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Demand For Purchase Loans Continues To Climb

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes continued to climb last week, rising 5 percent from one week earlier. It was the third consecutive week of increases. Together with a slight uptick in refinance activity, the gains pushed total mortgage application demand 1.8 percent higher than the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the improvement could be a sign that borrowers are trying to lock in low rates – which increased week over week – before they move any higher. “Despite the increase in rates, refinance applications rose slightly, driven by a 2 percent gain in conventional refinances,” Kan said. “Borrowers continue to lock in mortgages in anticipation of higher rates in the future.” Whatever the case, the housing market remains strong going into the holiday season, which typically sees mortgage loan demand slow down. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

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Housing Outlook Stays Positive Despite Challenges

Each month, Fannie Mae’s Economic and Strategic Research Group releases an outlook forecasting what they think is ahead for the economy and housing market. In November, their outlook is largely positive, with economic growth projected to remain fairly consistent and housing activity continuing its momentum into next year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, doesn’t see any major changes ahead. “Economic growth continues to slow, but not precipitously; and as rates have not yet reacted strongly, housing and mortgage activity remain very strong,” Duncan said. According to the release, the group has revised upward their expectation for total home sales this year and believes the current supply-side issues holding home building back will begin to ease in the months ahead. In fact, they expect new-home construction to rise nearly 5 percent next year, leading to a 13.9 percent increase in sales of new homes. And while they do expect mortgage rates to rise, their forecast is only for slight increases in 2022 and 2023, which means rates will remain low by historical standards. (source)

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Time On Market Sees Slight Improvement

One of the big challenges for home buyers this year is how quickly homes have been selling. It hasn’t been uncommon to see a good listing go up midweek and sell before the following Sunday. That doesn’t leave much time for interested buyers to get out to see it, consider their options, and make a solid offer. But while new numbers from the National Association of Realtors show homes are still selling quickly, there was a slight improvement in October. In fact, the time the typical home for sale was on the market bumped up to 18 days from 17 days the month before – the first improvement in months. And while 82 percent of homes sold in less than 30 days, that’s 5 percent fewer than did in August, for example. In other words, autumn home shoppers still need to be prepared to act fast, but may have a little more time than buyers did this summer. Lawrence Yun, NAR’s chief economist, says the challenging conditions haven’t slowed buyer demand . “Home sales remain resilient, despite low inventory and increasing affordability challenges,” Yun said. “Inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.” (source)

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Permits To Build New Homes Increase In October

If you’re not looking to buy a new house, you may not think the number of new homes being built has anything to do with your home search. But it does. In fact, much of what’s happening in the housing market today is a result of lagging new home construction numbers in the years following the housing crash and financial crisis. With fewer new homes being added to the national housing stock, low inventory became a persistent issue, driving prices and competition higher. The pandemic, supply shortages, and spiking material costs made it even worse over the past year and a half. New numbers from the U.S. Census Bureau and the Department of Housing and Urban Development offer prospective home buyers some hope, though. According to their most recent release, the number of building permits to build new homes rose 4 percent in October. And the number of building permits for single-family homes was up 2.7 percent. That means, a rising number of new homes will be built in the months ahead, which should help alleviate some of the upward pressure on home prices and give buyers more options to choose from when shopping for a house to buy. (source)

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Inventory Of Available Homes To Rebound In 2022

Typically, home buyers have a wish list of features they’re looking for in their next house. Whether it’s a bigger yard, more storage, extra bedrooms, or a great location, buyers always have a reason they’re ready to move. After all, why bother moving if your current home has everything you want and need? But when the number of homes for sale is low – as it’s been for the past few years – finding all the things you want in your next house can become more difficult. Fewer options means buyers are more likely to have to compromise on a few or do without some of them altogether. That’s why the early forecasts for next year’s housing market should be encouraging for prospective home buyers. For example, according to one recently released forecast for the year ahead, new listings are expected to reach a 10-year high in 2022, surpassing their most recent high of 7.6 million in 2018. If the prediction comes true, it’ll lead to a better balanced market and more options for home buyers. It’ll also make it more likely that you won’t have to abandon your wish list and settle for a home that has few of the features that had you ready to move in the first place. (source)

