are affecting Americans as they decide where to move in 2023. Companies that allowed employees to work remotely during and immediately after the Covid pandemic are reversing course this year. On Sept. 5, Meta’s requirement that employees assigned to an office show up at least three days a week went into effect. With the policy change, Facebook and Instagram’s parent company joined Google and other major employers that are pulling the plug on remote work despite advances in technology that allow people to log in from anywhere. Some analysts argue that it is a leadership preference, while others point out that…