THE HOUSING MARKET

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Re: THE HOUSING MARKET

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REUTERS

"U.S. housing market cooling as building permits tumble, starts fall"


By Lucia Mutikani

May 18, 2022

Summary

* Building permits decline 3.2% in April

* Single-family permits drop 4.6%; multi-family fall 1.0%

* Housing starts slip 0.2%; single-family dives 7.3%


WASHINGTON, May 18 (Reuters) - Permits for future U.S. homebuilding tumbled to a five-month low in April, suggesting the housing market was slowing as rising mortgage rates contribute to reduced affordability for entry-level and first-time buyers.

But the report from the Commerce Department on Wednesday also showed a record backlog of houses still to be constructed, indicating the moderation in homebuilding would be marginal.

Homebuilding was already being constrained by soaring prices as well as shortages of materials.

The housing market is the sector of the economy most sensitive to interest rates, with building permits a leading indicator for the sector.

"Housing construction appears to be undergoing a transition, with the sector caught between sharply rising mortgage rates and declining affordability on the one hand and supply-chain constraints on the other that continue to result in rising backlogs of projects," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

Building permits dropped 3.2% to a seasonally adjusted annual rate of 1.819 million units in April, the lowest level since last November.

They rose 3.1% on a year-on-year basis.

Economists polled by Reuters had forecast building permits would decrease to a rate of 1.812 million units.

The decline was concentrated in the single-family housing segment, where permits plunged 4.6% to a rate of 1.110 million units, the lowest level since last October.

Permits for buildings with five units or more fell only 0.6% to a rate of 656,000 units.

A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market Index dropped to the lowest level in nearly two years in May.

Builders blamed the fifth straight monthly decline in sentiment on soaring prices for building materials as well as rapidly rising mortgage rates.

The 30-year fixed-rate mortgage averaged 5.30% during the week ended May 12, the highest since July 2009, according to data from mortgage finance agency Freddie Mac.

It has increased by more than 100 basis points since mid-March when the Federal Reserve started raising interest rates to cool domestic demand and bring down high inflation.

The U.S. central bank has hiked its policy interest rate by 75 basis points since March.

The Fed is expected to increase that rate by half a percentage point at each of its next policy meetings in June and July.

"Higher mortgage rates would at a minimum create uncertainty over the path of housing demand and discourage builders from taking out speculative housing permits," said Isfar Munir, an economist at Citigroup in New York.

RECORD CONSTRUCTION BACKLOG

Cooling housing demand was reinforced by a separate report from the Mortgage Bankers Association on Wednesday showing applications for loans to buy a home dropped 12% last week from the prior week.

They were down 15% on a year-on-year basis.

Stocks on Wall Street were trading lower.

The dollar rose against a basket of currencies.

U.S. Treasury yields fell.

Housing starts slipped 0.2% to a rate of 1.724 million units last month.

Single-family housing starts, which account for the biggest share of homebuilding, plunged 7.3% to a rate of 1.100 million units, also the lowest level since last October.

Single-family homebuilding dropped in the Northeast, Midwest and the densely populated South, but rose in the West.

Starts for housing projects with five units or more surged 16.8% to a rate 612,000 units, the highest since April 1986.

There is a huge demand for rental apartments.

Though the rental vacancy rate rose in the first quarter, it remains close to the low levels seen in the mid-1980s.

There is room for further gains in multi-family housing construction, with permits running ahead of starts.

Despite the second straight monthly decline in overall starts, homebuilding remains underpinned by record low housing supply.

The number of houses approved for construction that are yet to be started rose 0.7% to an all-time high of 288,000 units in April.

The single-family housing backlog was the largest since June 2006.

Housing completions dropped 5.1% to a rate of 1.295 million units, with single-family housing units tumbling 4.9%.

Multi-family home completions declined 6.6%.

The inventory of single-family housing under construction rose 1.0% to a rate of 815,000 units last month, the highest since November 2006.

Multi-family homes under construction increased 2.3% to a rate of 811,000 units, the highest since February 1974.

