After several recent drops, mortgage applications reversed course last week, with those for home purchases jumping 5 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association’s latest report. The rise, which reflects data from the week ending Feb. 20, also came despite higher mortgage interest rates, MBA notes. (The survey includes adjustments for the President’s Day holiday.) Nevertheless, purchase applications still remain 2 percent lower than the same week a year ago.
Applications for refinancings continued to fall last week, dropping 8 percent to its lowest level this year. The drop prompted MBA’s overall mortgage application index, reflects both applications for home purchases and refinancings, to fall 3.5 percent for the week.
“The one exception to this trend was VA refinance volume, which increased 27 percent last week as certain lenders refocused on VA production,” says Mike Fratantoni, MBA’s chief economist. “The VA share of total applications increased to 9.6 percent from 8 percent the week prior as a result.”
Source: “Mortgage Applications Point to More Buyers,” CNBC (Feb. 25, 2015)
Freddie Mac released its U.S. Economic and Housing Market Outlook for February, looking at the affect short-term interest rate policy changes will have in light of the existing substantial downward pressure currently on long-term interest rates.
Highlights from the Outlook include:
• Forecasts for home sales (5.6 million in 2015) and housing starts (1.18 million in 2015) are unchanged from last month.
• Due to continued strong growth in house prices and relatively low inventories, expect house prices to increase 3.9 percent in 2015, up from our forecast of 3.5 percent last month.
• Raised 2015 origination’s forecast to $1.3 trillion from $1.2 trillion last month
• Revised the average 30-year fixed-rate mortgage rate forecast for 2015 down to 3.9 percent for the year, compared to 4.2 percent last month.
The spring market will likely be a hotter one this year, as low interest rates and a healthier economy lure more home buyers to the marketplace.
“Interest rates below 4 percent, rising rents, and healthier local job markets are convincing more consumers to consider home ownership,” Chris Polychron, National Association of REALTORS® president, said in a recent news release showing fourth-quarter 2014 home prices moving up.
An increase in the national family median income (to $65,782) mixed with low interest rates slightly improved affordability in the fourth quarter compared to the previous quarter, NAR reports. Affordability improved despite the national median single-family home price moving up to $208,700 in the fourth quarter, an increase of 6 percent year-over-year.
“Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying,” says Lawrence Yun, NAR’s chief economist. Please provide comments about your area!
Source: National Association of REALTORS®
Average fixed-rate mortgages are holding near historical lows, but did inch higher this week, Freddie Mac reports in its weekly mortgage market survey.
The economy added 257,000 new jobs in January, following additional increases in December (329,000) and November (423,000).
Despite this week’s uptick in rates, fixed-rate mortgages remain near lows from May 23, 2013, Freddie Mac reports.
Freddie Mac reports the following mortgage rates for the week ending Feb. 12:
- 30-year fixed-rate mortgages: averaged 3.69 percent, with an average 0.6 point up from last week’s 3.59 percent average. A year ago, 30-year rates averaged 4.28 percent.
- 15-year fixed-rate mortgages: averaged 2.99 percent, with an average 0.6 point, rising from last week’s 2.92 percent average. Last year at this time, 15-year rates averaged 3.33 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.97 percent, with an average 0.5 point, up from last week’s 2.82 percent average. A year ago, 5-year ARMs averaged 3.05 percent.
Source: Freddie Mac
Thursday and Friday are the most common days of the week when real estate professionals list a home, according to 2014 home sales data analyzed by the National Association of REALTORS®. Monday, Tuesday, and Wednesday follow in popularity in that order. The least popular days to post a new listing are Saturday and Sunday.
Also, “while home closings exhibit a strong tendency to get done at the end of the month, listings are much steadier throughout the course of the month, with a slight tendency to be posted earlier rather than later,” researchers write at NAR’s Economists’ Outlook blog.
Source: “EHS in 2014 by the Numbers – Part 3 – Popular Listing Dates,” National Association of REALTORS® Economists’ Outlook Blog (Jan. 14, 2015)
With home-price gains slowing in most parts of the country, sellers will be looking for ways to get top dollar for their listing. Cleaning and staging make a big difference. But for some sellers — such as investors seeking to bring a property up to neighborhood standards before the sale — remodeling work may be the ticket.
