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Nearly 90% Of Markets Improved In Last Year

The National Association of Home Builders’ Leading Markets Index scores individual housing markets based on their average permit, price, and employment levels for the past 12 months compared to their last period of normal growth. According to the most recent release, 86 percent of markets across the country have shown an improvement year-over-year. Robert Dietz, NAHB’s chief economist, says home prices are the strongest of the index’s components. “Among the LMI components, house prices continue to make the most widespread gains, with 324 markets having returned to or exceeded their last normal levels,” Dietz said. “Meanwhile, 66 metros have reached or exceeded normal employment activity. Single-family permits have inched up to 49 percent of normal activity, but remain the lagging part of the index.” Overall 119 of the approximately 340 metropolitan areas covered by the index have returned to or exceeded their last normal levels of economic and housing activity as of the first quarter of this year. That’s a year-over-year gain of 45 markets. And – though the housing market’s recovery has been slow and gradual – according to the NAHB, it’s headed in the right direction and should continue at a steady pace throughout the remainder of this year. More here.

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Purchase Activity Flat As Rates Rise

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up slightly last week from the week before. In fact, rates rose across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Though the increases were minor, it was enough to cause a 6 percent drop in refinance activity. Michael Fratantoni, MBA’s chief economist, told CNBC there are fewer borrowers looking to refinance with rates at their current level. “Refinance activity decreased for the second-straight week because fewer borrowers have an incentive to refi at the current level of rates, but there are still some who respond to the small changes we have seen in recent weeks,” Fratantoni said. Since demand for loans to buy homes is less affected by weekly rate fluctuations, the Purchase Index was unchanged from the week before and remains 13 percent higher than the same week one year ago. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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Home Sellers See Biggest Gains Since 2007

A new analysis of 125 metropolitan areas found that Americans who sold their homes in March sold them for an average of $30,500 more than they originally paid for them. That’s the highest average price gain of any month since December 2007, according to the report from RealtyTrac. Daren Blomquist, RealtyTrac’s senior vice president, says the numbers should be encouraging to current homeowners. “Home sellers in many markets are now seeing average price gains close to or above what home sellers experienced during the last housing boom,” Blomquist said. “That should encourage more homeowners to take advantage of the prime seller’s market and list their homes for sale this year. Banks are already taking advantage of that market as evidenced by the uptick in the distressed sales share over the last two quarters.” Though home price gains may seem like bad news for prospective buyers, the more homeowners who put their homes up for sale this year, the better the market will be for buyers. That’s because, home prices are largely driven by a lack of available homes for sale. As more homes become available, buyers will have more choices and more negotiating power – which will help moderate future price gains and balance the market. More here.

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Are Low Rates Offsetting Higher Home Prices?

With home prices largely recovered from the crash, affordability is once again a concern for the average American home buyer. In fact, there has been a lot of discussion recently about whether higher prices will lead to a drop in buyer demand or if still low mortgage rates and a better job market will help keep demand high and affordability conditions favorable. According to Black Knight Financial’s latest Mortgage Monitor, demand is still healthy but home price increases have begun to cut into the amount of savings buyers can expect from historically low rates. For example, without factoring in home price movement, recent mortgage rate declines would be saving buyers approximately $44 a month on their monthly payment. However, when including the rate of price gains, that savings falls to $18. Ben Graboske, Black Knight’s data and analytics SVP, says home prices are muting the effect low mortgage rates are having on housing affordability. “By and large, borrowers are still seeing net reductions in monthly payments across the country heading into the early home buying season,” Graboske said. “In some areas though, prices are appreciating so quickly that they may have fully offset any savings from rate declines.” However, declining mortgage rates have had a positive impact on housing affordability. According to Graboske, without falling rates, buyers would have been paying an additional $28 a month for the median-priced home compared to the end of last year. More here.

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Housing Poised For Best Year In A Decade

Housing markets across the country are trending positive and it could lead to real estate’s best year in a decade, according to Freddie Mac’s chief economist, Len Kiefer. “The U.S. housing market is poised to have its best year in a decade,” Kiefer said upon release of this month’s Multi-Indicator Market Index. “The National MiMi currently stands at 83, the highest since September of 2008. And the trends are nearly all positive.” The index – which compares current market data to long-term norms – looks at things like demand for home purchase loans, proportion of on-time mortgage payments, and the job market in all 50 states and the top 100 metropolitan areas. Year-over-year, the index has improved by 7.46 percent and 35 states have returned to their long-term stable range. According to Kiefer, the improving national trend can be found in local markets as well. “We still see pockets of weakness in the Midwest and South, while the Northeast and West are generally doing better,” Kiefer said. “But most markets in the Midwest and South are improving according to MiMi.” In fact, the index found 59 percent of included metro areas are now within their stable range with Austin, Denver, Salt Lake City, Honolulu, and Los Angeles rounding out the top five. More here.