"The housing market remains undersupplied, there is a significant housing supply shortfall which will not be restored in the near term," said Abbey Omodunbi, senior economist at PNC Financial in Pittsburgh, Pennsylvania.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao

https://www.reuters.com/business/us-bui ... 022-05-18/
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Re: THE HOUSING MARKET

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CNBC

"Mortgage demand slides further, even as interest rates pull back slightly"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED WED, MAY 25 20227:00 AM EDT

KEY POINTS

* Mortgage rates turned lower for the second straight week, but it wasn’t enough to boost demand for purchase loans or refinances.

* Applications to refinance a home loan dropped 2% for the week and were 75% lower than the same week one year ago.

* Applications for a mortgage to purchase a home were flat week to week and down 16% from a year ago.


Mortgage rates turned lower for the second straight week, but it wasn’t enough to boost demand for either new purchase loans or refinances, according to a weekly report from the Mortgage Bankers Association.

Rates are still much higher than they were for the past two years.

Last week the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.46% from 5.49%, with points dropping to 0.60 from 0.74 (including the origination fee) for loans with a 20% down payment.

Applications to refinance a home loan dropped 2% for the week and were 75% lower than the same week one year ago.

“Most refinance borrowers continue to remain on the sidelines as a result, and refinance applications have fallen in nine of the past 10 weeks."

"Compared to January 2022, refinance activity is down 66%,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Homebuyers are also pulling back.

Applications for a mortgage to purchase a home were flat week to week and down 16% from a year ago.


More supply is coming on the market, but homes are suddenly sitting longer for sale.

Mortgage demand from homebuyers is now close to the lows last seen in spring 2020, at the start of the Covid pandemic.

Homebuying quickly picked up after that, and frenzied demand pushed prices higher at an astounding rate over the past two years.

Now those high prices are sidelining potential buyers, especially people seeking to purchase their first home.

https://www.cnbc.com/2022/05/25/mortgag ... ghtly.html
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Re: THE HOUSING MARKET

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REUTERS

"Rising cost of living hurts U.S. consumer confidence; house prices soar"


By Lucia Mutikani

May 31, 2022

Summary

* Consumer confidence index falls to 106.4 in May

* Labor market gauge softens; more say jobs hard to find

* Buying intentions for cars, homes, major appliances ease

* House prices accelerate year-on-year in March


WASHINGTON, May 31 (Reuters) - U.S. consumer confidence eased modestly in May as persistently high inflation and rising interest rates force Americans to become more cautious about buying big ticket items, including motor vehicles and houses, which could curtail economic growth.

The survey from the Conference Board on Tuesday also showed consumers' perceptions of the labor market softening a bit this month.

Though the drop in confidence was small, it suggested that the Federal Reserve's aggressive monetary policy actions to slow demand were starting to have an impact.

"We can never underestimate the U.S. consumer," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

"But plans to pull back on purchases, and become a little more cautious, is something that the Federal Reserve would welcome as it aims to cool demand."

The Conference Board's consumer confidence index slipped to a reading of 106.4 this month.

Data for April was revised higher to show the index at 108.6 instead of the previously reported reading of 107.3.

The index remains above its pandemic lows.

It has fared much better than the University of Michigan's survey, where the consumer sentiment index is at an 11-year low.

The Conference Board survey puts more emphasis on the labor market.

The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, fell to 39.3 this month from a reading of 44.7 in April.

That was the first time in a year that this measure, which correlates to the unemployment rate from the Labor Department, was below 40.


About 12.5% of consumers viewed jobs as "hard to get," up from 10.1% in April.

On face value it suggests that the jobless probably ticked up from a two-year low of 3.6% in April.

Despite consumers' somewhat unfavorable perceptions, the labor market is tightening, with the Conference Board noting that "they do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run."

There were a record 11.5 million job openings on the last day of March and an all-time high 4.5 million workers resigned.

Stocks on Wall Street were lower.

The dollar was steady against a basket of currencies.

U.S. Treasury prices fell.

INFLATION PEAKED

Consumers' inflation expectations over the next 12 months dipped to 7.4% from 7.5% in April.

That fits in with economists' views that inflation has likely peaked.

The Fed has increased its policy interest rate by 75 basis points since March.

The U.S. central bank is expected to hike the overnight rate by half a percentage point at each of its next meetings in June and in July.

With prices still high and borrowing costs rising, consumers are reassessing their spending plans.