As the 2015 Remodeling Cost vs. Value Report makes clear, large-scale jobs aren’t likely to return sellers their full cost. But there are improvements worth doing in anticipation of an upcoming sale. Some will return almost 100 percent of their cost. Others may not have as great a payback, but they can improve the market position of the property in relation to the competition. (Think about the impact of beautiful kitchen photos on online home shoppers.) In addition, several pricier projects can provide owners with a few years of enjoyment while still offering a decent payback down the road.
Find out which remodeling projects get you the most bang for your buck.
Mortgage applications dropped sharply during the holidays, plunging 9.1 percent for the week ending Jan. 2 compared to two weeks earlier, according to the Mortgage Bankers Association’s mortgage activity index. The index reflects adjustments for New Year’s Day and Christmas Day when banks are closed.
Applications for refinancings dropped 12 percent from two weeks ago, while mortgage applications for home purchases, viewed as a leading gauge activity, dropped 5 percent.
“Beyond the seasonal slowdown, purchase application volume remains about 8 percent below last year’s level, indicating that home buyers are still cautious,” says the MBA’s chief economist, Mike Fratantoni.
Home shoppers have been slow to jump into the housing market, despite low mortgage rates. The 30-year fixed-rate mortgage fell to 4.01 percent for the week ending Jan. 2, according to the MBA. Lower bond yields this week are pushing rates even lower, with the average 30-year fixed-rate mortgage now a full quarter point lower than average rates available in the second half of December, the MBA notes.
Source: “Weekly Mortgage Applications Fall Sharply Over Holidays,” CNBC (Jan. 7, 2015)
Industry analysts and economists largely believe the real estate market will gain traction this year, but they acknowledge several challenges that pose a potential derailment to the ongoing recovery. CNNMoney recently highlighted several of those challenges:
Investors exit the market: Institutional investors accounted for 15 percent of all sales in October, a drop from 20 percent in January, according to National Association of REALTORS® housing data.
Lending criteria still tight. REALTORS® still say tight credit is holding many of their would-be buyers back and derailing transactions as buyers continue to struggle to qualify for a mortgage (although REALTORS® surveyed say they have seen a slight improvement in lending recently), according to the latest REALTOR® Confidence Index.
Rising mortgage rates: Mortgage rates are sitting near historical lows at the moment, under 4 percent for the 30-year fixed-rate mortgage, but don’t expect that to last. Many economists are predicting rates will push up to 5 percent by the end of this year.
Foreign buyers buying less in U.S.: Foreign buyers helped fuel the housing market recovery, but there are signs they’re presence is receding.For example, in California alone, sales to international clients has plunged about 25 percent in the past year, according to the California Association of REALTORS® (more: NAR’s 2014 Profile of International Home Buying Activity).
Source: “5 Biggest Threats to the Housing Market,” CNNMoney (Jan. 2, 2015)
Home buyers say that affordability is a bigger concern than the lack of homes for sale — the first time since early 2012 that price has trumped inventory in buyers’ minds, according to a new survey.
Nearly 33 percent of 1,300 home buyers say that “affordability in the area I want to buy” was the biggest obstacle to a home purchase in November, according to results from Redfin’s Real-Time Buyer Survey. That compares to 11 percent of buyers who cited the biggest obstacle as “not enough homes for sale.”
“If you can’t afford any of the homes for sale, it doesn’t matter how many homes are on the market,” says Leslie White, a Redfin real estate professional based in Washington, D.C. “Despite the low interest rates, prices in D.C. are so high right now, many home buyers feel priced out of the market. They’re being forced to decide between putting their home search on hold and renting another year, buying a significantly smaller home, or looking in neighborhoods farther away from the city.”
But some housing analysts are optimistic that the supply of homes under $300,000 will likely improve next year, as more home owners regain enough equity to put their homes on the market. Prices for homes in the low- to mid-range (generally below $310,000) rose by 12 percent this year — double the price increases for more expensive homes, according to Redfin’s Research Center.
Source: “Homebuyers More Concerned About Affordability Than the Lack of Homes for Sale,” Redfin Research Center (Dec. 29, 2014)