By CHUCK GREEN Builders in the United States are feeling the effects of Russia’s invasion of Ukraine, leading some experts to say there will be ramifications in the home and commercial markets. “Already, retail gasoline and diesel prices have jumped by record amounts and reached record levels. Construction firms use large amounts of fuel for their own trucks and offroad equipment,” said Ken Simonson, Chief Economist of The Associated General Contractors of America. Doubling down on the notion that the conflict is putting builders in a sticky situation, Simonson said they pay directly through fuel surcharges. Costs are embedded in the thousands of deliveries of equipment and materials to job sites as well as the hauling away of dirt, debris,…
Condo prices hit a record high– $319,000, up 14.6% YOY and 22.7% from before the pandemic— as buyers priced out of the single-family market turn towards more affordable options, Redfin reported. This is a turn-around from the beginning of the pandemic when American buyers wanted to avoid crowded areas, causing condo sales to drop by 48%. But as pandemic fears subside and home shoppers face stock shortages and price appreciation in the single-family market, condos are making a comeback. Gen Z in particular is reviving urban hotspots assumed to be dying out due to Covid-19. “Big cities are appealing for a host of reasons—big cities offer diverse job opportunities. Big cities offer many amenities that are not available in smaller…
March brought another dip in consumer sentiment, with the University of Michigan’s index registering its lowest level since August 2011. The March index was revised down to 59.4 from a reading of 59.7 two weeks ago. An index of 100 is equal to sentiment in Q1 1966. A year ago at this time, the index was 84.9. Consumer sentiment is now down 41.6 points from its peak in February 2020 and is even below the lows seen in four of the last six recessions. “When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty…
Pending home sales dropped for the fourth month in a row in February, down 4.1% from January and 5.4% YOY, the National Association of Realtors (NAR) reported. NAR’s Pending Home Sales Index (PHSI), which measures home sales using contract signings, fell in three of the major regions. The Northeast was the only region that saw an increase from January. All four regions saw year-over-year declines. “Pending transactions diminished in February mainly due to the low number of homes for sale. Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale,'” said Lawrence Yun, NAR’s chief economist. The Northeast PHSI rose 1.9% to 85.0 in February, down 9.2% YOY. In the Midwest, the…
Mortgage rates continued their upward march this week, averaging 4.42%, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.42%. A year ago at this time, the 30-year FRM averaged 3.17%. “This week, the 30-year fixed-rate mortgage increased by more than a quarter of a percent as mortgage rates across all loan types continued to move up,” said Sam Khater, Freddie Mac’s Chief Economist. “Rising inflation, escalating geopolitical uncertainty, and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power. In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the…
Forbearance plans rose for a second week, according to Black Knight’s blog, Vision. Overall, forbearances rose by 17,400 (2.4%). Forborne loans held by portfolios and PSLs drove the week with an increase of 7,800 (3.3%). FHA/VA loans saw an increase of 5,000 (3.3%), while GSE plans rose by 4,500 (2%). Black Knight said this week’s numbers “extended their upward trend this week following a typical pattern of increased mid-month restarts.” New plan starts held steady this week at 11,200, though restarts increased by 6,000 to a total of 31,700. Plan volume is down 47,000 (-6%) month-over-month. The increase this week comes on the heels of a major drop in plans two weeks ago, so rates remain historically low. An analysis…
Inventory and first-time buyers won’t bounce back until 2024, according to Zillow’s Home Price Expectations Survey. The survey polled a panel of housing experts who said they anticipate for-sale inventory levels will take two years to climb back to pre-pandemic levels. Total inventory fell from a monthly average of just 1 million in 2021 and early 2022 figures aren’t looking any better, both down from 1.6 million units in 2018 and 2019. The largest group of Zillow’s respondents (38%) expect inventory to reach 1.5 million units or more in 2024, though the second largest group (36%) predicted 2023. “Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” said Zillow senior…
New home sales dropped by 2% in February, declining for a second consecutive month, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. Purchase of new single-family homes fell to a 772,000 annualized rate, down from a revised rate of 788,000 in January and 6.2% lower than the expected rate of 823,000. These declines suggest American house hunters are taking a step back as interest rates and inflation rise. The South and West, two regions that have been quite popular with homebuyers in the last year, saw sales decline, while the less popular Northeast and Midwest saw an increase in sales. At month’s end, an estimated 407,000 new homes remained on the market,…
Mortgage loan application volume plummeted by 8.1% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows. The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped by 8.1%%. The adjusted purchase index fell 2%, while the unadjusted purchase index fell 1% and was 12% lower YOY. The refinance index fell a whopping 14% and was down 54% YOY. Refinances made up 44.8% of total applications. Mortgage interest rates jumped by 23 basis points last week, their largest weekly increase since March 2020, due to the Fed’s interest rate hike and the expectation of fewer MBS purchases, Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, noted. “With mortgage rates now at 4.5%, compared to rates at…
Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks made $1,099 on each originated loan in Q4 2021, dropping from Q3’s $2,594, according to the Mortgage Bankers Association’s (MBA) Quarterly Mortgage Bankers Performance Report. More than three-fourths (76%) of firms analyzed made a net profit in Q4, especially firms with servicing operations. Those benefited from slower prepayments and low delinquencies which boosted their MSR valuations. But it’s a decrease from Q3’s rate of 92%. Plus, if no firms in the study had servicing operations, only 58% would have made a net profit last quarter. “Production margins tightened substantially in the fourth quarter of 2021. After a two-year run of above-average profitability, pre-tax net production income per loan reached its…
