Annual single-family home price growth dipped from Q3 2022 to Q4 2022, according to Fannie Mae’s Home Price Index. Prices rose by 9.2% YOY in Q4, down from 13.1% in Q3. They increased just 0.2% quarter-over-over when seasonally adjusted, and fell 1% unadjusted. The index measures the average quarterly price change for all single-family properties in the United States, excluding condos. “The rise in mortgage rates over the past year and record inflation have constrained the purchasing power of prospective homebuyers. The resulting affordability pressures are evident in the home price declines of the past two quarters, along with the downturn in home sales,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. Demand has dwindled as many…
The pace of home sales has declined to its slowest pace since the beginning of the pandemic, but buyers are slowly starting to search for homes again. According to a new report from Redfin, the typical home sold during the four weeks ending January 8 was on the market for 44 days, the longest period since April 2020. The slowdown resulted in the largest YOY inventory increase in Redfin’s data history. Pending home sales fell by 32% YOY to their lowest recorded level, while mortgage purchase applications dipped to their lowest point since 2014. But early signs of demand like online home searches and tour requests are increasing. Redfin’s Homebuyer Demand Index rose by 6% as buyers watch interest rates…
Wells Fargo’s net earnings dropped in Q4 2022, pushed down by a settlement and the pressures of a shrinking economy. The bank announced that its net income fell to $2.86 billion, or 67 cents a share. This is half of its profits from the same time last year, which came in at $5.75 billion, $1.38 per share. Leaders at Wells Fargo noted that the decline was driven by the fall-off in mortgage demand. Its home lending was down 57% from Q4 2021. The bank announced this week that it is narrowing its home lending business, exiting the correspondent lending channel and shrinking its servicing portfolio. This move will force a round of layoffs, but it is unclear how many jobs…
The 30-year fixed rate dipped last week after inching up in the first weeks of the new year, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.33%, down from 6.48% the week prior. A year ago at this time, the 30-year FRM averaged 3.45 percent. The 15-year fixed-rate mortgage fell from 5.73% to 5.52%. A year ago, it averaged 2.62%. “While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates,” said Sam Khater, Freddie Mac’s Chief Economist. “Over the last few weeks latent demand has been on display with buyers jumping in and out of the…
Home price growth cooled to the single digits for the first time in a year as both buyers and sellers continued to pull back from the market. The typical home cost $400,000, an annual increase of 8.4%, according to Realtor.com’s Monthly Housing Trends Report. While price appreciation remains elevated, it’s far lower now than its peak of 18% YOY earlier this year. The number of homes for sale was up 74.6% YOY, with 49 of the 50 largest metros seeing their inventory increase. That metric remained 38% lower than the December 2017-2019 average, however. Newly listed homes and pending listings both declined YOY. Home sellers who are locked into low interest rates are hesitant to take on a more expensive…
Mortgage loan application volume rose in the first week of 2023, boosted by a flurry of refinancing, according to the Mortgage Bankers Association’s weekly survey. The adjusted Market Composite Index, a measure of mortgage loan application volume, increased by 1.2%. Refinances saw the most improvement, up 5% from the week prior, as homeowners took advantage of the market’s reaction to indicators of a slowing economy. Data released last week showed the U.S. economy created fewer jobs in December, and hourly wages grew at the slowest annual pace in 16 months. Wage growth has fallen by a full percentage point since Q2 2022. As a result, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell from…
Homebuyers are feeling slightly more optimistic about the market as mortgage rates ease. Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose 3.7 points in December. Three of its six components improved from the month prior as more consumers said they expect rates and home prices to drop. After weeks of declines, rates inched up in the first week of 2023 but remain well below 7%. Economists at Freddie Mac expect them to fall further as inflationary pressures ease. But home purchase sentiment remains near its all-time low, set in October, and is down 13.2 points YOY. Only 21% of respondents believe it’s a good time to buy a home. And the possibility of additional rate hikes from the Federal Reserve…
As the average 30-year fixed-rate mortgage rate rose to 6.48% from 6.42% in the last week of 2022, mortgage applications sunk to a 25-year low, according to officials at Freddie Mac. “Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market,” said Sam Khater, Freddie Mac’s Chief Economist. “While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.” Khater continued, “Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market. Moreover, if rates continue…
Minutes from the December meeting of the Federal Reserve Board and the Federal Open Market Committee were released this week, and they show Fed members still focused on fighting inflation, not lowering interest rates. (The full minutes can be found here.) “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time,” according to the summary of the meeting. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.” While the December rate hike of 50 basis points was smaller than the…
Home sales plummeted by 35% in November but there are early signs that demand may be picking up. Redfin’s latest data found that home sales dropped 35.1% YOY in November on a seasonally-adjusted basis. High buying costs kept both buyers and sellers on the sidelines. “Rates have declined significantly over the past six weeks, which is helpful for potential homebuyers, but new data indicates homeowners are hesitant to list their homes,” Sam Khater, Freddie Mac’s Chief Economist, noted. “Many of those homeowners are carefully weighing their options as more than two-thirds of current homeowners have a fixed mortgage rate of below four percent.” Sellers have hesitated to put their homes on the market, knowing they’ll have to buy a new…