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Demand For Home Purchase Loans Rises

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes saw its second-consecutive weekly increase, rising 2 percent from the week before. The improvement came during a week when average mortgage rates increased for 30-year fixed-rate loans with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the gains are a sign that buying activity will likely remain strong in the weeks ahead. “Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time – late fall – when home buying activity typically slows,” Kan said. “The second straight increase in purchase applications suggests that stronger sales activity may continue in the weeks to come.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

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Builders Confident Despite Supply Side Issues

Home builders are facing many challenges these days. From the supply chain to labor and lot shortages, it’s a difficult time to be in the home-building business. But despite all of those issues, the National Association of Home Builders’ Housing Market Index – which measures how confident home builders are feeling on a scale where any number above 50 indicates more of them view conditions as good than poor – scored an 83 in November, up three points from the month before. So what explains the high level of optimism among home builders? Put simply, it’s buyer demand. “The solid market for home building continued in November despite ongoing supply-side challenges,” Chuck Fowke, NAHB’s chairman, said. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.” In other words, buyer demand for homes remains elevated and the number of homes for sale remains lower than historically normal. That means, homes are in high demand and, despite current conditions, builders are feeling good about the market. (source)

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What Fall Showings Can Tell Us About Spring

For a lot of us, it’s still hard to believe summer’s over and the clocks have already rolled back. But it is November and the holidays are just around the corner. So maybe it isn’t too soon to start thinking about spring. If you’re a potential home buyer looking to make a move in the next six months, it’s definitely not too early. In fact, it may be the perfect time to get a feel for what you might expect when the housing market starts to heat up again. One good indicator for where the market is headed is how many showings are being scheduled for the homes currently listed for sale. And, if the past is any indicator, you can tell a lot about what spring will look like based on what happens the previous fall. For example, last year’s fall market was atypically competitive – which could’ve tipped you off that the following spring would be among the hottest in recent memory. So how’s this fall been looking so far? Well, according to recently released data, the number of scheduled showings has been around 5 percent lower than it was at the same time in 2020. That’s a pretty good indication that the spring market will be less hectic than this year’s was, with price increases slowing and a higher number of homes for sale. (source)

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Report Finds 57% Of Recently Sold Homes Affordable

By now, anyone interested in buying a house knows home prices have been rising. Climbing prices have been a factor for home buyers for years, and especially over the past 12 months. But while home prices have risen, that doesn’t necessarily mean you can’t find a home that’s affordable. It might actually be more possible than you think. For example, according to the National Association of Home Builders’ most recent Housing Opportunity Index – which measures how affordable buying a home is for families earning the U.S. median income – 56.6 percent of homes sold between the beginning of July and the end of September were considered affordable. That’s the good news. The bad news is affordability is at a lower level than it’s been in recent years. And, according to NAHB chairman, Chuck Fowke, the challenges home builders are facing have made it difficult to build the new homes that could help provide more affordable options for buyers. “Persistent building material supply chain bottlenecks and tariffs on Canadian lumber and Chinese steel and aluminum continue to place upward pressure on construction costs and home prices,” Fowke said. “Policymakers must fix supply chain vulnerabilities that are disrupting and delaying construction projects and hurting housing affordability.” (source)

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Homeownership Benefits Buyers’ Bottom Line

New numbers from ATTOM Data Solutions show that 39.5 percent of mortgaged residential properties were considered equity rich during the third quarter. That’s up from 28.3 percent last year at the same time. So what does equity rich mean? Well, according to ATTOM’s U.S. Home Equity & Underwater Report, it means the amount of loan balances secured by those properties was no more than 50 percent of the home’s estimated market value. In other words, a large percentage of homeowners are seeing a big benefit to their bottom line as their home’s value continues to grow. But it isn’t just long-time homeowners who are benefiting. With national home values up 16 percent year over year, even recent buyers have begun to see gains. Todd Teta, ATTOM’s chief product officer, says the improvements have been the best in years. “Homeowners across most of the United States could sit back with a smile yet again in the third quarter and watch their balance sheets grow as soaring home prices pushed their equity levels even higher,” Teta said. “Amid the best gains in two years, nearly four of every 10 owners found themselves in equity-rich territory.” (source)