After April Hikes, Mortgage Rates Slide in May

“While mortgage rates have increased by one-half of a percentage point so far this year, it has not impacted home purchase demand, which continues to grow this spring,” says Sam Khater, Freddie Mac’s chief economist. “The observed buyer resiliency in the face of higher rates reflects the healthy economy and strong consumer confidence, which are important drivers of home sales activity.

Freddie Mac reports the following national averages for the week ending May 3:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, dropping from last week’s 4.58 percent average. Last year at this time, 30-year rates averaged 4.02 percent.
  • 15-year fixed-rate mortgages: averaged 4.03 percent, with an average 0.4 point, rising from last week’s 4.02 percent average. A year ago, 15-year rates averaged 3.27 percent.

Source: Freddie Mac

Buyer Traffic Strong; Sellers Still Hesitant

Housing demand remains strong this summer, even as inventory issues persist in many markets across the country, according to the REALTORS® Confidence Index for June.

Overall housing demand this summer is on the rise due to more jobs being created and by low mortgage costs. According to NAR Research, “Job creation is strongly associated with the demand and supply of homes: strong job growth improves the prospect for home ownership, while job contraction in an area may lead to more homes being sold as people move out of the area.”

More details and national chart at: “Buyer Traffic Continued to Outpace Supply in Many States in April–June 2016,” National Association of REALTORS®’ Economists’ Outlook Blog (Aug. 3, 2016) and REALTORS® Confidence Index

Sellers Happy, But Home Buyers Are Frustrated

The number of home buyers who say now is a good time to buy dipped to an all-time survey low in Fannie Mae’s latest Home Purchase Sentiment Index. Meanwhile, home owners who say now is a good time to sell soared to an all-time survey high.

Some highlights from Fannie Mae’s latest Home Purchase Sentiment Index:

  • 30% of Americans say now is a good time to purchase a home, a drop of 3 percentage points from the previous month and now at an all-time survey low.
  • 15% of Americans say now is a good time to sell a home, now at an all-time survey high.
  • More consumers think home prices will rise over the next 12 months compared to March, and slightly fewer consumers also expect mortgage rates to go up over the next year.
  • The percentage of respondents who say they are not concerned with losing their job increased 6 percentage points to 74%, nearly a 7 percentage point decrease in March.
  • The percentage of respondents who say their household income is higher than it was 12 months ago held at 11%.

Source: Fannie Mae

Consumer Confidence in Housing Hot This Spring

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

Good News for High-End Home Buyers?

Jumbo loans are reportedly becoming easier to obtain, which may be welcome news for high-end home buyers.

Jumbo loans are mortgages larger than $417,000 in most parts of the nation and $625,000 in high-cost areas.

In the first quarter of 2013, lenders originated $54 billion in jumbo loans, up from $47 billion one year earlier, according to Inside Mortgage Finance.

“The pickup in jumbo lending comes as home prices are rising and banks are looking to build closer ties with affluent clients and put more loans on their balance sheets,” The Wall Street Journal reports.

“Housing prices are going up, consumer confidence is growing, and the affluent segment is in better shape,” says Kevin Watters, chief executive of mortgage banking at JP Morgan Chase.

Source: “High-End Home Loans Stage a Comeback,” The Wall Street Journal 6/21/13

“Vacation Home Market” Heating Up!

As consumer confidence, the economy, and job market all make gains, more Americans are feeling like they have money to spend on second residences and summer homes. Low interest rates are still a big draw.

Vacation home sales increased 10 percent nationwide in 2012, according to the National Association of REALTORS®. Real estate professionals are also reporting sales have been strong this spring in many vacation home hot spots.

“A lot of buyers who were sitting on the sidelines decided last year was probably a good time to take advantage of buying a vacation home,” says Paul Bishop, NAR’s vice president of research. “They were feeling pretty good about their own financial situation, given the growth in the market and in the economy.”

Source: “Vacation home sales sizzle; rentals book up,” CNBC (May 20, 2013) and “Desire For Vacation Homes Heating Up, Sales Strong,” Investor’s Business Daily (May 16, 2013)

“High Expectations” for Spring Housing Market!

Good news! Get ready for the healthiest spring home-buying season since 2007, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for March.

The mortgage giant is forecasting low mortgage rates and increasing housing prices to continue, as well as gradually improving consumer confidence that will likely boost home sales this spring.

Sales are expected to rise 8 to 10 percent in 2013 compared to 2012 numbers, Freddie economists report. Freddie Mac also expects housing starts to rise to 950,000 units this year compared to 780,000 in 2012.

“History shows us not all economic recoveries are created equal, and consumer confidence mirrors this fact,” says Frank Nothaft, Freddie Mac’s chief economist. “With the spring home-buying season upon us, the recent highs in the stock market are a welcome signal of better times ahead. But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery.”

Source: Freddie Mac

Could Rising Mortgage Rates Help Housing?

Mortgage rates are still near record lows but they have been inching up slightly in recent weeks as the U.S. economy shows some signs of improving. The 30-year fixed-rate mortgage—the most popular choice among home buyers—reached its highest level in more than six months last week, averaging 3.63 percent, according to Freddie Mac.

Mortgage rates are projected to rise higher this year, which could make buying a home more expensive. But some housing analysts say that the higher rates could actually help aid the housing recovery.

Home buyers who have been lingering on the market may finally move forward on a purchase. The increasing rates may drive home the point that  while borrowing is still cheap, they’d better lock in a rate now before rates move any higher.

More at source: “Why higher mortgage rates will help the housing market,” Fortune (March 18, 2013)

Optimism Builds in the “Housing Market”

Several recent indicators for the real estate industry are pointing to a market that is on the mend and entering recovery mode. 

Housing experts’ predictions for the new year tend to center around a market stabilizing before entering a gradual, albeit very slow, recovery. However, the tone is more upbeat than it has been in years for the housing market. This reflects current trends in the Placerville, El Dorado County, CA., regions.

Here are a few of the signs that are showing the market moving in a more positive direction: 

Home sales: Existing home sales are expected to increase 12 percent this year, following a 2 percent jump last year, Moody’s Analytics predicts. The signs are already showing: In November, pending home sales — a gauge for future home buying — reached its highest level in 19 months, the National Association of REALTORS® reported. (Read more.)

Consumer confidence: With mortgage rates at record lows and housing affordability high, about 71 percent of Americans say now is a good time to purchase a home. Also, more Americans are optimistic that home prices will rise over the next year — about 26 percent say prices will rise in 2012, an increase of 4 percent over the last survey, according to Fannie Mae’s December National Housing Survey

More information at sources: “Housing Outlook Is More Upbeat,” USA Today (Jan. 15, 2012) and “Consumers More Confident, Survey Says,” Deseret News (Utah) (Jan. 16, 2012)

The Credit Downgrade and the Real Estate Market

On Aug. 5, Standard & Poor’s downgraded the U.S. credit rating for the first time. Chief Economist for the National Association of Realtors, Lawrence Yun discusses how the credit downgrade could impact consumer confidence, mortgage rates and the real estate market.

Video: Watch now >