Lift in Housing Starts Indicates Inventory Relief

Housing starts neared their postrecession high in October, with expectations that the new-home market will soon provide much-needed inventory relief, the Commerce Department reports.

Starts, which reflect combined totals within the single-family and multifamily sectors, jumped 13.7 percent in October to a seasonally adjusted annual rate of 1.29 million. That’s the highest reading for new-home production since October 2016, when starts had reached a high of 1.33 million.

Starts for single-family homes in October increased 5.3 percent last month, reaching a seasonally adjusted annual rate of 877,000. They are now up 8.4 percent from a year ago. Multifamily starts surged nearly 37 percent, reaching 413,000 units in October after a weak September production report.

 

Source: National Association of Home Builders

Rates Hit Pause, Consumers Rush to Lock In?

A slight dip in interest rates last week brought more homeowners and home buyers to the mortgage market. More homeowners were quick to refinance before interest rates rise again, and home buyers were able to lock in lower rates during the week.

The Mortgage Bankers Association reported that total mortgage application volume—which includes for refinancings and home purchases—rose 3.1 percent last week on a seasonally adjusted basis. Mortgage applications, however, still remain 8.5 percent below a year ago.

Additional data at: “Weekly Mortgage Applications Rise as Rates Briefly Fall Back,” CNBC (Nov. 15, 2017)

Newbie Buyers Make Smaller Down Payments

About 60 percent of first-time home buyers put down 6 percent or less on a home purchase in September. The median down payment has dropped from 6 percent to 5 percent for first-time buyers, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers.

NAR conducted a survey of non-homeowners earlier this year and found that most consumers believe you need a down payment of 10 percent or 20 percent to buy a home.

“They may not be aware that these programs are available, and they may not be taking advantage of them,” Jessica Lautz, NAR’s managing director of survey research and communications, said in the latest Down Payment Report, published by the Down Payment Resource.

Thirty-two percent of first-time buyers said they saved for more than two years to have enough to buy a home. Student loan debt was the most often cited obstacle to saving. The second most cited barrier for saving was credit card debt.

Source: “The Down Payment Report,” Down Payment Resource (November 2017)

Mortgage Rates Mostly Flat This Week

Mortgage rates mostly held steady this week after posting a sizable jump last week.

“Following a strong surge last week, rates held relatively flat this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate remained unchanged at 3.94 percent.  The markets’ reaction to the upcoming announcement of the next Fed chair may impact the movement of rates in next week’s survey.”

Freddie mac reports the following national averages for the week ending Nov. 2:

  • 30-year fixed-rate mortgages; averaged 3.94 percent, with an average 0.5 point, the same average as last week. Last year at this time, 30-year rates averaged 3.54 percent.
  • 15-year fixed-rate mortgages: averaged 3.27 percent this week, with an average 0.5 point, rising from last week’s 3.25 percent average. A year ago, 15-year rates averaged 2.84 percent.

Source: Freddie Mac

When to Drop Your Listing Price

Though low inventory is prompting buyers to raise their offers in order to beat out competitors, you still want your sellers to know: an overpriced listing will linger on the market. Buyers pay attention to time on market and may erroneously assume something is wrong with a property that has gone “stale.” Real estate pros say it’s critical to determine what time frame is considered stale in your market and drop the price of your listing before getting to that pivotal moment.

Soaring home prices may make buyers pause, but houses are still selling fast. Nationwide, the average time a home spent on the market was 34 days in September, down from 39 days a year prior, according to the National Association of REALTORS®. Some sellers may be adamant about “testing the market” with a high asking price, so you should have a game plan for what to do if it backfires.

Source: “How to Know When to Drop the Asking Price on Your Home,” CNBC (Oct. 27, 2017)

Home Loan Rates Jump to 3-Month High

Mortgage rates reached their highest averages since July this week.

“The 30-year mortgage rate followed suit, increasing 6 basis points to 3.94 percent. Today’s survey rate is the highest rate in three months,”  says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Oct. 26:

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.88 percent average. Last year at this time, 30-year rates averaged 3.47 percent.
  • 15-year fixed-rate mortgages: averaged 3.25 percent, with an average 0.5 point, increasing from 3.19 percent last week. A year ago, 15-year rates averaged 2.78 percent.

Source: Freddie Mac

Wildfire Victims Get ‘Mortgage Reprieve’

Homeowners affected by the California wildfires may be eligible to defer their mortgage payments for up to 12 months. Mortgage financing giants Fannie Mae and Freddie Mac have issued guidelines for wildfire victims with single-family mortgages.

Victims may be eligible to stop making mortgage payments in three-month intervals, up to 12 months. They also may be eligible to avoid late fees during this temporary payment break, and to not have delinquencies reported to the credit bureaus.

Mortgage servicers have been authorized by Fannie and Freddie to suspend or reduce a homeowner’s mortgage payments immediately for up to 90 days without any contact from the homeowner if the servicer believes the homeowner has been affected by the disaster. For any additional payment forbearance of up to 12 months, homeowners will need to reach out to their lenders. Fannie Mae and Freddie Mac provide disaster relief information.

Also, HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and now face the task of rebuilding or buying another home. Borrowers with FHA-approved lenders may be eligible for 100 percent financing, including closing costs.

Source: “HUD Announces Disaster Help for Wildfire Victims,” Napa Valley Register (Oct. 19, 2017); “Fannie Mae Reminds Homeowners and Servicers of Mortgage Assistance Options for Areas Affected by California Wildfires,” Fannie Mae (Oct. 13, 2017); “Freddie Mac Confirms Disaster Relief Policies Amid California Wildfires,” Freddie Mac (Oct. 13, 2017)

Survey: Buyers Leery of Online Mortgage Info.

Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about mortgages, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the mortgage process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media.

Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a mortgage, according to the survey.

Source: “Lenders and Real Estate Agents Still Beat Online Sources as Top Mortgage Influencers,” Fannie Mae National Housing Survey (Oct. 19, 2017)

Home Lot Sizes Shrink to New Low

Lot sizes on new single-family homes have reached a new record low. New homes sold in 2016 had a median lot size of 8,562 square feet, or slightly under one-fifth of an acre.

The median lot size fell to under 8,600 square feet in 2015, according to the Census Bureau’s Survey of Construction data. Lot sizes have continued to shrink since then.

Location plays a big role. For example, the median lot size in the New England region is nearly twice as large as the national median, exceeding a third of an acre.

On the other hand, the Pacific region—where densities are often high and developed land is more scarce—has the smallest lots. Half of the lots in the region are under 0.15 acres.

US regional differences map at: “Lot Size Is at a Record Low,” National Association of Home Builders’ Eye on Housing blog (Oct. 3, 2017)

Consumers: Home Appraisals Still Falling Short

Appraisals continue to lag homeowners’ price expectations, according to the latest Quicken Loans’ National Home Price Perception Index, which compares homeowners’ initial estimates and appraiser’s opinions of home values. Appraised values were 1.35 percent lower than homeowners’ expectations in August. That has narrowed from a 1.55 percent difference in July.

Many homeowners are still not understanding their home’s current value, according to the analysis. The perceptions can vary quite a bit across the country, too. For example, home values are 3 percent higher than homeowners’ estimated values in the West, while they are 3 percent lower than expected in the Midwest and Northeast.

More interesting data and graphs at: quickenloans.com/press-room/2017/09/12/quicken-loans-study-shows-consumers-continue-to-be-too-optimistic-with-anticipated-home-value/