Pending Home Sales Jump

Pending home sales rose 1.2% in November after slipping the prior month, according to the National Association of REALTORS®’ latest housing report, which was just released. Year-over-year contract signings were up 7.4% nationally, according to the report. The West region of the country reported the highest monthly growth in pending home sales at 5.5%

“Despite the insufficient level of inventory, pending home contracts still increased in November,” said NAR Chief Economist Lawrence Yun, noting that housing inventory has been in decline for six straight months. “Favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”

Source: magazine.realtor/daily-news/2019/12/30

 

Home Loan Interest Rates Are Nearing 4%

Fixed-rate mortgages are climbing following a post-selection sell-off in the Treasury Market.

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

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.57 percent average. Last year at this time, 30-year rates averaged 3.97 percent.
  • 15-year fixed-rate mortgages: averaged 3.14 percent, with an average 0.5 point, increasing from last week’s 2.88 percent average. A year ago, 15-year rates averaged 3.18 percent.

Source: Freddie Mac

FHA ‘Fee Cuts’ Expected to Boost Home Sales

What type of impact will the Federal Housing Administration’s move to lower insurance premiums really have on the housing market? Housing experts are making predictions that the lower fees could translate into thousands of new home sales this year and next.

The Federal Housing Administration recently reduced its annual mortgage insurance premiums from 1.35 percent to 0.85 percent. According to estimates by the National Association of REALTORS®, the lower rates could result in big savings over time for borrowers. For example, a borrower with a $200,000 mortgage could unlock a savings of nearly $1,000 over the first year. By year five, the borrower may have saved nearly $4,800, and over 30 years potentially about an $18,000 savings.

The FHA’s lower pricing will likely draw thousands of credit-worthy borrowers back into the market, NAR notes. NAR Research has estimated that the fee reduction will price an additional 1.6 million to 2.1 million renters, along with many trade-up buyers. This could result in 90,000 to 140,000 additional annual home purchases, NAR estimates.

Estimates by Moody’s Analytics shows the reduction in the FHA premiums could amount to 45,000 additional new- and existing-home sales in 2015, and that single-family housing starts will rise by 20,000 as a direct result of the FHA reduction in premiums. But the maximum impact of the FHA’s premium cut likely won’t come to fruition until mid-2016, according to Moody’s report. Then, it expects home sales to increase by 100,000 due to the FHA reduction, with 40,000 additional single-family housing starts in 2016 due to it.

Source: “Moody’s: FHA Premium Cut Will Increase Home Sales By 45,000 This Year,” HousingWire (Jan. 28, 2015) and “FHA Lowers Pricing to Reflect Less Risk,” National Association of REALTORS® Economists’ Outlook Blog (Jan. 8, 2015)

Real Estate Predictions for 2015

Expect the home-purchase market to strengthen along with the economy in 2015, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for November.

“The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better,” says Frank Nothaft, Freddie Mac’s chief economist. “Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.”

Freddie Mac economists have made 5 projections in housing for 2015 at: Freddie Mac

 

 

Home Loan Rates May Rise Sooner Than Expected

Federal Reserve Chairwoman Janet Yellen said in testimony Tuesday that the Fed may need to raise interest rates sooner than expected, but it all will hinge on the labor market.

“If the labor market continues to improve more quickly than anticipated by the Federal Open Market Committee, resulting in faster convergence toward our dual objectives, then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned,” Yellen testified to the Senate Banking Committee on Tuesday. On the other hand, “if economic performance is disappointing, then the future path of interest rates likely would be more accommodative than currently anticipated.”

Recently, the unemployment rate has fallen rapidly, reaching 6.1 percent in June. But wage growth has remained weak, Yellen noted. Also, the housing market remains sluggish, which she said could slow the economic recovery.

“The housing sector has shown little recent progress,” Yellen testified. “While this sector has recovered notably from its earlier trough, housing activity leveled off in the wake of last year’s increase in mortgage rates, and readings this year have, overall, continued to be disappointing. The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

Source: “Yellen: Economy Uncertain, Housing Disappoints, and Rate Hikes Are Coming,” HousingWire (July 15, 2014) and “Yellen: Fed May Move Sooner if Labor Market Keeps Surprising,” The Wall Street Journal (July 15, 2014)

Fannie Mae Releases ‘2014 National Housing Survey Results’

Americans’ concerns about the direction of the economy and their household income appear to be weighing on housing growth, according to results from Fannie Mae’s May 2014 National Housing Survey. The share of respondents who believe the economy is headed in the wrong direction remained at 57 percent last month, and those who said their household income is significantly higher than it was at the same time last year decreased four percentage points to 21 percent.

Although respondents’ attitudes toward housing have been generally positive during the past few months, their reluctance to enter the home buying or selling market has restrained activity below typical seasonal trends.

Recovery Spreads Beyond Energy States

“It’s a promising sign to see areas like Los Angeles and San Jose joining the top ten largest [metros] showing a recovery,” says NAHB Chief Economist David Crowe. “We still expect 2014 to be a strong year for housing and to aid in the overall economic recovery. The job market continues to mend and, with that, we will see a steady release of pent-up demand of buyers.”

The index shows that 59 of the 350 metro markets tracked by the index have returned to or exceeded their last normal levels of economic and housing activity.

The index examines current housing permit, price, and employment data to see how close markets are performing at their historical normal levels.

Also, 28 percent of metro areas tracked had their score rise this month. Eighty-three percent have shown an improvement over the past year as well.

“Things are getting slowly better overall,” says NAHB Chairman Kevin Kelly. “And with the housing market now entering the spring buying season, the fact that the nation’s economy is headed in the right direction is a very promising sign.”

Source: National Association of Home Builders

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

Smaller Housing Markets Leading Recovery

As more housing markets return to normal, smaller markets are leading the pack, according to the National Association of Home Builders/First American Leading Markets Index. The latest index shows that 56 of the 350 metro areas evaluated nationwide have returned to or exceeded their normal levels of economic and housing activity.

“Forty-five percent of metro areas are recovering at a faster pace than the nation as a whole, with smaller markets leading the way,” says NAHB Chief Economist David Crowe. “Of the 56 markets that are at or above normal levels, 48 of them have populations that are less than 500,000, and many of these local metros are fueled by a strong energy sector, which is producing solid job and economic growth.”

The LMI evaluates more than 350 markets to gauge whether they are approaching or exceeding their previous normal levels of economic and housing activity, taking into account home prices, employment levels, and housing permits.

More information  at source: National Association of Home Builders