The share of consumers planning to buy a motor vehicle over the next six months dipped.

Fewer consumers intended to buy major household appliances like refrigerators, washing machines, dryers and television sets.

But the buying plans remained at levels sufficient to keep consumer spending growing and the overall economy expanding.

Rising interest rates and the accompanying tightening in financial conditions have left Americans worried about an imminent recession.

Economists say the hand-wringing about an economic downturn was exaggerated, noting the record high job openings and resignations.

"Recessions are ultimately a loss of faith," said Bernard Yaros, an economist at Moody's Analytics in West Chester, Pennsylvania.

"Yet consumers have no fear when it comes to job security."

"People are quitting their jobs at a prodigious rate, knowing they will easily find another job given the record number of open job positions."

Consumers this month also showed less inclination to buy a house as rising mortgage rates and record house prices eroded affordability.

A separate report on Tuesday showed the S&P CoreLogic Case-Shiller 20 metropolitan area home price index surged a record 21.2% on a year-on-year basis in March after increasing 20.3% in February.

Tight inventory, especially of previously owned houses, is driving house prices.

Big price gains were recorded in a number of cities including Tampa, Phoenix and Miami.

Strong house price inflation was reinforced by another report from the Federal Housing Finance Agency showing home prices increased 19% in the 12 months through March after rising 19.3% in February.

Price gains were across the board, with notable increases in the South Atlantic, East South Central, West South Central, Mountain and Pacific regions.

With demand slowing, house price inflation will cool down.

Reports this month showed continued declines in sales of new and previously owned home in April.

Applications for loans to purchase a home have also been dropping.

"House price gains will be far more modest from here," said Matthew Pointon, senior property economist at Capital Economics in New York.

"We expect annual growth to slow to zero by mid-2023."

Reporting by Lucia Mutikani; Editing by Andrea Ricci

https://www.reuters.com/markets/us/us-c ... 022-05-31/
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Re: THE HOUSING MARKET

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REUTERS

"Mortgage rates rise sharply after three weeks of easing"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED WED, JUN 1 2022

KEY POINTS

* Mortgage rates rose sharply this week, after pulling back over the last three weeks.

* The 30-year fixed hit 5.36% Monday and then moved higher again Tuesday to 5.47%, according to Mortgage News Daily.

*Volatility in global markets Monday sent bond yields higher. Mortgage rates follow loosely the yield on the 10-year U.S. Treasury.


Mortgage rates rose sharply this week, after pulling back over the last three weeks.

The 30-year fixed hit 5.36% Monday and then moved higher again Tuesday to 5.47%, according to Mortgage News Daily.


Volatility in global markets Monday sent bond yields higher.

Mortgage rates follow loosely the yield on the 10-year U.S. Treasury.

The average rate on the popular 30-year fixed loan ended last week at 5.25%.

The average rate on the popular 30-year fixed loan ended last week at 5.25%.

The last high, three weeks ago, was 5.67%, but the rate dropped as the stock market sold off and bond yields fell.

The jump Tuesday was likely due to data released from the U.S. Manufacturing Index.

“The uptick in the manufacturing index suggests the economy isn’t slamming on the brakes very quickly,” wrote Matthew Graham, COO of Mortgage News Daily on the site.

Mortgage rates, which are much higher than they were at the beginning of the year, have slammed the brakes on the red-hot housing market over the past few weeks.

Realtors are reporting lower sales, and mortgage demand to purchase a home is also dropping.

While both home sales and mortgage demand are falling, home prices are still rising fast.

Prices usually lag sales by about six months, but the rare dynamics in the market today – strong demand and very low supply – are still keeping prices high.

The National Association of Realtors’ chief economist, Lawrence Yun, did say on CNBC’s Power Lunch Monday, “It’s just inevitable that home price appreciation will slow down in the upcoming months.”

https://www.cnbc.com/2022/06/01/mortgag ... asing.html
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Re: THE HOUSING MARKET

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CNBC

"Mortgage demand falls to the lowest level in 22 years amid rising rates and slowing home sales"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED WED, JUN 8 2022

KEY POINTS

* The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%.

* Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.

* Refinance demand dropped 6% for the week and was down 75% year over year.


Mortgage rates are back on the upswing, after a brief decline in May, and the housing market is still suffering from a lack of listings.

