CNBC
"The average size of a new mortgage just set a record, as home prices continue to climb"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED WED, FEB 16 2022
KEY POINTS
* The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.05% from 3.83%.
* The average purchase loan size was a record $453,000.
* Applications to refinance a home loan are now less than half the volume of a year ago.
Homebuyers are facing one of the priciest housing markets in history, and that means they need larger mortgages than ever before.
While mortgage demand is falling, due to rising interest rates, the size of the average purchase loan application just set a record.
Mortgage applications to buy a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Volume was 7% lower than the same week one year ago.
“Purchase applications saw a modest decline over the week, with government purchase applications accounting for most of the decrease,” said Joel Kan, an MBA economist.
“Prospective buyers still face elevated sales prices in addition to higher mortgage rates."
"The heavier mix of conventional applications again contributed to another record average loan size at $453,000.”
Home prices have been climbing steadily as demand continues to outstrip the supply of houses for sale.
While the increases had moderated at the end of last summer, they are now widening again.
Prices nationally were up 18.5% year over year in December, according to the most recent report from CoreLogic.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.05% from 3.83%, with points rising to 0.45 from 0.40 (including the origination fee) for loans with a 20% down payment.
The rate was 107 basis points lower the same week one year ago.
“Mortgage rates increased across the board last week following the recent rise in Treasury yields, which have moved higher due to unrelenting inflationary pressures and increased market expectations of more aggressive policy moves by the Federal Reserve,” added Kan.
The sharp rise in mortgage rates over the last several months has cut refinance demand dramatically.
Application volume was down 9% for the week and was 54% lower than the same week one year ago.
The refinance share of applications decreased to 52.8% of total applications from 56.2% the previous week.
That was the lowest level since July 2019.
https://www.cnbc.com/2022/02/16/the-ave ... ecord.html
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"U.S. labor market still tightening; freezing temperatures chill homebuilding"
By Lucia Mutikani
February 17, 2022
Summary
* Weekly jobless claims increase 23,000 to 248,000
* Continuing claims fall 26,000 to 1.593 million
* Housing starts drop 4.1% in January; permits rise 0.7%
* Single-family starts fall 5.6%; permits jump 6.8%
WASHINGTON, Feb 17 (Reuters) - The number of Americans filing new claims for jobless benefits unexpectedly rose last week, but remained below pre-pandemic levels as labor market conditions continue to tighten.
The first increase in a month reported by the Labor Department on Thursday did not change economists' expectations for another month of solid employment gains in February.
There is an acute shortage of workers, which has seen employers boosting wages and offering other incentives to retain their workforce as well as attract labor.
Economists blamed the rise in claims on week-to-week volatility in the data and harsh weather in some parts of the country.
"Given the regular noise in the data and the range of factors that can impact filings we don't think the recent jump in initial claims filings is particularly worrisome at this point," said Daniel Silver, an economist at JPMorgan in New York.
"Overall, we think that the labor market remains tight."
Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 248,000 for the week ended Feb. 12.
Economists polled by Reuters had forecast 219,000 applications for the latest week.
Unadjusted claims climbed 7,742 to 238,482 last week, lifted by big increases in Missouri, Ohio and Kentucky, which offset notable declines in Pennsylvania, New Jersey and Wisconsin.
Claims had been declining since hitting a three-month high in mid-January as coronavirus cases, fueled by the Omicron variant, raged across the country.
Infections have dropped significantly in recent weeks.
There were a near record 10.9 million job openings at the end of December.
Claims have plunged from an all-time high of 6.149 million in early April 2020.
Last week's data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of February's employment report.
Claims are well below their 290,000 level in mid-January.
The economy created 467,000 jobs in January.
Stocks on Wall Street slumped amid escalating tensions between the West and Russia over Ukraine.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
MAXIMUM EMPLOYMENT
A survey from the Philadelphia Federal Reserve on Thursday showed employment at factories in the mid-Atlantic region rose strongly in February, and manufacturers also increased hours for workers.
But factory activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware, grew moderately because of persistent supply constraints.
Strong wages gains from the tight labor market and snarled supply chains are boosting inflation.
Minutes of the Federal Reserve's Jan. 25-26 meeting published on Wednesday showed "many" officials at the U.S. central bank "viewed labor market conditions as already at or very close to those consistent with maximum employment."
The Fed is expected to start raising interest rates in March to quell inflation, with economists anticipating as much as seven hikes this year.
The claims report also showed that the number of people receiving benefits after an initial week of aid dropped 26,000 to 1.593 million in the week ended Feb. 5.
"There are no signs here of a change in labor market trends," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Freezing temperatures depressed homebuilding in January.
A third report from the Commerce Department showed housing starts dropped 4.1% to a seasonally adjusted annual rate of 1.638 million units last month.
Temperatures were below average from the Midwest and Tennessee Valley to the Northeast in January, according to the National Centers for Environmental Information.
Single-family housing starts, which account for the biggest share of homebuilding, tumbled 5.6% to a rate of 1.116 million.
Starts fell in the Northeast, Midwest and South, but rose in the West.
Last month's decline is, however, probably temporary as building permits rose 0.7% to a rate of 1.899 million units, the highest since May 2006.
Single-family permits surged 6.8% to a rate of 1.205 million units, a one-year high.
The supply of previously owned homes on the market is at record lows.
But builders are facing challenges from soaring prices for inputs.
Prices for softwood lumber, which is used for framing, shot up 25.4% in January, government data showed this week.
The National Association of Homebuilders said on Wednesday that building material production bottlenecks were delaying projects, noting that "many builders are waiting months to receive cabinets, garage doors, countertops and appliances."
The supply squeeze was underscored by a surge in the backlog of houses approved for construction but not yet started to a record last month.
Rising mortgage rates could also slow demand for housing, especially among first-time buyers.
The 30-year fixed mortgage rate jumped above 4% last week for the first time since 2019, according to the Mortgage Bankers Association.
"Rising mortgage rates pose a significant risk to housing demand, but it's unclear what type of lag would exist for this impact to appear in the construction data," said Isfar Munir, an economist at Citigroup in New York.
"New homes can be sold before they are started, and last-bid attempts to buy homes before mortgage rates increase further could boost new home sales before the Fed actually begins hiking, this would be a positive tailwind for housing starts, at least for a few months."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/business/us-wee ... 022-02-17/
"U.S. labor market still tightening; freezing temperatures chill homebuilding"
By Lucia Mutikani
February 17, 2022
Summary
* Weekly jobless claims increase 23,000 to 248,000
* Continuing claims fall 26,000 to 1.593 million
* Housing starts drop 4.1% in January; permits rise 0.7%
* Single-family starts fall 5.6%; permits jump 6.8%
WASHINGTON, Feb 17 (Reuters) - The number of Americans filing new claims for jobless benefits unexpectedly rose last week, but remained below pre-pandemic levels as labor market conditions continue to tighten.
The first increase in a month reported by the Labor Department on Thursday did not change economists' expectations for another month of solid employment gains in February.
