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…

Existing-Home Sales Slip For 3rd Month Straight

April’s existing-home sales slipped for the third consecutive month, falling 2.4% from March to a seasonally adjusted rate of  5.61 million, the National Association of Realtors (NAR) reported. Sales were down 5.9% year-over-year, with each of the four major regions seeing declines. The median price for existing homes of all types was $391,200, up 14.8% YOY. This is the 122nd consecutive month of YOY price growth, the longest-running streak on record. “Higher home prices and sharply higher mortgage rates have reduced buyer activity. It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years,” said Lawrence Yun, NAR’s chief economist. Housing…

Inventory Rose In May For The First Time Since June 2019

Inventory increased for the first time since June 2019, with active listings up 8% YOY, according to Realtor.com’s May housing data. An inventory increase is a good sign for the market, which is facing pressure as rising rates and soaring home prices are causing potential buyers to back off. The national median listing price in May was $447,000, up 17.6% YOY and 35.4% from May 2020. Purchase loan applications are down 14% YOY, reaching their lowest level since December 2018. However, active listings were still down 48.5% from May 2020, meaning inventory is still half of what it once was. And while active listings grew, the total inventory of unsold homes, including pending listings, fell by 3.9% thanks to a…

Fannie Lowers Home Sale and Origination Expectations For 2022/23

Fannie Mae’s Economic and Strategic Research (ESR) Group has downwardly revised its full-year 2022 real GDP expectations, along with anticipated home sales and mortgage originations, according to the group’s latest forecast. They now expect full-year real GDP to grow at a reduced rate of 1.3%, a 0.8% decrease from their previous prediction, citing inflation, rising interest rates, and “a slowdown of global economic growth.” The forecast also predicts that Q2 2022 will see growth rebound to 1.6%, a reaction to Q1’s economic contraction of 1.4%. “Financial conditions have tightened significantly, and the economy is slowing faster than previously expected as markets adjust to the Federal Reserve’s tightening guidance,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. Mortgage…

Q1 2022 Sets New Foreclosure High

Foreclosure activity rose in all 50 states in Q1 2022, with foreclosure starts and bank repossessions reaching their highest numbers in two years, according to ATTOM’s Q1 2022 Foreclosure Market Report. A total of 78,271 U.S. properties had a foreclosure filing during Q1, up 39% from Q4 2021 and 132% YOY. March alone saw 33,333 properties with foreclosure filings, up 29% from February and 181% YOY. It was the 11th straight month of YOY increases in foreclosure activity. “Foreclosure activity has continued to gradually return to normal levels since the expiration of the government’s moratorium, and the CFPB’s enhanced mortgage servicing guidelines,” said Rick Sharga, executive vice president of market intelligence for ATTOM.  “But even with the large year-over-year increase…

Share of Young Homebuyers Falls To 10-Year Low

The share of young homebuyers under the age of 30 has dropped below pre-pandemic levels as the affordability crisis prices them out of the market, according to a survey by CoreLogic. Young homebuyers took advantage of historically low-interest rates in 2020, accounting for 22% of homebuyers, a record high for the age group. But the share fell back to pre-pandemic levels in 2021 and further declined at the beginning of 2022.  Controlled for seasonality, the share of young homebuyers in January and February 2022 is at a ten-year low. Markets in the Midwest have a higher portion of young homebuyers than coastal areas. More affordable metros have the highest share as young homebuyers – who typically have lower incomes and…

Morning Roundup (3/31/2022)– Boom Or Bust?

Good Morning! Today is Thursday, March 31. The US is planning to lift an order that has restricted immigration for the past two years. Officials say Vladimir Putin’s subordinates have misled him about the Russian military’s struggles to avoid angering him. Google’s sister company Waymo is sending fully autonomous vehicles onto the streets of San Francisco. The Mortgage Note Reports Will The Housing Market Boom Or Bust? As the spring selling season begins, people in the mortgage and real estate industries are speculating on whether 2022 will be a year of growth or the start of the end for a red-hot market. Editor Kimberley Haas takes a deep dive into this topic. Flip Profits: Home flipping profits fell across the…

Could Higher Interest Rates Actually Help the Housing Market?

By JARED WHITLEY Divorce is the number two most stressful event in a person’s life, leading lady Leslie Knope reveals in one episode of “Parks and Recreation,” adding “Of course, marriage is number seven. So, watch out, everyone. It’s all bad.”  We face a similar conundrum in the housing market right now. Housing prices have been out of control the last year, and in response, the Fed has announced it will raise interest rates this month. Rates have already surged to their highest point since March 2020 – the start of the coronavirus and its accompanying government damaging overreactions – showing that the salad days of 2% rates on a traditional home loan are over.  The question for housing experts to answer…

Average Homeowners Spend 13 Years In Their Home

The average American has now lived 13.2 years in their home, up from 2012’s 10.1 years but down from 2020’s 13.5-year record, Redfin reported. The report notes that last year’s high migration rates contributed to the downturn from 2020’s peak, though Americans continue aging in place, keeping the average inflated.  One-third of U.S. household heads were at least 65 years old in 2019. Housing analysts are already thinking about the changing face of the market as that number grows. Rising rents, stock shortages, and the number of homeowners who refinanced are also likely keeping people in their homes longer. “Homeowner tenure may have already peaked, or the decline in 2021 could be a blip before it climbs back up,” said…

Broker Confidence Dropped In February

Broker confidence fell for the second straight month in February, though brokers are “cautiously optimistic” about the future, according to RISMedia’s February Broker Confidence Index (BCI). The index, which is scaled 1 to 10, fell to 7.5 from January’s 7.9 and December 2021’s 8.2. For the 3,000 brokers surveyed, rising interest rates were not a big cause for concern. They felt that rising rates won’t hurt demand considering current market conditions. Brokers’ biggest worries were inflation and inventory, with a nod to the ongoing crisis in Ukraine. “The continued lack of supply has really created a bubble,” Quincy Smith, a broker with ERA Matt Fischer in Yuma, Arizona, told RISMedia.  “With the equity market starting what appears to be a…