As a result, mortgage demand continues to drop.


Total mortgage application volume fell 6.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

Demand hit the lowest level in 22 years.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40% from 5.33%, with points rising to 0.60 from 0.51 (including the origination fee) for loans with a 20% down payment.

Refinance demand, which is most sensitive to weekly rate moves, fell another 6% for the week and was 75% lower than the same week one year ago.

The vast majority of mortgage holders now have rates considerably lower than the current one, and even those who would like to pull cash out of their homes are choosing second mortgages, rather than refinancing their first liens.

“While rates were still lower than they were four weeks ago, they remained high enough to still suppress refinance activity."

"Only government refinances saw a slight increase last week,” said Joel Kan, an MBA economist.

Applications for a mortgage to purchase a home fell 7% for the week and were 21% lower than the same week one year ago.

“The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months."

"These worsening affordability challenges have been particularly hard on prospective first-time buyers,” Kan said.

Mortgage rates moved even higher to start this week, according to a separate survey by Mortgage News Daily.

Rates have been in a narrow range for several weeks after moving decidedly higher in the previous months.

“There’s some chance that the upper boundaries of that range end up being a ceiling for rates, but that will depend on inflation and other incoming economic data,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.

“With a key inflation report set to release on Friday morning, the potential for volatility remains high.”

https://www.cnbc.com/2022/06/08/mortgag ... years.html
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Re: THE HOUSING MARKET

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REUTERS

"U.S. mortgage interest rates jump to highest level since 2008"


Reuters

June 15, 2022

June 15 (Reuters) - The average interest rate on the most popular U.S. home loan climbed to its highest level since the 2008 financial crisis and purchase applications were down more than 15% from last year, Mortgage Bankers Association (MBA) data showed on Wednesday.

Still, more homebuyers sought properties compared to a week earlier, perhaps signalling a flurry of activity before aggressive tightening by the Federal Reserve further impacts the sector.

Fed policymakers later on Wednesday are expected to raise interest rates by 75 basis points in order to quell inflation running at a more than 40-year high.

The abrupt move, following a worse-than-expected key inflation reading last Friday, would be the biggest U.S. interest-rate hike in decades.

Expectations for Fed tightening have led to a surge in Treasury yields.

The yield on the 10-year note acts as a benchmark for mortgage rates.

The average contract rate on a 30-year fixed-rate mortgage rose by 25 basis points to 5.65% for the week ended June 10, the highest level since late 2008, towards the end of the financial crisis and Great Recession.

The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for purchase of a single family home, increased 8.1% from a week earlier and its Refinance Index rose 3.7%.

But purchase applications were down more then 15% compared to last year as ongoing record-low housing stock and a lack of affordability alongside the run up in interest rates have impacted demand.

Reporting by Lindsay Dunsmuir; Editing by Simon Cameron-Moore

https://www.reuters.com/markets/europe/ ... 022-06-15/
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Re: THE HOUSING MARKET

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REUTERS

"U.S. home sales slide as prices break above $400,000 for first time"


By Lucia Mutikani

June 21, 2022

Summary

* Existing home sales fall 3.4% in May

* Median house price surges 14.8% to $407,600 from year ago

* Housing inventory falls 4.1% from year ago

* Chicago Fed National Activity Index falls to 0.01 in May


WASHINGTON, June 21 (Reuters) - U.S. existing home sales tumbled to a two-year low in May as prices jumped to a record high - topping the $400,000 mark for the first time - and mortgage rates increased further, pushing out entry-level buyers from the market.

Despite the fourth straight monthly drop in sales and declining affordability, reported by the National Association of Realtors on Tuesday, the housing market remains fairly hot, with properties typically staying on the market for a record low 16 days.

With supply still undesirably low, prices could remain elevated, though sellers are reducing the list price in some areas where bidding wars were prevalent.

"Existing home sales should continue to slow over the course of the year as mortgage rates move higher," said David Berson, chief economist at Nationwide in Columbus, Ohio.

"But in the absence of a deep and sustained economic downturn, home sales should not drop as they did in the housing bust - allowing prices to continue to move higher on average."

Existing home sales fell 3.4% to a seasonally adjusted annual rate of 5.41 million units last month, the lowest level since June 2020 when sales were rebounding from the COVID-19 lockdown slump.