There is an acute shortage of workers, which has seen employers boosting wages and offering other incentives to retain their workforce as well as attract labor.
Economists blamed the rise in claims on week-to-week volatility in the data and harsh weather in some parts of the country.
"Given the regular noise in the data and the range of factors that can impact filings we don't think the recent jump in initial claims filings is particularly worrisome at this point," said Daniel Silver, an economist at JPMorgan in New York.
"Overall, we think that the labor market remains tight."
Initial claims for state unemployment benefits increased 23,000 to a seasonally adjusted 248,000 for the week ended Feb. 12.
Economists polled by Reuters had forecast 219,000 applications for the latest week.
Unadjusted claims climbed 7,742 to 238,482 last week, lifted by big increases in Missouri, Ohio and Kentucky, which offset notable declines in Pennsylvania, New Jersey and Wisconsin.
Claims had been declining since hitting a three-month high in mid-January as coronavirus cases, fueled by the Omicron variant, raged across the country.
Infections have dropped significantly in recent weeks.
There were a near record 10.9 million job openings at the end of December.
Claims have plunged from an all-time high of 6.149 million in early April 2020.
Last week's data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of February's employment report.
Claims are well below their 290,000 level in mid-January.
The economy created 467,000 jobs in January.
Stocks on Wall Street slumped amid escalating tensions between the West and Russia over Ukraine.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
MAXIMUM EMPLOYMENT
A survey from the Philadelphia Federal Reserve on Thursday showed employment at factories in the mid-Atlantic region rose strongly in February, and manufacturers also increased hours for workers.
But factory activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware, grew moderately because of persistent supply constraints.
Strong wages gains from the tight labor market and snarled supply chains are boosting inflation.
Minutes of the Federal Reserve's Jan. 25-26 meeting published on Wednesday showed "many" officials at the U.S. central bank "viewed labor market conditions as already at or very close to those consistent with maximum employment."
The Fed is expected to start raising interest rates in March to quell inflation, with economists anticipating as much as seven hikes this year.
The claims report also showed that the number of people receiving benefits after an initial week of aid dropped 26,000 to 1.593 million in the week ended Feb. 5.
"There are no signs here of a change in labor market trends," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
Freezing temperatures depressed homebuilding in January.
A third report from the Commerce Department showed housing starts dropped 4.1% to a seasonally adjusted annual rate of 1.638 million units last month.
Temperatures were below average from the Midwest and Tennessee Valley to the Northeast in January, according to the National Centers for Environmental Information.
Single-family housing starts, which account for the biggest share of homebuilding, tumbled 5.6% to a rate of 1.116 million.
Starts fell in the Northeast, Midwest and South, but rose in the West.
Last month's decline is, however, probably temporary as building permits rose 0.7% to a rate of 1.899 million units, the highest since May 2006.
Single-family permits surged 6.8% to a rate of 1.205 million units, a one-year high.
The supply of previously owned homes on the market is at record lows.
But builders are facing challenges from soaring prices for inputs.
Prices for softwood lumber, which is used for framing, shot up 25.4% in January, government data showed this week.
The National Association of Homebuilders said on Wednesday that building material production bottlenecks were delaying projects, noting that "many builders are waiting months to receive cabinets, garage doors, countertops and appliances."
The supply squeeze was underscored by a surge in the backlog of houses approved for construction but not yet started to a record last month.
Rising mortgage rates could also slow demand for housing, especially among first-time buyers.
The 30-year fixed mortgage rate jumped above 4% last week for the first time since 2019, according to the Mortgage Bankers Association.
"Rising mortgage rates pose a significant risk to housing demand, but it's unclear what type of lag would exist for this impact to appear in the construction data," said Isfar Munir, an economist at Citigroup in New York.
"New homes can be sold before they are started, and last-bid attempts to buy homes before mortgage rates increase further could boost new home sales before the Fed actually begins hiking, this would be a positive tailwind for housing starts, at least for a few months."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/business/us-wee ... 022-02-17/
Re: THE HOUSING MARKET
CNBC
"Mortgage rates are surging faster than expected, prompting economists to lower their home sales forecasts"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, MAR 22 2022
KEY POINTS
* The average rate on the popular 30-year fixed mortgage hit 4.72% on Tuesday, moving 26 basis points higher since just Friday, according to Mortgage News Daily.
* As a result of the recent spike in rates, economists are now lowering their home sales forecasts for this year.
* Most estimates at the end of last year had the average 30-year mortgage rate hitting 4.5% by the end of 2022, but the war in Ukraine, rising oil prices and inflation have all lit a fire under interest rates.
The average rate on the popular 30-year fixed mortgage hit 4.72% on Tuesday, moving 26 basis points higher since just Friday, according to Mortgage News Daily.
As a result of the recent spike in rates, economists are now lowering their home sales forecasts for this year.
Most estimates at the end of last year had the average 30-year mortgage rate hitting 4.5% by the close of 2022, but the war in Ukraine, rising oil prices and inflation have all lit a fire under interest rates.
At this time in 2021, rates were about 3.45%.
A shift in the policy outlook from the Federal Reserve, suggesting far more rate increases than expected, is pushing bond yields higher.
The 30-year fixed mortgage loosely follows the yield on the 10-year U.S. Treasury, which is now at the highest level since May 2019.
“Rates have a small chance to top out before hitting 5% and a good chance of topping out before hitting 6%,” said Matthew Graham, chief operating officer at Mortgage News Daily.
“It is a rapidly moving target in this environment, where we legitimately and unexpectedly find ourselves needing to be concerned with inflation for the first time since the 1980s.”
Economists had expected the rate to rise only slightly this year, but now that is changing.
Lawrence Yun, chief economist for the National Association of Realtors, now says he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%.
NAR’s latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6%-8% (NAR has not officially updated its forecast).
The rise in rates comes on top of an already sizzling housing market.
Demand remains strong, and supply remains historically low.
This has pressured home prices, which were already up 19% in January year over year, the latest read from CoreLogic.
“That is a double whammy that erodes affordability for homebuyers, especially first-timers,” said Frank Nothaft, chief economist at CoreLogic.
“First-time buyers are a sizable part of prospective shoppers and their share of purchases has slipped from one year ago."
"We will be revising our home sales forecast a bit lower.”
Home sellers may also be adjusting their expectations.
Asking prices slipped slightly last week, according to Realtor.com, despite the competitive market.
“In a potential sign that sellers are mindful of buyers’ tightening budgets as mortgage rates climb, last week’s data showed the first slowdown in asking price growth since January,” wrote Danielle Hale, chief economist at Realtor.com.
Hale said she may revise her sales forecast lower as well but hasn’t yet.
She points out that while rising costs could cut into home sales, there are several offsetting factors, such as rent.
“Fast-rising rents aren’t offering any relief and may keep some would-be buyers on the hunt for a home, so that they can lock-in the bulk of their housing costs before inflation raises the bar yet again,” said Hale.
