Existing-Home Sales Reach Decade High

Existing-home sales in January reached their fastest pace in nearly a decade, with all major regions except the Midwest posting gains last month, the National Association of REALTORS® reports.

Total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—rose 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January. That’s 3.8 percent higher than a year ago and marks the strongest month since February 2007, according to the NAR chief economist Lawrence Yun.

The REALTORS® Affordability Distribution Curve and Score, a new measurement of homebuying activity created by NAR and realtor.com®, revealed that the combination of higher mortgage rates and home prices made active listings less affordable for households in more than half of all states last month.

Source: National Association of REALTORS®

 

First-Time Home Buyers Aren’t Backing Down!

Higher mortgage rates and home prices aren’t deterring first-time buyers yet. Those new to the home-purchase game comprised 32 percent of the market in November, up from a 30 percent share a year ago, according to the National Association of REALTORS®’ latest housing report.

Overall, this has been a good year for this segment of the population. NAR’s 2016 Profile of Home Buyers and Sellers, released in November, showed that the annual share of first-time buyers was 35 percent in 2016, which is the highest since 2013 (38 percent).

“There are fewer available homes during the winter months but also fewer buyers,” suggests NAR President William E. Brown. “With mortgage rates and prices expected to increase as the year goes on, the first few months of 2017 could be an opportune time close on a home.” 
So we suggest let us start your home search now, plus the loan options ASAP!

Source: National Association of REALTORS®

Home Loan Interest Rates Likely to Stay Low Longer?

The Federal Reserve once again decided not to raise the federal funds rate this month, saying the economy is still falling short of benchmarks. That likely means home buyers will be able to take advantage of lower mortgage rate for awhile longer too.

Federal Open Markets Committee members released a statement Wednesday that said in an effort to “support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current zero to one-quarter percentage target rate for the federal funds rate remains appropriate.”

The FOMC will not decide on a rate hike again until its next meeting in December. At that time, the FOMC says it will assess progress with labor conditions as well as inflation pressures and expectations in deciding whether to raise rates at that time.

Jonathan Smoke, realtor.com®’s chief economist, predicted earlier this week. “That decline was likely a result of the stock market declines in August and September,” he said. “If builders are not focusing on first-time buyers, they are focusing on the segments most likely to be disrupted by declines in stock portfolios and retirement plans.”

Source: “Fed Again Delays Interest Rate Hike,” HousingWire (Oct. 28, 2015) and “Fed Keeps Interest Rates at Record Lows,” The Associated Press (Oct. 28, 2015)

‘First-Time Buyers’ Fuel Latest Home Sales Boost

The market share of first-time home buyers rose to 32 percent of transactions in May, matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers, NAR reports.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs,” says Lawrence Yun, NAR’s economist. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

As the supply of homes remain tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation, Yun notes. “Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above 4 percent,” Yun says.

Source: National Association of REALTORS®

What’s Holding Potential Home Sellers Back?

The National Association of REALTORS® recently reported that existing-home sales increased 4.7 percent in February compared to a year ago.

But with an improving labor market, home sales should be even higher, says Mark Fleming, chief economist at First American Financial Corp. Home prices are higher too, which often correlates with rising home sales, according to Fleming’s research.

“Rising prices only crimp affordability for the first-time buyer who doesn’t yet own the asset,” Fleming told The New York Times. “But the vast majority of home sales are to existing home owners. And for existing home owners, what changes affordability is their own income and the price of money.”

The equity picture has shown much improvement recently. CoreLogic reported earlier this month that89 percent – or about 44.5 million — of all U.S. properties with a mortgage had equity by the end of the fourth quarter of 2014.

Source: “Negative Equity a Drag on Home Sales,” The New York Times 3/ 27/15 and “89% of U.S. Homes Ended 2014 With Equity,” REALTOR® Magazine 3/18/15

Media Pessimism on Housing is Unwarranted

While news reports about a dip in the housing market abound, one economist says they’ve got it all wrong. Mark Fleming, chief economist at real estate insurance company First American Financial Corporation, recently wrote an editorial for The Hill urging “politicians, economists, and homebuyers” to take the media’s doom-and-gloom perspective “with a grain of salt—or better yet, the whole shaker.”

Fleming said part of the problem is the seasonality in the housing market, making one particularly cold slice of the calendar a poor choice to use as an indicator of overall market health. But he also criticized the media for assuming that rising housing prices are bad for buyers, when in reality, current home owners tend to move up when their home values go up, due to increases in their equity.

“More existing home owners have been able to sell their existing homes and purchase new ones. This has resulted in the positive signals that we’re seeing all around us in the housing market. To paraphrase the famous saying, ‘it’s the equity, stupid,'” Fleming wrote.

Source: “How not to interpret January’s housing data,” The Hill (March 4, 2015).