Latest Rate Hike Unnecessary, NAR’s Lawrence Yun Says

At the latest Federal Open Market Committee meeting, the Central Bank hinted at a pause in rate hikes as soon as June but still increased the benchmark rate by a quarter-point. Lawrence Yun, chief economist at the National Association of Realtors, found that puzzling. During the “Residential Economic Issues & Trends Forum” at NAR’s 2023 REALTORS Legislative Meeting, he called the increase unnecessary and stressed further increases harm the housing market and the economy at large.  Inventory, not interest rates, is the driving force behind the current housing market. Stock remains down 40% compared to 2019, while demand keeps growing. “We have to stop the bleeding before improvement takes place,” Yun said. “We need to get more inventory, and the…

Prices Climb In Q1 As Demand For Budget-Friendly Homes Heats Up

Home sale prices went up last quarter due to high competition in budget-friendly markets. The National Association of Realtors’ latest quarterly report found that single-family existing-home sales prices increased in 152 of 221 metros — about 70% — in Q1 2023.  The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,859, up 33% YOY. The divide in demand between affordable and expensive markets is the main factor in these numbers. High-end markets with the most expensive homes are seeing declines, while cheaper areas are seeing intense competition for the few affordable homes for sale, pushing prices up. “Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater…

Pending Home Sales Slipped In March

Pending home sales sank in March as rate-sensitive buyers continued to skirt the market, according to the National Association of Realtors. NAR’s Pending Home Sales Index declined by 5.2% between February and March. Year-over-year, it dropped by 23.2%. All four regions saw pending sales fall YOY, and three of the four saw contract signings shrink. Signings increased slightly in the South as the region continues to attract buyers chasing affordability and sunny weather. NAR Chief Economist Lawrence Yun pointed to tight inventory as the main hindrance to sales. “Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally,” he said.…

CHLA, NAR Offer Tweaks To FHA 203(k) Program

The Community Home Lenders of America and National Association of REALTORS sent a letter to the Federal Housing Administration offering advice on the 203(k) loan program. Section 203(k) insurance enables allows homebuyers to pay for both a house and the cost of its renovation through a single mortgage. It applies to refinances as well, so long as the home is more than a year old and the repairs cost at least $5,000. Both organizations applauded the program, saying the loans “create an opportunity for low to moderate income and first-time buyers to participate in homeownership by facilitating the financing of homes in need of rehabilitation.” There are 16 million vacant homes in the U.S., many of which are uninhabitable due…

Americans Would Rather Renovate Than Buy A New Home

Inflation is forcing homeowners to put renovations on the back burner, but most would still rather renovate than move. Nearly 60% of respondents to a new survey from Discover Home Loans said they are postponing their renovation projects as projects become more expensive than their budgets. Another 26% will reduce the scope of their projects due to increased costs. But 79% would still rather renovate their current home than purchase a new one. Just under half of respondents said they are no longer interested in buying a home specifically because of rising interest rates. “Our survey results show that homeowners are still looking to invest in their homes, despite higher home improvement costs. With large amounts of existing home equity…

Inflation Climbed In March But Showed Signs Of Cooling

Inflation continued its upward march last month but showed signs of cooling, according to new data from the Bureau of Labor Statistics. The Consumer Price Index rose 5% YOY in March, down from 6% in February. Month-over-month, inflation was up 0.1% on a seasonally adjusted basis, compared to 0.4% in February. The core index, which measures everything but volatile food and fuel costs, ticked up by 0.1% to 5.6% YOY. Though the increase is slight, it’s the first YOY acceleration since September. “This is obviously a short-term setback for the Fed. However, inflation was never expected to decelerate in a straight line,” Tiffany Wilding, managing director and North American economist at PIMCO, wrote in a note. “[N]otwithstanding this report we…

Mortgage Apps Reverse Course, Fall For First Time In A Month

Mortgage applications reversed after a month of increases despite declining rates, a rocky start to the typically robust spring buying season. The Mortgage Bankers Association’s weekly survey says the adjusted Market Composite Index – a measure of mortgage loan application volume – decreased by 4.1%. Adjusted purchase applications dropped by 4%, while the unadjusted index was down 3% from the week before and 35% lower YOY. Mortgage rates fell slightly, with the average interest rate for 30-year fixed loans down from 6.45% to 6.40%. This is the lowest level in more than a month. Jumbo rates increased, however, from 6.27% to 6.36%. “While we have seen relative weakness at the high end of the housing market in recent months, the…

George Ratiu Joins Keeping Current Matters As Chief Economist

Realtor.com’s George Ratiu is joining Keeping Current Matters as chief economist, the company announced in a press release. “What I admire most about Keeping Current Matters is that we share a passion for breaking down the large volume of real estate data into meaningful insights that are easy for everyone to understand, whether it’s agents or consumers,” Ratiu said. “I’m excited about the opportunity to join this effort and contribute my experience and expertise to empower people to make informed decisions and feel comfortable with one of the largest financial transactions of our lives.” Ratiu brings more than fifteen years of real estate market data and research experience to the position. KCM says Ratiu shares its passion for a “people-first…

Existing Home Sales Exploded In February

Existing-home sales exploded in February, breaking a full-year downward streak thanks to retreating interest rates. Sales increased by 14.5% to a seasonally adjusted annual rate of 4.48 million from 4.02 million the month prior, according to the latest data from the National Association of Realtors. It’s the largest monthly percentage increase since July 2020. All four major regions saw sales increase month-over-month and decrease year-over-year. At the same time, the median price for an existing home slid YOY alongside rates, down 0.2% to $363,000. This is the first YOY decline in 131 consecutive months, the longest streak on record. “Conscious of changing mortgage rates, homebuyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas…

Pending Home Sales Jumped In January

Pending home sales jumped in January, a strong showing and the second increase since May 2022, according to the National Association of Realtors. NAR’s Pending Home Sales Index improved 8.1% between December and January. Year-over-year it dropped by 24.1%, an improvement over December’s 33.8% decline. All four regions saw pending sales fall YOY, but signings increased month-over-month in each. “Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR Chief Economist Lawrence Yun. Yun expects home sales to stall in 2023 despite NAR’s data. “Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur. But an annual gain in home sales will not occur until…