“Demographics are also favorable for the housing market this year, with more than 45 million households in the 26-35 age range, which are key years for household formation and first-time home buying."
"However, the economic considerations for those households are going to be challenging,” she added.
Data also provided by Reuters
https://www.cnbc.com/2022/03/22/mortgag ... casts.html
"Mortgage rates are surging faster than expected, prompting economists to lower their home sales forecasts"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, MAR 22 2022
KEY POINTS
* The average rate on the popular 30-year fixed mortgage hit 4.72% on Tuesday, moving 26 basis points higher since just Friday, according to Mortgage News Daily.
* As a result of the recent spike in rates, economists are now lowering their home sales forecasts for this year.
* Most estimates at the end of last year had the average 30-year mortgage rate hitting 4.5% by the end of 2022, but the war in Ukraine, rising oil prices and inflation have all lit a fire under interest rates.
The average rate on the popular 30-year fixed mortgage hit 4.72% on Tuesday, moving 26 basis points higher since just Friday, according to Mortgage News Daily.
As a result of the recent spike in rates, economists are now lowering their home sales forecasts for this year.
Most estimates at the end of last year had the average 30-year mortgage rate hitting 4.5% by the close of 2022, but the war in Ukraine, rising oil prices and inflation have all lit a fire under interest rates.
At this time in 2021, rates were about 3.45%.
A shift in the policy outlook from the Federal Reserve, suggesting far more rate increases than expected, is pushing bond yields higher.
The 30-year fixed mortgage loosely follows the yield on the 10-year U.S. Treasury, which is now at the highest level since May 2019.
“Rates have a small chance to top out before hitting 5% and a good chance of topping out before hitting 6%,” said Matthew Graham, chief operating officer at Mortgage News Daily.
“It is a rapidly moving target in this environment, where we legitimately and unexpectedly find ourselves needing to be concerned with inflation for the first time since the 1980s.”
Economists had expected the rate to rise only slightly this year, but now that is changing.
Lawrence Yun, chief economist for the National Association of Realtors, now says he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%.
NAR’s latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6%-8% (NAR has not officially updated its forecast).
The rise in rates comes on top of an already sizzling housing market.
Demand remains strong, and supply remains historically low.
This has pressured home prices, which were already up 19% in January year over year, the latest read from CoreLogic.
“That is a double whammy that erodes affordability for homebuyers, especially first-timers,” said Frank Nothaft, chief economist at CoreLogic.
“First-time buyers are a sizable part of prospective shoppers and their share of purchases has slipped from one year ago."
"We will be revising our home sales forecast a bit lower.”
Home sellers may also be adjusting their expectations.
Asking prices slipped slightly last week, according to Realtor.com, despite the competitive market.
“In a potential sign that sellers are mindful of buyers’ tightening budgets as mortgage rates climb, last week’s data showed the first slowdown in asking price growth since January,” wrote Danielle Hale, chief economist at Realtor.com.
Hale said she may revise her sales forecast lower as well but hasn’t yet.
She points out that while rising costs could cut into home sales, there are several offsetting factors, such as rent.
“Fast-rising rents aren’t offering any relief and may keep some would-be buyers on the hunt for a home, so that they can lock-in the bulk of their housing costs before inflation raises the bar yet again,” said Hale.
“Demographics are also favorable for the housing market this year, with more than 45 million households in the 26-35 age range, which are key years for household formation and first-time home buying."
"However, the economic considerations for those households are going to be challenging,” she added.
Data also provided by Reuters
https://www.cnbc.com/2022/03/22/mortgag ... casts.html
Re: THE HOUSING MARKET
REUTERS
"U.S. new home sales drop further as mortgages rates rise; prices push higher"
By Lucia Mutikani
MARCH 23, 2022
WASHINGTON (Reuters) - Sales of new U.S. single-family homes unexpectedly fell in February amid rising mortgage rates and higher house prices, which are squeezing out some first-time buyers from the market.
Despite the second straight monthly decline reported by the Commerce Department on Wednesday, sales remained above their pre-pandemic level.
Economists saw reduced affordability curbing activity in the near-term, but expected the new housing market to plod along this year given pent-up demand, a record low inventory of previously owned homes and strong wage gains.
“With interest rates climbing further because of the negative supply shock emanating from the Russian invasion of Ukraine, home sales are likely to trend lower in coming months,” said David Berson, chief economist at Nationwide in Columbus, Ohio.
“But unless mortgage rates spike or the economy stalls or worse, the falloff in new home sales should be modest.”
New home sales decreased 2% to a seasonally adjusted annual rate of 772,000 units last month.
January’s sales pace was revised down to 788,000 units from the previously reported 801,000 units.
Sales surged 59.3% in the Northeast and increased 6.3% in the Midwest.
But they fell 1.7% in the densely populated South and tumbled 13.0% in the West.
New homes are a leading indicator for the housing market as they are counted at the signing of a contract.
Economists polled by Reuters had forecast new home sales, which account for 11.4% of U.S. home sales, would rebound to a rate of 810,000 units.
Sales declined 6.2% on a year-on-year basis in February.
They peaked at a rate of 993,000 units in January 2021, which was the highest since the end of 2006.
Mortgage rates surged in February and have continued to push higher after the Federal Reserve last week raised its policy interest rate by 25 basis points, the first hike in more than three years, and laid out an aggressive plan to push borrowing costs to restrictive levels by 2023.
The 30-year fixed rate vaulted 23 basis points to a three-year high of 4.50% last week, data from the Mortgage Bankers Association showed on Wednesday.
Stocks on Wall Street were trading lower as oil prices rose.
The dollar gained versus a basket of currencies.
U.S. Treasury yields fell.
SUPPLY-DEMAND IMBALANCE
Though, mortgage rates remain low by historical standards, strong house price inflation has combined to significantly increase the typical monthly mortgage payment.
“Mortgage payments as a share of median family income have risen above 20% for the first time since late 2007,” said Matthew Pointon, senior property economist at Capital Economics in New York.
“That will act to cool housing market activity."
"A record low number of existing homes on the market that implies new sales will grind out a small gain over 2022.”
Data last week showed sales of previously owned homes fell sharply in February.
The median new house price in February increased 10.7% from a year ago to $400,600.
House prices have risen 31% compared to three years ago.
None of the houses sold last month were below $200,000.
Strong house price growth is expected to persist through this year and into 2023.
“We may be approaching a pivot point when higher home costs and higher mortgage rates cool both sales and price increases, but given the supply-and-demand imbalance, we may not hit that point this year,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
There were 407,000 new homes on the market, the highest since August 2008 and up from 398,000 units in January.
Houses under construction made up 65% of the inventory, with homes yet to be built accounting for about 26%.
The backlog of homes approved for construction but yet to be started is at an all-time high as builders struggle with shortages and higher prices for inputs like lumber for framing, as well as cabinets, garage doors, countertops and appliances.
At February’s sales pace it would take 6.3 months to clear the supply of houses on the market, up from 6.1 months in January.