Sales rose in the Northeast, but declined in the Midwest, the West and densely populated South.

Economists polled by Reuters had forecast sales would decrease to a rate of 5.40 million units.

They estimate that a housing market downturn would need sales to drop to between a rate of 4.0 million to 4.5 million.

Home resales, which account for the bulk of U.S. home sales, tumbled 8.6% on a year-on-year basis last month.

Sales in May were mostly closings on contracts signed one to two months ago, before mortgage rates started accelerating amid a surge in inflation expectations and the Federal Reserve's aggressive interest rate hikes.

The average contract rate on a 30-year fixed-rate mortgage jumped 55 basis points last week to a 13-1/2-year high of 5.78%, according to data from mortgage finance agency Freddie Mac.

That was the largest one-week increase since 1987.

The rate has surged more than 250 basis points since January.

The report joined housing starts, building permits and homebuilder sentiment in suggesting that the housing market was losing speed under the weight of higher borrowing costs.

It was also the latest indication that the U.S. central bank's rapid monetary policy tightening was slowing the overall economy.

That was underscored by a separate report from the Chicago Fed on Tuesday showing its National Activity Index fell to a reading of 0.01 in May from 0.40 in April, which it said "suggests economic growth declined in May."

A zero value for the monthly index has been associated with the economy expanding at trend growth.

Fears of a recession have been mounting in the wake of the Fed's decision last week to raise its policy rate by three-quarters of a percentage point, its biggest hike since 1994.

The Fed has increased its benchmark overnight interest rate by 150 basis points since March.

U.S. stocks on Wall Street rebounded on Tuesday from recent sharp losses.

The dollar fell against a basket of currencies.

U.S. Treasury yields rose.

SLOWING MIGRATION

The housing market is the sector most sensitive to interest rates.

Its slowdown could help to bring housing supply and demand back into alignment and slow price growth.

The median existing house price raced 14.8% from a year earlier to an all-time high of $407,600 in May, crossing the $400,000 level for the first time.

The $250,000-$500,000 price bracket accounted for 42.0% of the houses sold last month, with the $500,000-$750,000 segment making up 19.3%.

Only 19.5% of the homes sold were in the sought-after $100,000-$250,000 price range.

Double-digit price growth was registered in the South and West.

But the pandemic-driven migration to some areas in the South is slowing, which could help tame the price appreciation.

"The affordability migration will lose some steam now that interest rates have risen, which will make it a bit tougher to sell homes in those higher-price markets," said Mark Vitner, a senior economist at Wells Fargo in Charlotte, North Carolina.

There were 1.16 million previously owned homes on the market, following a seasonal monthly bump of 12.6%.

Supply remained 4.1% down year-on-year.

The steady monthly improvement could continue, with government data last week showing housing completions in May increased to the highest level since 2007.

At May's sales pace, it would take 2.6 months to exhaust the current inventory of existing homes, up from 2.5 months a year ago.

A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

Eighty-eight percent of homes sold in May were on the market for less than a month.

First-time buyers accounted for just 27% of sales, which economists said also explained why double-digit home price growth persists even as discounts become more common.

All-cash sales made up 25% of transactions - those are mostly Wall Street institutions taking advantage of the rising demand for renting.

Reporting by Lucia Mutikani; Editing by Dan Burns and Paul Simao

https://www.reuters.com/markets/us/us-e ... 022-06-21/
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Re: THE HOUSING MARKET

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REUTERS

"U.S. new home sales rebound in May; consumer sentiment at record low"


By Lucia Mutikani

June 24, 2022

Summary

* New home sales rebound 10.7% in May; April data revised up

* Median house price jumps 15.0% to $449,000 from year ago

* Consumer sentiment tumbles to record low in June


WASHINGTON, June 24 (Reuters) - Sales of new U.S. single-family homes unexpectedly rose in May, but the rebound is likely to be temporary as home prices continue to increase and the average contract rate on a 30-year fixed-rate mortgage approaches 6%, reducing affordability.

While the report from the Commerce Department on Friday also showed new home supply hitting a 14-year high last month, overall housing inventory remains significantly low.