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Pending Home Sales Signal Strong Spring

For the second straight month, pending home sales increased from the month before, according to new numbers released by the National Association of Realtors. The Pending Home Sales Index – which measures contract signings not closed sales – was up 1.4 percent from the previous month and reached its highest reading in almost a year. Lawrence Yun, NAR’s chief economist, says March’s increase is a sign that the spring buying season is off to a solid start. “Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March,” Yun said. “This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast above wage growth.” Though affordability concerns persist, there is still strong demand from buyers – which is being sustained both by low borrowing costs and an improved job market. Regionally, only the West saw a decline in March, falling 1.8 percent from the month before. The Northeast and South were both up approximately 3 percent, while the Midwest was mostly flat. More here.

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Demand For Home Loans Up From One Year Ago

The Mortgage Bankers Association’s Weekly Applications Survey looks at the number of Americans who have requested applications for refinance or purchase loans during the past week. It is a good indication of the level of demand for home loans across the country and can also be a predictor of future home sales. According to the most recent results, overall demand for home loans fell last week due, in part, to a drop in refinance activity. Average mortgage rates rose slightly across all loan categories and – because refinance demand tends to be more sensitive to rate fluctuations – activity slipped 5 percent from one week earlier. Refinance volume, however, remains 12 percent higher than one year ago and mortgage rates are still historically low. Purchase application demand dipped last week as well but it is also up from last year’s level. Lynn Fisher, MBA’s vice president of research and economics, told CNBC recent news may not be a fair indication of what’s happening in housing these days. “News about new home sales and single family housing starts fell short of expectations in the last week, however some of March’s housing activity was likely pulled forward into one of the warmest Februarys on record,” Fisher said. “While purchase applications fell slightly last week, the average level for April is the highest since 2010.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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New Home Sales On Pace To Surpass Last Year

New numbers released by the U.S. Census Bureau and the Department of Housing and Urban Development show sales of new homes down 1.5 percent in March from February’s estimate. However, the monthly total doesn’t tell the whole story. A closer look at the report reveals that combined sales for December, January, and February were revised upward by 23,000. Along with the fact that new home sales are still 5.4 percent above last year’s level, that means sales are still on pace to beat last year’s total – which was the best year of sales since 2007. In fact, so far this year, new home sales are already 1.3 percent above the same period last year. Also, economists expect that – though the first quarter of this year has been slower than anticipated – things should pick up as the year goes on. In addition to the relatively good sales news, the median price of a new house was down slightly last month. The report found the median sales price of new homes sold in March was $288,000; the average price was $356,200. More here.

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Outlook Unchanged Despite Slow Growth

Despite the fact that economic growth stalled during the first quarter of the year, the outlook for the remainder of the year has not changed, according to Fannie Mae’s Economic & Strategic Research Group’s April 2016 Economic and Housing Outlook. In fact, the group’s latest forecast calls for a pickup in consumer spending and overall growth during the second quarter. Doug Duncan, Fannie Mae’s chief economist, says the housing market should also remain steady, despite some challenges. “Our forecast for housing activity, mortgage rates, and mortgage originations are little changed in the April forecast,” Duncan said. “We expect total mortgage originations to decline about 9 percent in 2016 to $1.56 trillion, with a refinance share of 40 percent. Sustained improvement in the labor market and personal incomes among young adults should draw more potential home buyers into the housing market, but many will continue to face affordability challenges. Home price growth has been rising at a faster clip than incomes, and the increasing supply of single-family housing is skewed toward larger and less affordable homes. These factors continue to weigh on housing affordability, particularly for first-time home buyers.” More here.

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Real Estate Remains Top Investment Choice

Americans continue to choose real estate as the “best long-term investment” when given a choice between it and gold, stocks and mutual funds, savings accounts, and bonds. In fact, 35 percent of respondents to a recent poll from Gallup said they thought real estate was the best investment, up from 19 percent in August 2011. Stocks and mutual funds came in second at 22 percent and gold – which topped the list just five years ago – was preferred by only 17 percent of respondents. Gold prices have fallen over the past few years and, as a result, the number of Americans that consider it a good investment has dropped. Real estate, on the other hand, has been rebounding. The average sale price of new homes has risen to $348,900 from $259,300 since 2011 and, with home prices still rising, so has the number of participants who chose it as the safest investment. However, the results vary when broken down into demographic groups. For example, Americans under the age of 30 were the least likely age group to choose real estate and the most likely to prefer savings. On the other hand, stocks were preferred most by Americans with higher incomes. Surprisingly, renters were almost as likely as homeowners to pick real estate as the best investment. More here.