Reporting by Lucia Mutikani; Editing by Paul Simao and Diane Craft
https://www.reuters.com/article/usa-eco ... SL2N2VQ1CF
"U.S. new home sales drop further as mortgages rates rise; prices push higher"
By Lucia Mutikani
MARCH 23, 2022
WASHINGTON (Reuters) - Sales of new U.S. single-family homes unexpectedly fell in February amid rising mortgage rates and higher house prices, which are squeezing out some first-time buyers from the market.
Despite the second straight monthly decline reported by the Commerce Department on Wednesday, sales remained above their pre-pandemic level.
Economists saw reduced affordability curbing activity in the near-term, but expected the new housing market to plod along this year given pent-up demand, a record low inventory of previously owned homes and strong wage gains.
“With interest rates climbing further because of the negative supply shock emanating from the Russian invasion of Ukraine, home sales are likely to trend lower in coming months,” said David Berson, chief economist at Nationwide in Columbus, Ohio.
“But unless mortgage rates spike or the economy stalls or worse, the falloff in new home sales should be modest.”
New home sales decreased 2% to a seasonally adjusted annual rate of 772,000 units last month.
January’s sales pace was revised down to 788,000 units from the previously reported 801,000 units.
Sales surged 59.3% in the Northeast and increased 6.3% in the Midwest.
But they fell 1.7% in the densely populated South and tumbled 13.0% in the West.
New homes are a leading indicator for the housing market as they are counted at the signing of a contract.
Economists polled by Reuters had forecast new home sales, which account for 11.4% of U.S. home sales, would rebound to a rate of 810,000 units.
Sales declined 6.2% on a year-on-year basis in February.
They peaked at a rate of 993,000 units in January 2021, which was the highest since the end of 2006.
Mortgage rates surged in February and have continued to push higher after the Federal Reserve last week raised its policy interest rate by 25 basis points, the first hike in more than three years, and laid out an aggressive plan to push borrowing costs to restrictive levels by 2023.
The 30-year fixed rate vaulted 23 basis points to a three-year high of 4.50% last week, data from the Mortgage Bankers Association showed on Wednesday.
Stocks on Wall Street were trading lower as oil prices rose.
The dollar gained versus a basket of currencies.
U.S. Treasury yields fell.
SUPPLY-DEMAND IMBALANCE
Though, mortgage rates remain low by historical standards, strong house price inflation has combined to significantly increase the typical monthly mortgage payment.
“Mortgage payments as a share of median family income have risen above 20% for the first time since late 2007,” said Matthew Pointon, senior property economist at Capital Economics in New York.
“That will act to cool housing market activity."
"A record low number of existing homes on the market that implies new sales will grind out a small gain over 2022.”
Data last week showed sales of previously owned homes fell sharply in February.
The median new house price in February increased 10.7% from a year ago to $400,600.
House prices have risen 31% compared to three years ago.
None of the houses sold last month were below $200,000.
Strong house price growth is expected to persist through this year and into 2023.
“We may be approaching a pivot point when higher home costs and higher mortgage rates cool both sales and price increases, but given the supply-and-demand imbalance, we may not hit that point this year,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
There were 407,000 new homes on the market, the highest since August 2008 and up from 398,000 units in January.
Houses under construction made up 65% of the inventory, with homes yet to be built accounting for about 26%.
The backlog of homes approved for construction but yet to be started is at an all-time high as builders struggle with shortages and higher prices for inputs like lumber for framing, as well as cabinets, garage doors, countertops and appliances.
At February’s sales pace it would take 6.3 months to clear the supply of houses on the market, up from 6.1 months in January.
Reporting by Lucia Mutikani; Editing by Paul Simao and Diane Craft
https://www.reuters.com/article/usa-eco ... SL2N2VQ1CF
Re: THE HOUSING MARKET
CNBC
"Pending home sales sink in February, setting a grim tone as housing market enters key spring season"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED FRI, MAR 25 2022
KEY POINTS
* Setting a soft tone for the usually busy spring season, pending home sales, which measure signed contracts on existing homes, fell 4.1% in February compared with January.
* This is the fourth straight month of declines in pending sales, which are an indicator of future closings, one to two months out.
* The median monthly payment on a new mortgage is now taking up a much larger share of a typical consumer’s income. It jumped 8.3% in February compared with January.
* The interest rate on the most popular type of U.S. home loan surged last week by the most in two years.
In a grim sign for the housing market’s busiest season, pending home sales, which measure signed contracts on existing homes, fell 4.1% in February compared with January, according to the National Association of Realtors.
Sales were down 5.4% compared with February 2021.
Analysts were expecting a slight gain.
This is the fourth straight month of declines in pending sales, which are an indicator of future closings, one to two months out.
Since this count is based on signed contracts in February, when mortgage rates really started to take off, it is a strong indicator of how the market is reacting to the new rate environment, especially as it is entering the crucial spring season.
Rates began rising in January and continued sharply higher in February.
The average rate on the 30-year fixed mortgage is now more than a full percentage point higher than it was one year ago.
Regionally, pending sales rose 1.9% month to month in the Northeast but were down 9.2% from a year ago.
In the Midwest, sales decreased 6.0% for the month and were down 5.2% from February 2021.
In the South, sales fell 4.4% monthly and 4.3% annually, and in the West they were down 5.4% for the month and 5.3% from a year ago.
The jump in mortgage rates could not come at a worse time, as spring is historically the busiest season for the housing market.
“Most of my buyers are adjusting their target to buy the home they can afford at the higher rates,” said Paul Legere, a buyer’s agent with Joel Nelson Group in Washington, D.C.
“There has been a pronounced sense of urgency to lock in a mortgage rate and get into a property."
"In my market at least, buyers are not electing to rent as an alternative.”
Today’s potential buyers are facing an expensive market.
The median monthly payment on a new mortgage is now taking up a much larger share of a typical consumer’s income.
It jumped 8.3% in February compared with January, according to a new index from the Mortgage Bankers Association.
It is nearly 22% higher than it was in February 2021.
For borrowers on the lower end of the market, that monthly payment is up nearly 10% month to month.
“The 30-year fixed-rate mortgage spiked 73 basis points from December 2021 through February 2022."
"Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped $127 from January and $337 from one year ago,” said Edward Seiler, MBA’s associate vice president of housing economics.
Buyers continue to face a tight and pricey market.
Now they have to factor in inflation in other parts of their budgets, as well.
List prices for homes reaccelerated after a brief reprieve in the fall of last year, according to Realtor.com.
“As we move into the spring season, markets remain clearly tilted in sellers’ favor,” said George Ratiu, senior economist at Realtor.com.
“However, with mortgage rates moving toward 5%, we are seeing early signs of a shift in housing fundamentals, as many people looking for a home have hit a ceiling on their ability to afford a home.”
https://www.cnbc.com/2022/03/25/home-sa ... eason.html
"Pending home sales sink in February, setting a grim tone as housing market enters key spring season"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED FRI, MAR 25 2022
KEY POINTS
* Setting a soft tone for the usually busy spring season, pending home sales, which measure signed contracts on existing homes, fell 4.1% in February compared with January.