The rise in sales after four straight monthly declines, likely reflected buyers rushing to lock in mortgage rates in anticipation of further increases.

A survey this month suggested homebuilders expected weaker sales in June.

"We suspect May's surprisingly strong new home sales will prove to be the last hurrah for new home sales this year," said Mark Vitner, senior economist at Wells Fargo in Charlotte, North Carolina.

New home sales jumped 10.7% to a seasonally adjusted annual rate of 696,000 units last month.

April's sales pace was revised higher to 629,000 units from the previously reported 591,000 units.

Sales surged in the West and the densely populated South, but declined in the Midwest and Northeast.

Economists polled by Reuters had forecast that new home sales, which account for 11.4% of U.S. home sales, would fall to a rate of 588,000 units.

Sales dropped 5.9% on a year-on-year basis in May.

They peaked at a rate of 993,000 units in January 2021, which was the highest level since the end of 2006.

The average contract rate on a 30-year fixed-rate mortgage increased this week to more than a 13-1/2-year high of 5.81%, from 5.78% last week, according to data from mortgage finance agency Freddie Mac.

The rate has risen more than 250 basis points since January, amid a surge in inflation expectations and the Federal Reserve's aggressive interest rate hikes.

There was, however, some encouraging news on the inflation front.

While a survey from the University of Michigan on Friday confirmed consumer confidence plunged to a record low in June, consumers' inflation expectations moderated a bit.

The University of Michigan said its final consumer sentiment index fell to 50.0 from a preliminary reading of 50.2 earlier this month.

It was down from 55.2 in May.

The survey's one-year inflation expectation was unchanged from May at 5.3%, but ticked down from a preliminary June reading of 5.4%.

The five-year inflation outlook edged up to 3.1% from 3.0% in May, but was down from 3.3% earlier in June.

The increase in the preliminary inflation expectations and jump in annual consumer prices were behind the Fed's decision last week to raise its policy rate by three-quarters of a percentage point, its biggest hike since 1994.

"Fed officials will breathe a sigh of relief," said Christopher Rupkey, chief economist at FWDBONDS in New York.

"There is nothing in today's data to change market expectations for another 75-basis-points rate hike in July."

Stocks on Wall Street were trading higher.

The dollar fell against a basket of currencies.

U.S. Treasury yields rose.

HOUSING COOLING

Data this week showed sales of previously owned homes fell to a two-year low in May.

Housing starts and building permits also declined last month, though they remained at high levels.

But cooling demand could help to bring housing supply and demand back into alignment and slow price growth.

The median new house price in May accelerated 15.0% from a year ago to $449,000.

There were 444,000 new homes on the market at the end of last month, the highest number since May 2008 and up from 437,000 units in April.

Houses under construction made up roughly 65.8% of the inventory, with homes yet to be built accounting for about 25.9%.

At May's sales pace it would take 7.7 months to clear the supply of houses on the market, down from 8.3 months in April.

"Going forward, we expect homebuilders to be willing to offer more incentives and discounts to support sales in a rising mortgage rate environment," said Doug Duncan, chief economist at mortgage finance agency Fannie Mae.

Reporting by Lucia Mutikani, additional reporting by Lindsay Dunsmuir; Editing by Mark Porter and Paul Simao

https://www.reuters.com/business/us-new ... 022-06-24/
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Re: THE HOUSING MARKET

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CNBC

"Pending home sales post surprise increase in May, likely due to brief pullback in mortgage rates"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED MON, JUN 27 2022

KEY POINTS

* Pending home sales, a measure of signed contracts on existing homes, rose slightly in May, up 0.7% compared with April, according to the National Association of Realtors.

* Buyers have been contending with rising mortgage rates since the start of this year, but rates actually pulled back slightly in May, and that may account for the sales gain.

* Still, pending sales were over 13% lower than they were in May 2021.


Pending home sales, a measure of signed contracts on existing homes, rose slightly in May, up 0.7% compared with April, according to the National Association of Realtors.

That broke a six-month streak of declining demand.

Sales were still 13.6% lower than in May 2021.


Buyers have been contending with rising mortgage rates since the start of this year, but rates actually pulled back slightly in May, and that may account for the sales gain.

More supply also came on the market, and total active inventory increased as well, as some homes sat on the market longer.

