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Contracts To Buy Homes Skyrocket In May

The National Association of Realtors’ monthly Pending Home Sales Index has tracked the number of signed contracts to buy homes since January 2001. In May, the index set an all-time record for month-over-month gains, with a 44.3 percent increase. After the improvement, pending sales are now just 5.1 percent lower than they were last year at the same time. Lawrence Yun, NAR’s chief economist, says the rebound is a good sign for the housing market and the overall economy. “This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” Yun said. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.” Every region of the country saw double-digit increases, led by a 56.2 percent gain in the West. Yun says the recovery has significantly improved the outlook for home sales this year. In fact, the NAR now expects total sales to suffer a less than 10 percent decline, despite the typical spring sales season being disrupted by the coronavirus pandemic. (source)

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Buyers Have Returned, But What About Sellers?

In March, when the pandemic took hold and things started shutting down, many home buyers and sellers put their spring plans on hold. The start of the housing market’s typical sales season was delayed indefinitely as Americans took a wait-and-see attitude. Now, three months later, local economies have reopened and consumers have started to adjust to new safety measures. But what has happened to the plans of those home buyers and sellers? Well, according to new numbers from the National Association of Realtors’ consumer website, home buyers have returned to the market much faster than sellers. In fact, buyer demand has bounced back in full, while new listings are down 19 percent from where they were last year at the same time. That means, a lot of homeowners who were planning to sell have yet to put their homes on the market. How many of them eventually do, and when, will help determine where home prices are headed, how much competition buyers face, and how quickly the homes that are for sale end up selling this summer. (source)

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Homes For Sale Are Selling Quickly

Buying a home takes a while. But though the process takes several weeks, you won’t necessarily have a lot of time to deliberate once you’ve found a house you like. In most cases, you have to make an offer quickly or you’ll risk losing the home to another buyer. That’s because, in the current market, inventory is low. The number of homes for sale was already lower than normal before the coronavirus and, since the onset of the pandemic, it’s fallen further. So, when you’ve found a house that fits your budget and lifestyle, chances are someone else has found it too. And competition from other buyers means you have to be prepared to move fast. How fast? Well, according to one new analysis, the typical home sold in June had an offer accepted within 22 days of it being listed. That’s the fastest homes have sold since the summer of 2018. And, while there are some cities where homes stay on the market longer, 29 of the 35 largest metros are seeing homes sell faster than they were last year at the same time. That means, in most markets, there are more buyers than homes for sale. So, if you’re planning on buying this summer, you should also plan to move quickly when you find the house you want. (source)

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Mortgage Rates Mostly Flat Last Week

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week. In fact, rates for 30-year fixed-rate loans with conforming loan balances were unchanged from the week before. Rates for jumbo loans and those backed by the Federal Housing Administration saw slight increases. But despite mortgage rates still hovering near record lows, demand for loan applications fell week-over-week. Joel Kan, MBA’s vice president of economic and industry forecasting, says the purchase market remains strong. “Even with high unemployment and economic uncertainty, the purchase market is strong. Activity has climbed above year-ago levels for five straight weeks and was 18 percent higher than a year ago last week,” Kan said. “One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market.” 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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New Home Buyers Lead Sales Rebound

New home sales are a good indicator of what’s currently happening in the housing market. This is due to the fact that they’re counted when a contract to buy is signed, rather than at closing like existing-home sales. That’s also why new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development are good news for the market’s recovery. According to the most recent results, sales of newly built single-family homes rose 16.6 percent in May from the month before and are now 12.7 percent higher than they were last year at the same time. The strength of the rebound was unexpected, as economists were predicting gains but thought sales would rise just 2.9 percent month-over-month. That the improvement was as strong as it was is an indication that home buyers – many of whom were sidelined by coronavirus shutdowns in March and April – became much more active in May. Along with other recent data showing signs of a rebound, May’s new-home sales numbers are reason to be optimistic that the housing market’s recovery will continue to gain strength as the summer goes on. (source)