* This is the fourth straight month of declines in pending sales, which are an indicator of future closings, one to two months out.
* The median monthly payment on a new mortgage is now taking up a much larger share of a typical consumer’s income. It jumped 8.3% in February compared with January.
* The interest rate on the most popular type of U.S. home loan surged last week by the most in two years.
In a grim sign for the housing market’s busiest season, pending home sales, which measure signed contracts on existing homes, fell 4.1% in February compared with January, according to the National Association of Realtors.
Sales were down 5.4% compared with February 2021.
Analysts were expecting a slight gain.
This is the fourth straight month of declines in pending sales, which are an indicator of future closings, one to two months out.
Since this count is based on signed contracts in February, when mortgage rates really started to take off, it is a strong indicator of how the market is reacting to the new rate environment, especially as it is entering the crucial spring season.
Rates began rising in January and continued sharply higher in February.
The average rate on the 30-year fixed mortgage is now more than a full percentage point higher than it was one year ago.
Regionally, pending sales rose 1.9% month to month in the Northeast but were down 9.2% from a year ago.
In the Midwest, sales decreased 6.0% for the month and were down 5.2% from February 2021.
In the South, sales fell 4.4% monthly and 4.3% annually, and in the West they were down 5.4% for the month and 5.3% from a year ago.
The jump in mortgage rates could not come at a worse time, as spring is historically the busiest season for the housing market.
“Most of my buyers are adjusting their target to buy the home they can afford at the higher rates,” said Paul Legere, a buyer’s agent with Joel Nelson Group in Washington, D.C.
“There has been a pronounced sense of urgency to lock in a mortgage rate and get into a property."
"In my market at least, buyers are not electing to rent as an alternative.”
Today’s potential buyers are facing an expensive market.
The median monthly payment on a new mortgage is now taking up a much larger share of a typical consumer’s income.
It jumped 8.3% in February compared with January, according to a new index from the Mortgage Bankers Association.
It is nearly 22% higher than it was in February 2021.
For borrowers on the lower end of the market, that monthly payment is up nearly 10% month to month.
“The 30-year fixed-rate mortgage spiked 73 basis points from December 2021 through February 2022."
"Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped $127 from January and $337 from one year ago,” said Edward Seiler, MBA’s associate vice president of housing economics.
Buyers continue to face a tight and pricey market.
Now they have to factor in inflation in other parts of their budgets, as well.
List prices for homes reaccelerated after a brief reprieve in the fall of last year, according to Realtor.com.
“As we move into the spring season, markets remain clearly tilted in sellers’ favor,” said George Ratiu, senior economist at Realtor.com.
“However, with mortgage rates moving toward 5%, we are seeing early signs of a shift in housing fundamentals, as many people looking for a home have hit a ceiling on their ability to afford a home.”
https://www.cnbc.com/2022/03/25/home-sa ... eason.html
Re: THE HOUSING MARKET
CNBC
"Mortgage rate soars closer to 5% in its second huge jump this week"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED FRI, MAR 25 2022
KEY POINTS
* The average rate on the 30-year fixed mortgage shot significantly higher Friday, rising 24 basis points to 4.95%, according to Mortgage News Daily.
* The quicker-than-expected rise in rates has weighed on demand for mortgages and refinancing loans.
* With both rates and prices considerably higher, the median mortgage payment is now more than 20% higher than it was a year ago.
The rate for the most common kind of mortgage just surged again.
The average rate on the 30-year fixed mortgage shot significantly higher Friday, rising 24 basis points to 4.95%, according to Mortgage News Daily.
It is now 164 basis points higher than it was one year ago.
“That’s the second time this week, and it puts this week on par with the worst week from the 2013 taper tantrum — a record we didn’t see being legitimately challenged a few days ago,” said Matthew Graham, COO of Mortgage News Daily.
On Tuesday, the rate had hit 4.72%, a 26-basis-point jump from March 18.
The quicker-than-expected rise in rates has weighed on demand for mortgages and refinancing loans.
The rate surged as the yield on the U.S. 10-year Treasury also took off.
Mortgage rates follow that yield loosely, but not entirely.
Mortgage rates are also influenced by demand for mortgage-backed bonds.
The Federal Reserve is scaling back its holdings of these assets and is also hiking interest rates.
It couldn’t come at a worse time, as the all-important spring housing market gets underway.
Potential buyers are already facing extraordinarily tight supply and sky-high prices.
With both rates and prices considerably higher, the median mortgage payment is now more than 20% higher than it was a year ago.
Buyers are also facing inflation on everything else in their budgets, which exacerbates the affordability issues.
Rents are also surging higher at a record rate, causing more potential buyers to be unable to put aside money for a down payment.
In addition, as rates rise, some buyers will no longer qualify for a mortgage.
Lenders have been much more strict about how much debt a borrower may take on in relation to income.
Economists are already beginning to revise their sales figures lower for the year.
Lawrence Yun, chief economist for the National Association of Realtors, said Tuesday that he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%.
NAR’s latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6% to 8%.
NAR has not officially updated its forecast.
https://www.cnbc.com/2022/03/25/mortgag ... -week.html
"Mortgage rate soars closer to 5% in its second huge jump this week"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED FRI, MAR 25 2022
KEY POINTS
* The average rate on the 30-year fixed mortgage shot significantly higher Friday, rising 24 basis points to 4.95%, according to Mortgage News Daily.
* The quicker-than-expected rise in rates has weighed on demand for mortgages and refinancing loans.
* With both rates and prices considerably higher, the median mortgage payment is now more than 20% higher than it was a year ago.
The rate for the most common kind of mortgage just surged again.
The average rate on the 30-year fixed mortgage shot significantly higher Friday, rising 24 basis points to 4.95%, according to Mortgage News Daily.
It is now 164 basis points higher than it was one year ago.
“That’s the second time this week, and it puts this week on par with the worst week from the 2013 taper tantrum — a record we didn’t see being legitimately challenged a few days ago,” said Matthew Graham, COO of Mortgage News Daily.
On Tuesday, the rate had hit 4.72%, a 26-basis-point jump from March 18.
The quicker-than-expected rise in rates has weighed on demand for mortgages and refinancing loans.
The rate surged as the yield on the U.S. 10-year Treasury also took off.
Mortgage rates follow that yield loosely, but not entirely.
Mortgage rates are also influenced by demand for mortgage-backed bonds.
The Federal Reserve is scaling back its holdings of these assets and is also hiking interest rates.
It couldn’t come at a worse time, as the all-important spring housing market gets underway.
Potential buyers are already facing extraordinarily tight supply and sky-high prices.
With both rates and prices considerably higher, the median mortgage payment is now more than 20% higher than it was a year ago.
Buyers are also facing inflation on everything else in their budgets, which exacerbates the affordability issues.