The average on the 30-year fixed mortgage hit a high of 5.64% in the first week of the month, but then fell to 5.25% by the end of the month, according to Mortgage News Daily.

By mid-June it surged again to just over 6%.

“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” said Lawrence Yun, chief economist for the Realtors.

“Contract signings are down sizably from a year ago because of much higher mortgage rates.”


The supply of homes for sale has finally begun to rise, up 21% now from a year ago, according to Realtor.com.

It is still, however, about half of pre-Covid levels.

The median listing price last week was also up about 17% year over year, holding steady for the third straight week.

Regionally, pending home sales rose 15.4% in the Northeast compared with last month and were down 11.9% from May 2021.

In the Midwest sales fell 1.7% for the month and were down 8.8% from a year ago.

In the South, sales increased 0.2% month to month and were down 13.8% year over year.

Sales fell hardest in the West, where homes are priciest, down 5.0% for the month and down 19.8% from the year before.

“While interest rates slid during the month, the costs of financing a home purchase remained elevated,” said George Ratiu, manager of economic research at Realtor.com.

“At the midpoint of 2022, real estate markets are mirroring an economy reaching for its post-pandemic reality.”

https://www.cnbc.com/2022/06/27/pending ... n-may.html
thelivyjr
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Re: THE HOUSING MARKET

Post by thelivyjr »

RIGZONE

"Homebuyers are canceling deals at the highest rate since the start of the pandemic"


Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK

PUBLISHED MON, JUL 11 2022

KEY POINTS

* Americans are canceling deals to buy homes at the highest rate since the start of the Covid pandemic.

* The share of sale agreements on existing homes canceled in June was just under 15% of all homes that went under contract, according to a new report from Redfin.

* Homebuilders are also seeing higher cancelation rates.


Americans are canceling deals to buy homes at the highest rate since the start of the Covid pandemic.

The share of sale agreements on existing homes canceled in June was just under 15% of all homes that went under contract, according to a new report from Redfin.

That is the highest share since early 2020, when homebuying paused immediately, albeit briefly.


Cancelations were at about 11% one year ago.

Higher mortgage rates and surging inflation are causing many potential homebuyers to reconsider their purchases.

The average rate on the 30-year fixed mortgage started this year around 3% and then began rising steadily.

It briefly shot above 6% in mid-June before settling in a narrow range around 5.75% now, according to Mortgage News Daily.

Higher mortgage rates have also caused some borrowers to no longer qualify for the loans they want.

Lenders generally use a front-end debt-to-income ratio of about 28% as the ceiling for home loans.

The costs of owning a median-priced home in the second quarter required 31.5% of the average U.S. wage, according to a report by Attom, a property data provider.

That’s the highest percentage since 2007 and up from 24% the year before, marking the biggest jump in more than two decades.

Buyers are also seeing the once red-hot market turn around quickly and dramatically.

They may no longer see the urgency in bidding for a home that they feel might depreciate in the coming year.


“The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” said Taylor Marr, Redfin’s deputy chief economist.

“Buyers are increasingly keeping rather than waiving inspection and appraisal contingencies."

"That gives them the flexibility to call the deal off if issues arise during the homebuying process.”

Homebuilders are also seeing higher cancelation rates.

Even before the sharpest increase in rates in June, cancelations in May jumped to 9.3% in a survey of builders by John Burns Real Estate Consulting.

That compares with 6.6% in May 2021.

“Buyer’s remorse and cancelations shortly after contract are increasing."

"Builders state buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline,” said Jody Kahn, senior vice president at JBREC.

Kahn also noted that in her mid-June survey she continued to see cancelations on the rise.

Lennar, one of the nation’s largest homebuilders, said in its most recent quarterly earnings report that its cancelation rate did increase sequentially to 11.8% but was below its long-term historical average.

It also reported increasing its incentives to make up for falling demand, due to rising interest rates.

“It seems that these trends will harden as the Fed continues to tighten until inflation subsides."

"While we can choose to fight against the trend, the reality is that the market has been changing and we are getting ahead of it by making all necessary adjustments,” said Lennar Chairman Stuart Miller in the release.

Data also provided by Reuters

https://www.cnbc.com/2022/07/11/homebuy ... covid.html
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