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Mortgage Giants Revise Housing Forecasts

April 22 2014

Citing constraints on credit and tight inventories, Freddie Mac and Fannie Mae have trimmed their housing expectations for this year.

Fannie Mae’s Chief Economist Doug Duncan says he expects new-home construction to reach 1.5 million housing units this year, a drop of 50,000 from Fannie’s forecast earlier this year.

“We have downgraded our housing forecast slightly due to a lackluster sales picture, but the recent loss of momentum is likely a temporary one,” Duncan says.

Freddie Mac also has trimmed its housing forecast recently, cutting its forecast for home sales to 5.5 million from the earlier 5.6 million estimate for this year.

“Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “Fannie, Freddie Cut Housing-Market Forecasts for 2014,” The Wall Street Journal (April 21, 2014)

Mortgage Rates ‘Fall Back’ to 6-Week Lows

April 18 2014

For the second consecutive week, fixed-mortgage rates eased, offering home buyers a slight bump in affordability in the midst of the spring home-buying season, Freddie Mac announced in its weekly mortgage market report.

“Mortgage rates continued to ease this week as housing starts rose 2.8 percent in March but not as much as expected,” Frank Nothaft, Freddie Mac’s chief economist, says. “Also, permits fell 2.4 percent in March to a seasonally adjusted annual rate of 990,000, which followed a slight downward revision of 4,000 permits in February.”

Freddie Mac reports the following national averages for the week ending April 17:

  • 30-year fixed-rate mortgages: averaged 4.27 percent, with an average 0.7 point, dropping from last week’s 4.34 percent average. Last year at this time, 30-year rates averaged 3.41 percent.
  • 15-year fixed-rate mortgages: averaged 3.33 percent, with an average 0.6 point, dropping from last week’s 3.38 percent average. A year ago, 15-year rates averaged 2.64 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.03 percent, with an average 0.5 point, dropping from last week’s 3.09 percent average. A year ago, 5-year ARMs averaged 2.60 percent.

Source: Freddie Mac

3 Reasons to Start Using ‘Video Email’

April 15 2014

Video email can help real estate agents make a lasting impression on prospects. Here are three reasons why you should consider incorporating video into email campaigns.

  1. It improves communications, keeps clients invested in a relationship with you, and lets prospects get to know the agent on a personal and professional level.
  2. Video messages can be added to automatic email campaigns.  Agents can give monthly market activity updates, for instance, on the same day each month via video email, then track open rates and clicks.
  3. With such tools as BombBomb, which integrates with Realtors Property Resource®, agents also can attach market data to their videos to reinforce their messages.

Source: “3 Reasons to Send Prospects Video Email,” RISMedia (April 10, 2014)

Rising Home Prices Press Down Affordability

April 14 2014

While housing affordability rose from January to February in some select markets, it’s lower year-over-year as home prices continue to rise while wages stay mostly stagnant, according to the National Association of REALTORS®’ latest Housing Affordability Index. The index is based on median home prices, family incomes, and average mortgage interest rates.

The median single-family home price is $189,200, up 9 percent from year-ago levels. Mortgage rates have also been on the rise, up a full percentage point from year-ago levels. Meanwhile, income levels have risen 1.9 percent in the past year.

Affordability is up slightly from a month ago in the Northeast and Midwest, while the West and South saw a minor drop in February month-over-month, according to NAR’s index. However, affordability is down in all regions from year-ago levels. The West has seen the largest decline in affordability in the past year, due to a 17 percent price gain.

Source: “Latest Housing Affordability Data,” National Association of REALTORS®’ Economists’ Outlook blog (April 11, 2014)

Consumer Confidence in Housing Hot This Spring

April 8 2014

Consumer attitudes are reflecting greater optimism in the housing market heading into real estate’s traditionally strong spring selling season, according to Fannie Mae’s March 2014 National Housing Survey.

In the poll of 1,000 people, 38 percent say it’s a good time to sell a home, up from 26 percent a year ago. The poll also shows that 69 percent of those surveyed say it’s a good time to buy, and 52 percent say it’s easier today to get financing for a home.

Americans feel more confident about their personal finances: An all-time survey high of 40 percent say their personal financial situation has improved during the past year.

“The housing recovery continues to proceed in fits and starts,” says Doug Duncan, Fannie Mae’s chief economist. “Rising mortgage rates and a lack of supply have dampened housing market momentum. However, we see several positive signs going into this year’s spring home-buying season, compared with last year. For example, consumers are less pessimistic about their personal finances and more optimistic about the current selling environment and their ability to get a mortgage. Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track. Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers.”

Source: Fannie Mae

Home Prices Likely to Moderate Soon?

April 2 2014

Home owners have been enjoying big home price rises across the country, but those increases – often by double-digit percentages – will likely level off soon, according to CoreLogic’s latest Home Price Index, which reflects February data. The index, which also includes distressed sales, was up 12.2 percent in February compared to year-ago levels.