Rents are also surging higher at a record rate, causing more potential buyers to be unable to put aside money for a down payment.
In addition, as rates rise, some buyers will no longer qualify for a mortgage.
Lenders have been much more strict about how much debt a borrower may take on in relation to income.
Economists are already beginning to revise their sales figures lower for the year.
Lawrence Yun, chief economist for the National Association of Realtors, said Tuesday that he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%.
NAR’s latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6% to 8%.
NAR has not officially updated its forecast.
https://www.cnbc.com/2022/03/25/mortgag ... -week.html
Re: THE HOUSING MARKET
CNBC
"Home prices heated up to start the year, with huge surges in Arizona and Florida, says S&P Case-Shiller report"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, MAR 29 2022
KEY POINTS
* Home prices nationally rose 19.2% year over year in January, up from 18.9% in December, according to the S&P CoreLogic Case-Shiller Index.
* The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month.
* The 20-city composite rose 19.1%, up from 18.6% in December.
* Phoenix, Tampa, Florida, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively.
After cooling off ever so slightly toward the end of last year, home price gains reaccelerated in January.
Home prices nationally rose 19.2% year over year in January, up from 18.9% in December, according to the S&P CoreLogic Case-Shiller Index.
The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month.
The 20-city composite rose 19.1%, up from 18.6% in December.
Phoenix, Tampa, Florida, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively.
Sixteen of the 20 cities reported higher price increases in the year ended in January 2022 versus the year ended in December 2021.
Washington, D.C., Minneapolis and Chicago saw the smallest annual gains, although they were all still up double digits from a year ago.
Tight supply and strong demand appear to be outweighing rising mortgage rates, which would usually take some of the heat out of housing.
While the index is a three-month running average, mortgage rates began to climb in January.
The average rate on the 30-year fixed ended 2021 at around 3.25% and ended January at 3.68% according to Mortgage News Daily.
It is now flirting with 5%.
“The macroeconomic environment is evolving rapidly."
"Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response."
"We may soon begin to see the impact of increasing mortgage rates on home prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices.
Higher mortgage rates have already started to affect sales in the first months of the year.
Pending home sales, which measure signed contracts on existing homes, have now fallen for four straight months, according to the National Association of Realtors.
“The monthly payment for a median-priced home has jumped 30% in the past year, far outpacing even fast-rising consumer prices, up almost 8% from a year ago,” said George Ratiu, senior economist at Realtor.com, in a release.
“While the small number of homes-for-sale will keep upward pressure on prices as we move through the Spring buying season, I expect conditions to undergo noticeable adjustments in the months ahead.”
https://www.cnbc.com/2022/03/29/home-pr ... 1648558905
"Home prices heated up to start the year, with huge surges in Arizona and Florida, says S&P Case-Shiller report"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED TUE, MAR 29 2022
KEY POINTS
* Home prices nationally rose 19.2% year over year in January, up from 18.9% in December, according to the S&P CoreLogic Case-Shiller Index.
* The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month.
* The 20-city composite rose 19.1%, up from 18.6% in December.
* Phoenix, Tampa, Florida, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively.
After cooling off ever so slightly toward the end of last year, home price gains reaccelerated in January.
Home prices nationally rose 19.2% year over year in January, up from 18.9% in December, according to the S&P CoreLogic Case-Shiller Index.
The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month.
The 20-city composite rose 19.1%, up from 18.6% in December.
Phoenix, Tampa, Florida, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively.
Sixteen of the 20 cities reported higher price increases in the year ended in January 2022 versus the year ended in December 2021.
Washington, D.C., Minneapolis and Chicago saw the smallest annual gains, although they were all still up double digits from a year ago.
Tight supply and strong demand appear to be outweighing rising mortgage rates, which would usually take some of the heat out of housing.
While the index is a three-month running average, mortgage rates began to climb in January.
The average rate on the 30-year fixed ended 2021 at around 3.25% and ended January at 3.68% according to Mortgage News Daily.
It is now flirting with 5%.
“The macroeconomic environment is evolving rapidly."
"Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response."
"We may soon begin to see the impact of increasing mortgage rates on home prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices.
Higher mortgage rates have already started to affect sales in the first months of the year.
Pending home sales, which measure signed contracts on existing homes, have now fallen for four straight months, according to the National Association of Realtors.
“The monthly payment for a median-priced home has jumped 30% in the past year, far outpacing even fast-rising consumer prices, up almost 8% from a year ago,” said George Ratiu, senior economist at Realtor.com, in a release.
“While the small number of homes-for-sale will keep upward pressure on prices as we move through the Spring buying season, I expect conditions to undergo noticeable adjustments in the months ahead.”
https://www.cnbc.com/2022/03/29/home-pr ... 1648558905
Re: THE HOUSING MARKET
REUTERS
"U.S. homebuilder sentiment drops to seven-month low amid surging mortgage rates"
By Lucia Mutikani
APRIL 18, 2022
WASHINGTON (Reuters) - Confidence among U.S. single-family homebuilders fell to a seven-month low in April as surging mortgage rates and snarled supply chains boosted housing costs, shutting out some first-time buyers from the market, a survey showed on Monday.
The housing market is under the spotlight as the Federal Reserve adopts an aggressive monetary policy stance in its fight against sky-high inflation, sending the 30-year fixed mortgage rate above 5% for first time in over a decade.
But with housing inventory at record lows, the blow from surging borrowing costs could be modest.
“The extreme supply-demand imbalance in today’s housing market will likely dampen the hit to activity from higher rates,” said Ronnie Walker, an economist at Goldman Sachs.
The National Association of Home Builders/Wells Fargo Housing Market index dropped two points to 77 this month.
The fourth straight monthly decline pushed the index to its lowest level since last September.
A reading above 50 indicates that more builders view conditions as good rather than poor.
Homebuilding sentiment dropped to its lowest level in nearly two years in the Midwest.
It also fell in the West, but rose in the Northeast and edged up in the densely populated South.
Shortages as well as the high cost of building materials such as framing lumber are making it difficult for builders to ramp up production.
According to government data, the backlog of houses approved for construction but yet to be started hit an all-time high in February.
Homebuilding and housing permits likely slipped in March, a Reuters survey of economists predicted.
March’s housing starts report is scheduled to be published on Tuesday.
“Policymakers must take proactive steps to fix supply chain issues that will reduce the cost of development, stem the rise in home prices and allow builders to increase production,” said NAHB Chairman Jerry Konter in a statement.
The Fed in March raised its policy interest rate by 25 basis points, the first hike in more than three years.
Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio.
REDUCED AFFORDABILITY
The 30-year fixed-rate mortgage averaged 5.0% during the week ending April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac.
More expensive building materials and higher mortgage rates are raising the cost of buying a house, making home purchasing less affordable, especially for lower-income groups and first-time home buyers.
At the current mortgage rate, economists estimate consumers taking a $300,000 home loan would pay $263 more per month than if they had fixed the loan rate at the beginning of this year.
