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Typical Home Sells Faster Than Last Year

In this market, homes for sale don’t last very long. Good homes are listed and purchased in a matter of days. In fact, according to new numbers from the National Association of Realtors’ consumer website, properties in June sold 35 days faster than last year and 21 days faster than the average June between 2017 and 2019. Nationally, the typical home was on the market just 37 days – and, in cities like Rochester, Denver, and Nashville, homes sold in two weeks or less. Fortunately, George Ratiu, the website’s senior economist, says relief may be on the way. “The improvement we saw in new listings growth from May to June shows sellers are entering the market historically later in the season, which could mean we’ll see home buying continue into the fall as buyers jump at new opportunities,” Ratiu said. In other words, new listings have been trending higher and it may mean home sellers are returning to the market. If the trend holds – and more homes become available for sale – the market’s current pace will begin to slow and buyers will have more choices and, hopefully, a little more time. (source)

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Is Buying A Home Still Affordable?

Homeownership is a major financial commitment. Not only does it mean a monthly mortgage payment but it also comes with other expenses like property tax and homeowners insurance that add to the cost. So with home-price increases in the news, it’s natural to wonder whether buying a home is still affordable. ATTOM Data Solutions’ second-quarter 2021 U.S. Home Affordability Report has some answers. The report takes homeownership costs on a median-priced home and wage data from the Bureau of Labor Statistics and compares them to historical averages. The results found 61 percent of counties were less affordable now than they’ve been in the past. However, though more expensive in those counties, homeownership isn’t beyond the average worker’s financial means. Todd Teta, ATTOM’s chief product officer, says it’s still within reach for the average American. “Average workers across the country can still manage the major expenses of owning a home, based on lender standards,” Teta said. “But things have gone in the wrong direction this quarter in a majority of markets as the national housing market boom roars onward.” (source)

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Contracts To Buy Homes Soar In May

startThe National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes that are signed each month. The index is considered a good indicator of future home sales, since contract signings typically precede closings by several weeks. In May, pending home sales bounced back after declining in April. In fact, the number of contracts to buy rose 8 percent from the previous month and are now 13.1 percent higher than last year at the same time. The results marked the strongest reading for the month of May since 2005. Lawrence Yun, NAR’s chief economist, said the improvement was a surprise. “May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” Yun said. “The housing market is attracting buyers due to the decline in mortgage rates … and from an uptick in listings.” Contract signings were up in all four regions with the biggest gains found in the Northeast and West. (source)

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Weekly Survey Finds Average Rates Up-And-Down

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates were volatile last week, with rates up for 30-year fixed-rate loans with conforming balances but down for jumbo loans, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The volatility contributed to decreasing refinance and purchase activity, which both fell from one week earlier. Inventory was also a factor and likely played a role in pushing demand for loans to buy homes lower. Joel Kan, MBA’s senior vice president and chief economist, says current conditions are particularly challenging for first-time buyers. “The average loan size for total purchase applications increased, indicating that first-time home buyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale,” Kan said. 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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Buyer Demand Keeps Home Prices Climbing

There are a lot of Americans looking to buy a home this year. In fact, there are far more home buyers active in the market than there are available homes for sale. That, of course, puts upward pressure on home prices. The latest S&P Case-Shiller Home Price Indices shows just how much. According to the data, which covers the 12 months through the end of April, home prices are up 14.6 percent from last year at the same time. Craig J. Lazzara, managing director and global head of index investment strategy at S&P, says the increases are driven, in part, by demand created by the pandemic. “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. “April’s data continues to be consistent with this hypothesis.” In other words, the pandemic not only caused some of last year’s buyers to wait until this year, it also pushed more of them to look in the same neighborhoods, causing prices to spike in those markets. (source)

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Hot Summer Market Sees A Needed Improvement

When people talk about the housing market being hot, they’re generally talking about the competition for available homes. A “hot” market, in other words, is one where homes sell quickly and bidding wars are common. That’s where we are today. Hopeful home buyers have to be quick, decisive, and prepared if they want to buy a home in this market. But while there’s definitely an imbalance between supply and demand these days, there are signs that things may be improving. For example, according to one recent analysis, active listings – which refer to the number of homes listed for sale at any given time – have increased 5 percent since hitting their 2021 low in mid-March. Additionally, new listings are up 6 percent from last year. Together, it’s an encouraging sign that more home sellers are returning to the market. And while listings are still down 34 percent from 2020, the upward trend offers hope that homes for sale will continue to rebound and bring needed balance to markets suffering from record-low inventory. (source)

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Generation Z Says They’re Almost Ready To Buy

For generations, young Americans have included homeownership among their goals for the future. Its appeal has endured over the decades and through numerous bubbles, crashes, and recessions. Now, according to a new survey from the National Association of Realtors’ consumer website, there’s another generation of young Americans making plans to buy in the near future. The recently released survey of 18-to-25 year olds found that nearly three-quarters of respondents said they’d prefer to buy rather than rent over the long term. Among them, 43 percent said they think they’ll be ready to buy in the next five years – with an almost identical amount saying they think it’ll take them somewhere between five and 10 years. Either way, that means millions of prospective home buyers entering the market over the next decade. And, if survey results are any indication, most of them with be looking to buy in the suburbs – since nearly half of Gen-Z survey participants said they saw themselves buying there rather than in an urban or rural area. (source)

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Rising Material Costs Hinder New Home Sales

The lack of previously owned homes for sale is an opportunity for home builders. There are, after all, plenty of buyers. So, in a market with low inventory, a builder could be reasonably confident that the homes they built would be purchased, and quickly. So why then do recently released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show new home sales falling? Well, part of the problem is the rising price of building materials. Costs have skyrocketed over the past year and made it more difficult for builders to build the affordable homes buyers want most. In fact, the median sales price of new homes sold in May was $374,400. The average sales price was $430,600. At the same time, new homes below $200,000 accounted for just 2 percent of all transactions. In other words, it’s getting more expensive to build new homes, which, of course, makes them more expensive to buy. Still, despite the challenges, new home sales are still over 9 percent higher than last year at the same time. (source)

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Mortgage Applications Are Trending Higher

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications rose 2.1 percent last week from the week before. Refinance activity was up 3 percent and the Purchase Index rose 1 percent. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand for loans to buy homes has been increasing lately. “Purchase application have regained an upward trend over the past few weeks,” Kan said. “Activity was slightly higher for the third straight week, but remained lower than the same week a year ago. Government purchase applications drove most of the last week’s increase, which also contributed to a slightly lower overall average purchase loan size.” The improvement came during a week when average mortgage rates were up. In fact, rates were higher across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, FHA loans, and 15-year fixed-rate loans. The MBA’s survey has been conducted weekly and covers 75 percent of all retail residential mortgage applications. (source)

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Existing Home Sales Mostly Flat In May

Sales of previously owned homes fell less than one percent in May, according to new numbers from the National Association of Realtors. The month-over-month decline, though slight, was the fourth consecutive monthly decrease for existing-home sales. Lawrence Yun, NAR’s chief economist, says the issues currently holding sales back are expected to improve in the months ahead. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market,” Yun said. “The market’s outlook, however, is encouraging. Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.” In the meantime, home buyers should expect a competitive and fast-moving market. In fact, nearly nine out of ten homes sold in May were on the market less than a month. The typical property was sold in just 17 days. At that pace, buyers need to be prepared and ready to move quickly when they find a home they’d like to buy. (source)