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Existing Home Sales Fall In May

Sales of previously owned homes fell in May, according to new numbers from the National Association of Realtors. Completed transactions were down 9.7 percent from the month before and 26.6 percent below last year at the same time. It was the third consecutive month of decreasing sales since the coronavirus’ first impact in March. But despite the declines, Lawrence Yun, NAR’s chief economist, is optimistic that things will rebound soon. “Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” Yun said. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year ago figures in the second half of the year.” His optimism is most likely based in other recent housing data showing buyers are returning to the market faster than originally expected. But while rebounding buyer interest is encouraging, it could put upward pressure on prices, if it outpaces the number of homes available for sale. As it is, the median existing-home price rose 2.3 percent year-over-year in May. (source)

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The Importance Of A Good Credit Score

Without credit, buying a house becomes much more difficult. After all, not many of us have enough money in the bank to be able to write a check for a couple hundred thousand dollars. And, if you can’t pay cash, you’ll need a loan. Which is why your credit score is so important. It’s one of the ways a lender gets a feel for your financial habits and how responsible you are with your money. In short, your credit score will affect, not only the terms of the loan and your interest rate, but whether or not you even qualify at all. So you’re going to want to enter the home buying process with as good a score as you can. The first step is knowing what yours is, then checking your history for any errors or issues that can be fixed. But, once you’ve done that, how do you know where you stand? Well, typically a score over 700 is considered good, with anything over 800 considered excellent. Most scores will fall somewhere between 600 and 750. Overall, Americans’ credit has been improving lately. In fact, according to Ellie Mae’s most recent Origination Insight Report, FICO scores on all loans last month increased to 750. (source)

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Home Builders Optimistic After Demand Rebounds

If you want to know how the housing market is doing, ask a home builder. Their livelihood depends on knowing what, where, and when people are ready to buy a home. So they’re generally a pretty good indicator of where things are headed. That’s why the National Association of Home Builders conducts a monthly survey asking builders to score the market on a scale where any number above 50 indicates more builders view conditions as good than poor. In June, their Housing Market Index surged 21 points to 58. Robert Dietz, NAHB’s chief economist, says home builders are seeing signs of momentum. “Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” Dietz said. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.” Among index components, those measuring buyer traffic and expectations for the next six months saw the biggest improvement. (source)

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Mortgage Rates Fall To Another Survey Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates for 30-year fixed-rate mortgages with conforming loan balances fell to another all-time survey low last week. Rates also declined for jumbo loans, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The drop led to an 8 percent increase in mortgage application demand over one week earlier. Both purchase activity and refinance activity were up week-over-week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says pent-up demand and low mortgage rates are fueling the gains. “Purchase applications increased to the highest level in over 11 years and for the ninth consecutive week. The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” Kan said. “Mortgage rates dropped to another record low in MBA’s survey, leading to a 10 percent surge in refinance applications.” Refinance demand is now 106 percent higher than it was last year at this time. 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 Market On Track For A Quick Recovery

When the housing market crashed in 2008, the road to recovery was a long and gradual one. But while the market’s current downturn looks to be the worst since then – with home sales predicted to suffer the biggest year-over-year decline in 12 years – expectations for its recovery are far more optimistic. In fact, according to one recent analysis from Nationwide, home sales could be back to 2019 levels as soon as next year. Of course, the speed at which the market rebounds will largely depend on the coronavirus’ spread and available treatments. But real-estate market fundamentals were strong at the beginning of the year and a combination of low mortgage rates, favorable demographics, and solid household formations should help fuel a quick recovery. David W. Berson, Nationwide’s senior vice president and chief economist, says current data is already showing signs of a rebound. “New home sales unexpectedly increased for April, suggesting some consumers continued to shop while on lockdown,” Berson said. “Record-low mortgage rates have also helped to buoy the housing market, and mortgage applications for purchase have surged since bottoming out in early April.” If those trends continue, the market should quickly gain strength and be well positioned for a turnaround. (source)