Annual house prices continue to post double-digit growth.
Consumers expected home prices and rents to rise sharply this year, a separate survey by the New York Fed showed on Tuesday.
Renters reported seeing just a 43.3% likelihood of ever owning a home, down from 51.6% in 2021 and the lowest reading since the survey began in 2014.
“Rising mortgage rates and the run-up in prices in recent years will worsen affordability but pent-up demand from consumers will keep house price growth strong,” said Abbey Omodunbi, a senior economist at PNC Financial in Pittsburgh, Pennsylvania.
Goldman Sachs estimates that sales of previously owned homes will drop about 6.0% to an annualized pace of 5.8 million units this year from the fourth quarter of 2021.
It also expected house price inflation to remain strong this year.
“While higher mortgage rates will help to slow home price growth by reducing the imbalance between supply and demand, our model suggests that the current level of housing market tightness and blistering pace of recent home price growth will support just over 10%, fourth quarter/fourth quarter, home price growth this year,” said Goldman Sachs’ Walker.
“We expect home price growth to slow more substantially beyond this year."
"Our model points to a pace of home price growth in the low single digits by mid-2023, a pace we previously did not expect to reach until 2024.”
The NAHB survey’s measure of current sales conditions fell to a seven-month low of 85 from 87 in March.
But its gauge of sales expectations over the next six months rose three points to 73.
The component measuring traffic of prospective buyers declined six points to an eight-month low of 60.
Reporting by Lucia Mutikani; Additional reporting by Ann Saphir in San Francisco; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL2N2WG0YZ
"U.S. homebuilder sentiment drops to seven-month low amid surging mortgage rates"
By Lucia Mutikani
APRIL 18, 2022
WASHINGTON (Reuters) - Confidence among U.S. single-family homebuilders fell to a seven-month low in April as surging mortgage rates and snarled supply chains boosted housing costs, shutting out some first-time buyers from the market, a survey showed on Monday.
The housing market is under the spotlight as the Federal Reserve adopts an aggressive monetary policy stance in its fight against sky-high inflation, sending the 30-year fixed mortgage rate above 5% for first time in over a decade.
But with housing inventory at record lows, the blow from surging borrowing costs could be modest.
“The extreme supply-demand imbalance in today’s housing market will likely dampen the hit to activity from higher rates,” said Ronnie Walker, an economist at Goldman Sachs.
The National Association of Home Builders/Wells Fargo Housing Market index dropped two points to 77 this month.
The fourth straight monthly decline pushed the index to its lowest level since last September.
A reading above 50 indicates that more builders view conditions as good rather than poor.
Homebuilding sentiment dropped to its lowest level in nearly two years in the Midwest.
It also fell in the West, but rose in the Northeast and edged up in the densely populated South.
Shortages as well as the high cost of building materials such as framing lumber are making it difficult for builders to ramp up production.
According to government data, the backlog of houses approved for construction but yet to be started hit an all-time high in February.
Homebuilding and housing permits likely slipped in March, a Reuters survey of economists predicted.
March’s housing starts report is scheduled to be published on Tuesday.
“Policymakers must take proactive steps to fix supply chain issues that will reduce the cost of development, stem the rise in home prices and allow builders to increase production,” said NAHB Chairman Jerry Konter in a statement.
The Fed in March raised its policy interest rate by 25 basis points, the first hike in more than three years.
Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio.
REDUCED AFFORDABILITY
The 30-year fixed-rate mortgage averaged 5.0% during the week ending April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac.
More expensive building materials and higher mortgage rates are raising the cost of buying a house, making home purchasing less affordable, especially for lower-income groups and first-time home buyers.
At the current mortgage rate, economists estimate consumers taking a $300,000 home loan would pay $263 more per month than if they had fixed the loan rate at the beginning of this year.
Annual house prices continue to post double-digit growth.
Consumers expected home prices and rents to rise sharply this year, a separate survey by the New York Fed showed on Tuesday.
Renters reported seeing just a 43.3% likelihood of ever owning a home, down from 51.6% in 2021 and the lowest reading since the survey began in 2014.
“Rising mortgage rates and the run-up in prices in recent years will worsen affordability but pent-up demand from consumers will keep house price growth strong,” said Abbey Omodunbi, a senior economist at PNC Financial in Pittsburgh, Pennsylvania.
Goldman Sachs estimates that sales of previously owned homes will drop about 6.0% to an annualized pace of 5.8 million units this year from the fourth quarter of 2021.
It also expected house price inflation to remain strong this year.
“While higher mortgage rates will help to slow home price growth by reducing the imbalance between supply and demand, our model suggests that the current level of housing market tightness and blistering pace of recent home price growth will support just over 10%, fourth quarter/fourth quarter, home price growth this year,” said Goldman Sachs’ Walker.
“We expect home price growth to slow more substantially beyond this year."
"Our model points to a pace of home price growth in the low single digits by mid-2023, a pace we previously did not expect to reach until 2024.”
The NAHB survey’s measure of current sales conditions fell to a seven-month low of 85 from 87 in March.
But its gauge of sales expectations over the next six months rose three points to 73.
The component measuring traffic of prospective buyers declined six points to an eight-month low of 60.
Reporting by Lucia Mutikani; Additional reporting by Ann Saphir in San Francisco; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL2N2WG0YZ
Re: THE HOUSING MARKET
CNBC
"The price of a home sold in March set a record, as inventory dwindled and sales fell"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED WED, APR 20 2022
KEY POINTS
* March sales were 4.5% lower than the same period in 2021.
* The median price of an existing home sold in March was $375,300, an increase of 15% from March 2021. That’s the highest median price ever recorded by the Realtors.
* At the end of March there were 950,000 homes for sale, a decrease of 9.5% year over year. At the current sales pace that represents a two-month supply.
Sales of existing homes dropped 2.7% in March to a seasonally adjusted, annualized rate of 5.77 million units, according to the National Association of Realtors.
February’s reading was also revised downward with a larger-than-usual dent, from 6.02 million units to 5.93 million.
March sales were 4.5% lower than the same period in 2021.
The reading is based on closings, meaning the contracts were likely signed in January and February, when mortgage rates began to rise but had not yet shot up as sharply as they did in March.
The average rate on the 30-year fixed mortgage stood at 3.29% at the beginning of January and rose to 3.9% by the end of February, according to Mortgage News Daily.
The 30-year fixed rate now stands at 5.35%.
Higher rates exacerbated an already pricey market for buyers.
The median price of an existing home sold in March was $375,300, an increase of 15% from March 2021.
That’s the highest median price ever recorded by the Realtors.
With rates rising, and prices significantly higher, the average borrower is paying about 38% more on the monthly payment now than they would have for the same home one year ago, according to Realtor.com.
Prices continue to rise because the supply of homes for sale is still incredibly low amid strong demand from millennials.
At the end of March there were 950,000 homes for sale, a decrease of 9.5% year over year.
At the current sales pace that represents a two-month supply.
The supply of homes for sale is worst at the lowest end of the market, skewing sales toward the more expensive end.
