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Rising Share Of Americans Say They Plan To Buy

Buying a house is not something we do very often. Studies show the average American only buys a home three times in their entire life. So it’d make sense that the share of Americans planning to buy at any given time would stay fairly consistent and relatively low. But new numbers from the National Association of Home Builders show buyer demand is actually rising, and quickly. The data – from the NAHB’s most recent Housing Trends Report – found the share of Americans planning to buy in the next 12 months is higher than it’s been in over two years. It’s also nearly twice what it was at the beginning of 2020. In fact, among surveyed adults, 17 percent said they’re planning to buy within the next year, which is a significant jump from 10 percent during the first quarter of 2020. But what’s driving the increases? Well, according to the report, it’s mostly younger Americans – with the biggest gains in buyer interest coming from millennials. (source)

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Home Seller Profits Hit $94,500 In 2nd Quarter

If you’re a homeowner who is thinking about making a move, ATTOM Data Solution’s most recent U.S. Home Sales Report has good news for you. That’s because the report – which looks at how much profit the typical home sale generated during the second quarter of this year – found that home sellers are seeing bigger profits than they did at the beginning of the year – and significantly more than at the same time last year. In fact, during the second quarter, the typical home sale generated a profit of $94,500. That’s up from $90,000 during the first quarter and $60,572 during the second quarter of 2020. In short, it’s a good time to sell a home. But while home seller profits are up, return on investment saw a slight decline. Todd Teta, ATTOM’s chief product officer, says it may be a sign that the market is finally starting to cool. “While it may just be a momentary thing in today’s volatile market, it’s definitely something to keep an eye on in case it’s a sign that the market is finally cooling or giving in to some of the economic forces connected to the virus pandemic,” Teta said. (source)

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Contracts To Buy Retreat After May’s Big Gains

The number of contracts to buy homes signed in June fell 1.9 percent from the month before, according to new numbers from the National Association of Realtors. In May, they were up 8 percent month-over-month. The dramatic swing continues an up-and-down trend pending sales have followed since the start of the year. Lawrence Yun, NAR’s chief economist, says the volatility is due, in part, to rising home prices. “Buyers are still interested and want to own a home, but record-high home prices are causing some to retreat,” Yun said. But while home prices are rising everywhere, contract signings are doing better in some regions than others. In fact, last month, pending sales were up in the Northeast and Midwest and down in the South and West. “The Midwest region offers the most affordable costs for a home and hence that region has seen better sales activity compared to other areas in recent months,” Yun explained. (source)

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Outlook Sees A Calmer Housing Market Ahead

The housing market’s breakneck pace this spring may’ve caused, at least, some prospective home buyers to hesitate. Competition, bidding wars, and double-digit price increases will do that. After all, choosing a house to buy is already a big decision without the added pressure of a hot market. But if you’re a buyer who’s been waiting for the market to cool off, Fannie Mae’s Economic and Strategic Research Group may have some encouraging news. The group – which releases a monthly outlook for the housing market and economy – says they expect things to start cooling down. In fact, Mark Palim, Fannie Mae’s vice president and deputy chief economist, says the group sees moderating price increases and improved inventory on the horizon. “While recent home price growth has been historically high, we’re forecasting further home price appreciation to moderate through the remainder of the year and into 2022,” Palim said. “On the supply side, we think home builders will be able to increase production as supply chain disruptions and labor shortages alleviate, which should add to the inventory of new and existing homes available for sale.” (source)

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Rates Fall To Lowest Level Since February

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from one week earlier. Rates were down 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 loans. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the drop brought rates to their lowest level in months, and in some cases decades. “The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery,” Kan said. “Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990.” Despite the declines, however, purchase application demand slowed week-over-week, dropping 2 percent from the week before. 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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What Can Prices Tell Us About Today’s Buyers?

Home prices are rising. That’s no surprise to anyone who’s been looking to buy or sell a home. In this market, there are more buyers than homes for sale and the imbalance has been pushing prices higher for months. In fact, according to the S&P Case-Shiller Home Price Indices – considered among the leading measures of U.S. home values – price growth broke records again in May. In other words, this year’s housing market has been hot. But, according to Craig J. Lazzara, managing director and global head of index investment strategy at S&P, home-price data also says something about buyers’ priorities. “We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes,” Lazzara said. “May’s data continues to be consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing.” (source)

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New Home Sales Slip In June

New numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show sales of newly built single-family homes fell 6.6 percent in June from the month before. The decline was unexpected. In fact, economists polled before the report’s release forecast a 3 percent increase from May’s number. So what happened? Well, high home prices and the rising cost of building materials may have something to do with it. The median sales price of new homes sold during the month was $361,800. The average price was $428,700. But while high home prices may have made buyers more hesitant in June, there were some encouraging signs in the monthly report. For example, the number of new homes for sale is higher than it’s been in more than a year. That means, home builders have been adding for-sale inventory, which should help moderate future price increases. And it may have already started. The median and average sales price both fell last month, with the median price almost $20,000 lower than it was in May. (source)

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Homes Closer To Cities See Slower Price Growth

There’s a reason living near a major metropolis has traditionally been more expensive than living further away. Put simply, it’s where the jobs are. And, if you work in the city, you likely aren’t going to want to live so far away that you have a two-hour commute there and back. Naturally, though, the pandemic has changed things. With more Americans able to work remotely, home buyers have a different set of priorities than they did even a few years ago. For example, a recent analysis of commute times and home prices found that homes within 10 minutes of city centers are seeing slower price growth than those further out. In 2017, homes within a 10-minute commute had the fastest-growing home values in half of the 18 most expensive metros. Now, only three of the 18 are still experiencing the fastest growth. In fact, these days, more than half of them are experiencing slower growth or even seeing prices beginning to fall. That’s pretty strong evidence that remote work has changed our priorities and moved affordability higher than living near the city on many buyers’ wish lists. (source)

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Improved Supply Pushes Home Sales Higher In June

Sales of previously owned homes increased 1.4 percent in June, according to new numbers from the National Association of Realtors. The month-over-month improvement pushed home sales 22.9 percent higher than they were last year at the same time. Lawrence Yun, NAR’s chief economist, says the number of available listings has improved and it’s helping home sales. “Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” Yun said. “Home sales continue to run at a pace above the rate seen before the pandemic.” But while the number of listings has increased, inventory is still tighter than historically normal. In fact, at the current sales pace, there was a 2.6-month supply of homes available for sale in June. That’s improved from May but still well below the 6-month supply considered healthy for the market. That means buyers still need to be prepared to act fast, since nine of 10 homes sold in June were on the market for less than a month. (source)

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Rates Mostly Down From Week Before

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly down last week, with decreases seen for 30-year fixed-rate mortgages with jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Rates for 30-year mortgages with conforming loan balances rose slightly from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says mortgage rates are being affected by coronavirus concerns. “The 10-year treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of COVID variants and their impact on global economic growth,” Kan said. “There were mixed changes in mortgage rates as a result, with the 30-year fixed rate increasing slightly … after two weeks of declines.” Demand for mortgage applications was down week-over-week. Refinance activity fell 3 percent and the Purchase Index was down 6 percent. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)