“As the spring home-buying season kicks off, house price appreciation continues to be strong,” says Mark Fleming, CoreLogic’s chief economist. “Although prices should remain strong in the near term due to a short supply of homes on the market, price increases should moderate over the next year as home equity releases pent-up supply.”

The National Association of REALTORS®’ most recent existing-home sales report showed that the median existing-home price for all housing types was $189,000 in February, a 9.1 percent rise over February 2013. “Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years,” Lawrence Yun, NAR’s chief economist, said in a statement.

Source: CoreLogic and “Home Prices Will Keep Rising, But Level-Off Soon,” Mortgage News Daily (April 1, 2014)

Mortgage Rates Are Inching Back Up

March 28 2014

Fixed mortgage rates were on the rise this week, “applying additional pressure for those markets that are already feeling an affordability pinch,” Freddie Mac reports in its weekly mortgage market survey.

“Mortgage rates rose following the uptick on the 10-year Treasury note after comments by the Federal Reserve Chair Janet Yellen indicated a possible increase on interest rates as soon as early 2015,” Frank Nothaft, Freddie Mac’s chief economist, explains.

Freddie Mac reports the following national averages for the week ending March 27:

  • 30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.6 point, rising from last week’s 4.32 percent average. A year ago at this time, 30-year rates averaged 3.57 percent.
  • 15-year fixed-rate mortgages: averaged 3.42 percent, with an average 0.6 point, rising from last week’s 3.32 percent average. Last year at this time, 15-year rates averaged 2.76 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.10 percent, with an average 0.5 point, increasing from last week’s 3.02 percent average. A year ago, 5-year ARMs averaged 2.68 percent.

Source: Freddie Mac

No More Record-Low Mortgage Interest Rates?

March 25 2014

While mortgage rates have been rising the last few months, they are still historically low compared to the trend over the last four decades, Freddie Mac says in a blog post.

But rates as low as they were in November 2012 — when the 30-year fixed-rate mortgage reached an all-time low of 3.31 percent — aren’t likely to return any time soon, the mortgage giant says. Still, Freddie assures borrowers that the all-time record high of 18.63 percent reached in October 1981 isn’t on the horizon either. (At 18.63 percent, monthly mortgage payments on a $200,000 loan would be $3,117, compared to $992 a month at today’s 4.32 percent average.)

With mortgage rates at 4.32 percent, 123 of the 157 metros that Freddie Mac tracks remain very affordable to households earning the median income. In order for affordability to be hampered in the majority of markets, interest rates would have to reach 7 percent, according to Freddie Mac.

“Stubbornly high unemployment over the last several years coupled with stagnant income growth exacerbates declining affordability in a rising interest rate environment,” per Freddie’s blog post. “More jobs and income growth would help blunt the effects of higher interest rates and make buying a home more accessible. While jobs and income have shown some improvement in recent months, they continue to be challenged.”

Historic overview of mortgage rates at source:  Mortgage Rates: From Dirt Cheap, to Cheap,” Freddie Mac (March 24, 2014)

 

Mortgage Rates Fall, But Rises Likely Next Week

March 21 2014

Freddie Mac says that the drop in mortgage rates this week may be temporary, due to the Fed’s recent announcement that it would begin winding down its bond-purchasing stimulus program sooner than originally thought.

The Federal Reserve hinted Wednesday that interest rates could start to rise in early 2015, and that it is continuing to taper its economic stimulus programs, including its bond-purchase program that had been aimed at holding down long-term interest rates and increasing job growth. The Fed said that rates could remain low for “a considerable time” after its bond purchase program ends, but new Fed Reserve Chair Janet Yellen then later clarified that would be about six months time frame.

“The rate on the 10-year treasury note rose following the Fed’s announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week,” says Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac reported the following national averages for the week ending March 20:

  • 30-year fixed-rate mortgages: averaged 4.32 percent, with an average 0.6 point, dropping from last week’s 4.37 percent average. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.32 percent, with an average 0.6 point, falling from last week’s 3.38 percent average. A year ago, 15-year rates averaged 2.72 percent at this time.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.02 percent, with an average 0.4 point, falling from last week’s 3.09 percent average. A year ago, 5-year ARMs averaged 2.61 percent.

Source: Freddie Mac and “Fed Changes Guidance on Raising Rates,” USA Today (3/19/14)

Modest Gain in Builder Sentiment for Spring

March 18 2014

Builder confidence in the single-family new-home market ticked up by only one point in March as builders remain concerned about several challenges in the sector, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“The March HMI mirrors last month’s sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and labor,” says NAHB Chairman Kevin Kelly.

Several factors are raising concerns about meeting demand for the spring buying season, says NAHB Chief Economist David Crowe.

“These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale,” Crowe says.

NAHB’s index gauges builder perceptions of current single-family home sales and sales expectations for the next six months, as well as buyer traffic. Sentiment in March was 47; any number below 50 indicates that more builders view conditions as poor than good.

Broken out, the component gauging current sales conditions was 52 in March; the component measuring sales expectations for the next six months was 53; and the component measuring buyer traffic rose two points to 33.

Source: National Association of Home Builders