Sales of homes priced between $100,000 and $250,000 were 21% lower compared with a year ago, while sales of homes priced between $750,000 and $1 million rose 30%.
Homes priced above $1 million saw a 25% sales jump.
“We know that the builders have been underproducing since the foreclosure crisis, which is the reason we have this shortage,” said Lawrence Yun, chief economist at the National Association of Realtors.
“But when mortgage rates increase, we have seen several months of inventory rising.”
Homes that are for sale are moving quickly with average days on the market just 17 days, down from 18 days a year ago.
And cash is king.
It made up 28% of all sales in March, the highest since July 2014.
More recent weekly housing data from Realtor.com suggests that supply may be on the upswing, with increases in fresh listings.
“A bit of good news for buyers as we are in what is typically the best time of year to list a home for sale,” said Danielle Hale, chief economist at Realtor.com in a release.
“Combined with moderation in home sales, this should mean a greater number of options for remaining home searchers to choose from.”
https://www.cnbc.com/2022/04/20/the-pri ... -fell.html
"The price of a home sold in March set a record, as inventory dwindled and sales fell"
Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK
PUBLISHED WED, APR 20 2022
KEY POINTS
* March sales were 4.5% lower than the same period in 2021.
* The median price of an existing home sold in March was $375,300, an increase of 15% from March 2021. That’s the highest median price ever recorded by the Realtors.
* At the end of March there were 950,000 homes for sale, a decrease of 9.5% year over year. At the current sales pace that represents a two-month supply.
Sales of existing homes dropped 2.7% in March to a seasonally adjusted, annualized rate of 5.77 million units, according to the National Association of Realtors.
February’s reading was also revised downward with a larger-than-usual dent, from 6.02 million units to 5.93 million.
March sales were 4.5% lower than the same period in 2021.
The reading is based on closings, meaning the contracts were likely signed in January and February, when mortgage rates began to rise but had not yet shot up as sharply as they did in March.
The average rate on the 30-year fixed mortgage stood at 3.29% at the beginning of January and rose to 3.9% by the end of February, according to Mortgage News Daily.
The 30-year fixed rate now stands at 5.35%.
Higher rates exacerbated an already pricey market for buyers.
The median price of an existing home sold in March was $375,300, an increase of 15% from March 2021.
That’s the highest median price ever recorded by the Realtors.
With rates rising, and prices significantly higher, the average borrower is paying about 38% more on the monthly payment now than they would have for the same home one year ago, according to Realtor.com.
Prices continue to rise because the supply of homes for sale is still incredibly low amid strong demand from millennials.
At the end of March there were 950,000 homes for sale, a decrease of 9.5% year over year.
At the current sales pace that represents a two-month supply.
The supply of homes for sale is worst at the lowest end of the market, skewing sales toward the more expensive end.
Sales of homes priced between $100,000 and $250,000 were 21% lower compared with a year ago, while sales of homes priced between $750,000 and $1 million rose 30%.
Homes priced above $1 million saw a 25% sales jump.
“We know that the builders have been underproducing since the foreclosure crisis, which is the reason we have this shortage,” said Lawrence Yun, chief economist at the National Association of Realtors.
“But when mortgage rates increase, we have seen several months of inventory rising.”
Homes that are for sale are moving quickly with average days on the market just 17 days, down from 18 days a year ago.
And cash is king.
It made up 28% of all sales in March, the highest since July 2014.
More recent weekly housing data from Realtor.com suggests that supply may be on the upswing, with increases in fresh listings.
“A bit of good news for buyers as we are in what is typically the best time of year to list a home for sale,” said Danielle Hale, chief economist at Realtor.com in a release.
“Combined with moderation in home sales, this should mean a greater number of options for remaining home searchers to choose from.”
https://www.cnbc.com/2022/04/20/the-pri ... -fell.html
Re: THE HOUSING MARKET
REUTERS
"U.S. mortgage interest rates reach a 12 year high, demand falters"
By Reuters Staff
APRIL 20, 2022
(Reuters) - The average interest rate on the most popular U.S. home loan climbed to a 12 year high last week and fewer homebuyers sought properties in a sign that the Federal Reserve’s aim of cooling the housing market may be beginning to have an impact, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage increased to 5.20% in the week ended April 15 from 5.13% a week earlier, the MBA survey showed.
It has risen 2 percentage points from one year ago.
The bulk of the run up, however, has occurred since the start of the year, causing the fastest climb in home-financing costs in decades as the Fed abandoned a cautious approach to raising its benchmark overnight lending rate in favor of swifter and more decisive action to bring down persistently high inflation.
The central bank is also set to decide at its next meeting on May 3-4 to begin reducing its portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities, a stash of assets that had helped keep consumer borrowing costs - for mortgages in particular - low throughout the COVID-19 pandemic.
Those expectations for Fed tightening actions have led to a surge in Treasury yields as financial markets reacted.
The yield on the 10-year note, which acts as a benchmark for mortgage rates, is at its highest level since 2018.
The latest increase in home-financing costs also led to fewer mortgage applications last week following a small bump in demand the prior week as buyers rushed to lock in rates before they moved higher.
The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, fell 3.0% on a seasonally adjusted basis to 254.0, while the refinance index fell 8%.
Reporting by Lindsay Dunsmuir; Editing by Mark Potter
https://www.reuters.com/article/us-usa- ... SKCN2MC0VD
"U.S. mortgage interest rates reach a 12 year high, demand falters"
By Reuters Staff
APRIL 20, 2022
(Reuters) - The average interest rate on the most popular U.S. home loan climbed to a 12 year high last week and fewer homebuyers sought properties in a sign that the Federal Reserve’s aim of cooling the housing market may be beginning to have an impact, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage increased to 5.20% in the week ended April 15 from 5.13% a week earlier, the MBA survey showed.
It has risen 2 percentage points from one year ago.
The bulk of the run up, however, has occurred since the start of the year, causing the fastest climb in home-financing costs in decades as the Fed abandoned a cautious approach to raising its benchmark overnight lending rate in favor of swifter and more decisive action to bring down persistently high inflation.
The central bank is also set to decide at its next meeting on May 3-4 to begin reducing its portfolio of $8.5 trillion of U.S. Treasuries and mortgage-backed securities, a stash of assets that had helped keep consumer borrowing costs - for mortgages in particular - low throughout the COVID-19 pandemic.
Those expectations for Fed tightening actions have led to a surge in Treasury yields as financial markets reacted.
The yield on the 10-year note, which acts as a benchmark for mortgage rates, is at its highest level since 2018.
The latest increase in home-financing costs also led to fewer mortgage applications last week following a small bump in demand the prior week as buyers rushed to lock in rates before they moved higher.
The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, fell 3.0% on a seasonally adjusted basis to 254.0, while the refinance index fell 8%.
Reporting by Lindsay Dunsmuir; Editing by Mark Potter
https://www.reuters.com/article/us-usa- ... SKCN2MC0VD