Home Sales Reflect Impact Of Rates, Lack Of Inventory

New home sales fell in June as new construction takes heat from rising interest rates, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. Sales fell by 2.5% to a seasonally adjusted annual rate of 697,000, compared to May’s revised rate of 715,000. They were up 23.8% from the same time last year, however. The seasonally‐adjusted estimate of new houses for sale was 432,000, up from last month and representing a supply of 7.4 months at the current sales rate. Homebuilders are working hard to keep inventory flowing, providing options for homebuyers. “Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price…

Home Prices Slipped YoY But Rise Monthly

Data released today shows national home prices slipped year-over-year in May but continue heating up in the short term, with month-over-month prices rising. Year-over-year, prices fell by 0.5%, down from -0.1% the prior month, according to the S&P CoreLogic Case-Shiller National Home Price NSA Index. The 20-City Composite posted a -1.7% year-over-year decline, unchanged from the month prior, as home prices have recently seen a boost. Craig J. Lazzara, managing director at S&P DJI, noted that regional differences are still “striking,” with the West Coast hubs that saw huge migration during the pandemic having the weakest growth. The Southeast (+2.1%) continues to see strong growth, though this month its top-performer crown was stolen by the Midwest (+2.7%). Looking at cities,…

Applications Rebound As Rates Exceed 7%

Mortgage applications went up last week, benefitting from VA and FHA activity. The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 0.9%, improving slightly after the week prior’s 4.4% decline. This week’s data includes an adjustment for the July 4th holiday. Adjusted purchase applications rose by 2%, though the unadjusted index was down 19% from the week before and 26% lower YOY. The bump in purchase activity is attributed to an increase in FHA and VA loan activity. Both loan types offer major perks like low down payments and minimum closing costs to those who qualify, making them more attractive than conventional loans in the current…

Home Prices Reverse Course As Inventory Tightens Further

Competition has returned full force to the housing market as demand for limited inventory sends home prices soaring. Black Knight’s latest Home Price Index hit a new record in May, with prices up 0.7% month-over-month and 8.9% YOY. This is the fifth consecutive month of gains. Many markets experienced home price declines in the last few months, but that trend seems to be reversing. Of the 50 largest markets analyzed by Black Knight, 27 hit their prior price peaks or set new records this spring. “There is no doubt that the housing market has reignited from a home price perspective,” said Andy Walden, Black Knight Vice President of Enterprise Research. “The reheating is widespread, with more than half of the…

Home Prices Surged In May

Competition for limited inventory has led to surprisingly hot home prices this spring season. Zillow’s latest market report found that home values grew 1.4% between April and May, the highest since June 2022. This is cooler growth than the previous two springs, but more than in 2018 or 2019. The typical home is valued at $346,856, up 0.9% YOY and 3.4% from January’s low point. Buyers are desperate to make this market work for them despite its challenges, with sales up nearly 10% from April to May. At the same time, inventory reached a record low. “Many homeowners are still opting not to sell and give up historically low mortgage rates. But those who do have been rewarded with bidding…

Single-Family Prices Up Again In April

Single-family home prices increased again in April as low inventory keeps a nationwide correction at bay. Prices were up 2% YOY, the 135th straight month of growth, according to CoreLogic’s Home Price Index. However, it’s the sixth straight month of single-digit gains, a boon for affordability. Since peaking in spring 2022 at nearly 20% growth, prices have moderated. Month-over-month, prices rose by 1.2%. The ongoing stock shortage could keep prices up even as demand dwindles, possibly for the next twelve months. CoreLogic expects price growth to tick down further in 2023 before changing course at year-end. “While mortgage rate volatility continues to cause buyer hesitation, the lack of for-sale homes is putting firm pressure on prices this spring, leading to…

Just 6% Of Potential Buyers Plan To Purchase This Summer

With affordability at its worst level in more than three decades, most Americans are putting off buying a home until rates fall. Only 6% of Americans interested in buying a home are planning to do so this summer, with the majority waiting for interest rates to drop, according to BMO’s Real Financial Progress Index. Just 4% say they expect to buy in the fall. High rates, low inventory, and sky-high house prices are keeping potential buyers on the sidelines. Of those who don’t currently own a property, 65% are holding off due to the state of the economy. In the current high-rate environment, affordability is an insurmountable challenge for many buyers. As of May, each of the 100 largest U.S.…

Rates Reverse Course

After falling slightly the week before, mortgage rates shot right back up last week, continuing to fluctuate within the 6% range. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.39%, up from 6.35% the week prior. A year ago at this time, the 30-year FRM averaged 5.25%. The 15-year fixed-rate mortgage remained unchanged at 5.75%. A year ago, it averaged 4.43%. “The 30-year fixed-rate mortgage averaged 6.39% this week, as economic crosscurrents have kept rates within a ten-basis point range over the last several weeks,” said Sam Khater, Freddie Mac’s Chief Economist.  “After the substantial slowdown in growth last fall, home prices stabilized during the winter and began to modestly rise over the last few months.…

Existing-Home Sales Dipped Again In April

Existing-home sales dipped in April as high interest rates and low inventory continued to negatively impact the market. Sales declined by 3.4% to a seasonally adjusted annual rate of 4.28 million from 4.44 million the month prior, according to the latest data from the National Association of Realtors. Year-over-year, sales are down 23.2%. All four major regions saw sales decline year-over-year and month-over-month. “Home sales are bouncing back and forth but remain above recent cyclical lows. The combination of job gains, limited inventory, and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand,” said NAR Chief Economist Lawrence Yun. “Roughly half of the country is experiencing price gains. Even in markets with lower…

Renting Is Still Cheaper Than Buying, But Not In All Cities

The choice between renting and buying isn’t obvious in some American cities. While most cities have clear-cut price advantages to either, some are in a sticky in-between where the benefits of renting or buying may come down to personal circumstances, according to a new study from Home Bay. Home Bay analyzed the 50 most-populous metros based on their price-to-rent ratios. A ratio of 15 or lower means it’s better to buy, while 21 or higher means it’s better to rent. The national average is 18. Pittsburgh, PA; New Orleans, LA; Chicago, IL; and Cleveland, OH, are the most affordable cities to buy a home in compared to their average rents, all with a ratio of 12. For example, residents can…