Homebuyer Demand Falls In Its Largest Annual Decline Since The Pandemic Began

Soaring interest rates pushed homebuyer demand down in its largest annual decline in more than two years, Redfin reported. Redfin’s Homebuyer Demand Index was down 16% YOY, its largest drop since April 2020, in response to lagging inventory and skyrocketing mortgage rates. Last week, rates jumped a full half-point in the largest one-week increase in the history of Freddie Mac’s weekly rate survey, which dates back to 1987. This week they’re up to 5.81%. At the same time, pending home sales were down 10% YOY, the largest decline since May 2020. Home prices are moderating slightly, but still elevated. The average size of a purchase loan application was $420,000, down from a peak of $460,000. In 2019, the average loan…

Affordability Hits 15-Year Low

Affordability is at a 15-year low, with mortgage payments up in 45 of the 50 largest U.S. metros, according to Zillow’s latest market report. Buying a typical U.S. home with interest rates of 5.78% would result in monthly payments of $2,127. That’s up 36% year to date, and 51% YOY. Those monthly payments would account for 28% of homeowners’ monthly income, inching closer to the 30% benchmark that means homeowners are cost-burdened. The report noted that since rates have risen above the April data it references, homeowners may already be at that 30% threshold. Rising interest rates and soaring home prices have pushed mortgages out of reach for many Americans, leading to diminishing demand that has economists worried that recession…

Bidding Wars Fall To Lowest Level Since Feb 2021

Bidding wars dropped to their lowest level since February 2021 as the housing market begins to cool, with only 57.8% of home offers facing competition in May, according to Redfin. Though more than half of prospective buyers are still facing competition when bidding on a home, that number is down from 60.9% the month prior and a pandemic peak of 68.8% a year earlier. A typical home received 5.3 offers in May, down from 6.8 in April and 7.4 in YOY. This is the fourth straight month of declines. The unadjusted bidding war rate was 60.8%, down from 67.8% month-over-month and 71.8% YOY. “Homes are now getting one to three offers, compared with five to 10 two months ago and…

Manchester Tops Hottest Housing Markets As More Affordable Northeast Metros Attract Buyers

The city of Manchester in New Hampshire is May’s hottest housing market, ranking first for the 10th time in the past year, Realtor.com reported. Realtor.com’s monthly Hottness ranking looks at market demand, as measured by unique viewers per property on its website, and the pace of the market as measured by the number of days a listing remains active on Realtor.com. The Northeast dominated the top 20 hottest markets, with multiple cities in Connecticut, Massachusetts, New Hampshire, and Vermont. Wisconsin also made its way onto the list. Manchester took the top spot for the first time in 2020 and has been number one 15 times since then. The Northeast has had the least price hikes, which likely plays a role…

Rate Locks Dropped Again In May As Refis Hit New Low

Rate lock volumes dropped again in May by 4.8% despite interest rate growth slowing, according to Black Knight’s latest Originations Market Report. While conforming 30-year rates rose at the beginning of the month to 5.5%, they cooled by month-end to 5.34%, 7 basis points down from April. Still, lock volumes fell for both rate/term and cash-out refis, down 23.6% and 11.9% respectively. Cash-outs are now down 42.2% from last year. “Ultimately, our OBMMI daily interest rate tracker showed 30-year conforming offerings finishing the month at 5.34%, down 7 basis points from last month. Still, despite this plateau in rates, rate lock volume continued to slide in May, with declines seen across all loan purposes,” said Scott Happ, president of Optimal…

Second-Home Hotspots See Prices Surge In April

Second-home destinations saw YOY price surges in April, with four of the five most popular areas seeing more than 25% growth, Redin reported. While average rental prices increased 10% in areas not considered second-home destinations by Redfin, prices rose by 17.1% in vacation hotspots to $1,893. Redfin found a similar trend in the for-sale market, with the typical home in second-home markets selling for $516,423 in April, up 19.9% YOY and a new record. Prices in non-second-home markets increased by 14.8%. Phoenix, Cape Coral, FL, Naples, FL, Myrtle Beach, SC, and Las Vegas– the top five destinations for second homes– saw significant increases in both rental and home-sale prices. All but Myrtle Beach experienced rent growth above 25% YOY, and…

Applications Drop Another 6.5%

Mortgage loan application volume dropped by 6.5%, the fifth decrease in six weeks, the Mortgage Bankers Association’s (MBA) weekly survey shows. The adjusted Market Composite Index, a measure of mortgage loan application volume, fell by 6.5%. The adjusted purchase index fell 7%, while the unadjusted purchase index fell by 18% and was 21% lower YOY. The refinance index fell 6% and was down 75% YOY, though refinances made up a higher share of total applications (32.2%, up from 31.5%) as purchase applications dwindle. ARM activity fell to 8.2% of total applications.  “Weakness in both purchase and refinance applications pushed the market index down to its lowest level in 22 years. The 30-year fixed-rate increased to 5.4% after three consecutive declines.…

Single-Family Constructions Down In Suburban Markets

Construction of single-family homes fell across several market types in Q1 2022, with an especially large dip in large suburban markets, according to the National Association of Home Builder’s (NAHB) Home Building Geography Index (HBGI). Four-quarter moving average single-family growth rates in large metro suburban counties fell from 18.7% in Q1 2021 to 5.2% in Q1 2022. At the same time, multifamily construction in large metros has jumped after falling during the pandemic. Large metro core counties recovered from a negative 3.6% growth rate to a 17.4% rate. Multifamily construction was largely centered in large metro core areas (36.9% of development), followed by large metro suburbs (25.8%), small metro core areas (23.5%), and other submarkets (13.7%). “Single-family growth rates have…

Prices Are Up In Distressed Neighborhoods Due To Soaring HPI And Low Inventory Elsewhere

Home prices rose in Q1 2022 for the majority of Opportunity Zones, with the pace of gains in half of all zones besting quarterly and annual increases across the nation, ATTOM reported. Opportunity Zones are areas targeted for economic improvement, defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet specific criteria for redevelopment. ATTOM analyzed 5,092 zones in the U.S. that had at least five home sales in Q1 2022. The report found that median single-family home and condo prices increased in 55% of zones between Q4 2021 and Q1 2022. In 50%, prices rose by at least 20%, despite the fact that the pace of increases slowed in Q1. “Home price trends…

Affordability Declining As Monthly Payments Eat Up The Typical Borrower’s Income

The national median payment applied for by homebuyers rose 8.8% to $1,889 in April, according to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI). PAPI measures changes in monthly mortgage payments relative to income across time. An increase shows the payment to income ratio is up due to increasing application loan amounts or mortgage rates, or a decline in earnings. The national PAPI was up 7.8% to 162.7 in April. This shows affordability declining as payments increase, accounting for a larger share of a typical person’s income. The index is up 27% YOY. Borrowers in the 25th percentile of prices saw their mortgage payment rise 9.6% to $1,236. “Rapid home-price growth, low inventory, and an 80-basis-point surge in…