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New Home Sales Slide In January

Sales of new single-family homes fell 9.2 percent in January, according to new estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. The decline follows an unexpected December increase of nearly 11 percent and puts sales 5.2 percent below year-ago levels. New home sales estimates tend to be volatile from month-to-month and some of the decrease can be explained by this. After all, the previous month’s surge was nearly equal to the size of January’s slide. Still, a look at regional results can further explain the decline. For example, sales were actually up in the Northeast and South. However, a 32.1 percent drop in the West – combined with falling sales in the Midwest – negated those gains and pulled overall numbers downward. Also in the report, the median sales price of new homes sold in January was $278,800; the average sales price was $365,700. At the end of the month, there was a 5.8-month supply of new homes available for sale at the current sales rate. More here.

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Purchase Application Demand Moves Higher

Demand for loans to buy homes moved higher last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. The 2 percent increase means purchase application demand is now 27 percent higher than it was at the same time last year. That is significant because mortgage loan demand is typically a good indicator of future home sales – so the improvement could indicate a strong upcoming spring sales season. Overall, mortgage application demand fell 4.3 percent, however, due to a drop in refinance activity. Average mortgage rates were up across all loan categories, including 30-year fixed-rate mortgages with both jumbo and conforming balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The rate increase caused the number of borrowers seeking to refinance to fall 8 percent. Michael Fratantoni, MBA’s chief economist, said the decline was mostly seen on loans with higher balances. “The dollar volume of refinance applications decreased by 26 percent, while refinance applications based on loan count decreased 17 percent, indicating that the volume of larger loans dropped to a greater extent than smaller loans,” Fratantoni told CNBC. 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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Existing Home Sales Rise 11% Over Last Year

Sales of previously owned homes were relatively flat in January, according to new estimates from the National Association of Realtors. In fact, sales rose just 0.4 percent from December. But despite being virtually unchanged from the month before, home sales were at their strongest pace in six months and are now 11 percent higher than at the same time last year. Lawrence Yun, NAR’s chief economist, says sales started the year on solid footing. “The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints,” Yun said. “Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession.” And, though flat overall, a closer look at January’s sales data shows that regional results were varied. For example, sales were up 4 percent in the Midwest and 2.7 percent in the Northeast. At the same time, sales of previously owned homes were unchanged in the South and dropped 4.1 percent in the West. More here.

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Gov’t Housing Scorecard Shows Strength

The Department of Housing and Urban Development collects and analyzes key housing data each month in an effort to measure government programs put in place to help stabilize the housing market following the financial crisis. The Housing Scorecard provides information on home prices, new and existing home sales, foreclosure mitigation efforts, delinquencies, equity, etc. According to the most recent release, the housing market had a strong 2015 and ended the year on the upswing. For example, sales numbers show new home sales rose 14.6 percent last year over 2014, while existing home sales had their best year since 2006. At the same time, the number of delinquent prime mortgage loans fell 16.7 percent from one year earlier and seriously delinquent loans were down even further, dropping nearly 30 percent. But while low mortgage rates and a stronger economy boosted demand and helped struggling homeowners, improved conditions also brought higher home prices. In fact, home prices are now 27 percent above their low point, reached in March 2011. At the end of last year, they were about 5.5 percent higher than the year before and at their highest level since 2007. But despite the encouraging news, the report cautions that there is still work to be done to help underwater homeowners, further reduce mortgage delinquencies, and foster home sales. More here.

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Global Woes Haven’t Hurt Housing Health

In today’s world, everything is connected. Because of this, global economic conditions can impact the U.S. economy and housing market. And, according to Fannie Mae’s latest Economic and Housing Outlook from their Economic & Strategic Research Group, the economy does appear to have slowed in response to sluggish global markets. However, Doug Duncan, Fannie Mae’s chief economist, says the housing market should still improve despite the headwinds. “We expect our 2016 theme ‘housing affordability constrains as expansion matures’ to hold true as home price gains are likely to outpace household income growth as the year continues,” Duncan said. “However, the expected increase in home prices should help lift underwater mortgages and create a healthier housing market. Meanwhile, increased household formation, low mortgage rates, and easing credit standards and more access to credit for residential mortgages are positive factors for a continued housing expansion.” Duncan also says builders should be able to build new single-family homes at a faster pace this year, which should help moderate price increases and provide more options for prospective buyers. In short, though there has been a lot of economic uncertainty in the news lately, the housing market still appears to be on solid footing. More here.

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New Home Construction Down In January

The number of new homes being built in any particular area is a good indicator of how well the local housing market and economy are doing. In short, when the economy is up, more new homes will be built because there will be more people looking to buy. Because of this, the U.S. Census Bureau and the Department of Housing and Urban Development track new residential construction numbers each month. According to their most recent release, the number of single-family homes that began construction during the month of January was down 3.9 percent from the month before. The drop was unexpected but appears to be due to harsh winter weather in the Northeast. In fact, a closer look at the numbers shows the region suffered a 14.1 percent slide, while the South and West – where weather is less of a factor – were essentially flat from one month earlier. In addition, building permits, which are a good indictor of future housing starts, were also relatively flat from December’s numbers. Because the decline was likely due to heavy snowfall during the month, analysts expect the downturn to be temporary. More here.

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Average Mortgage Rate Falls To 10-Month Low

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates dropped again last week, hitting their lowest point since last April. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, as well as loans backed by the Federal Housing Administration and 15-year fixed-rate mortgages. The decline spurred refinance activity, which increased 16 percent over the week before. Michael Fratantoni, MBA’s chief economist, told CNBC that the refinance rush was once again led by jumbo borrowers. “Treasury rates fell again last week, and mortgage rates fell to their lowest level in over a year, with rates on jumbo loans dropping to their lowest level since December 2012,” Fratantoni said. “As we have noted in recent weeks, borrowers with larger loans tend to be more sensitive to a drop in rates, because they stand to benefit more from refinancing.” Because of this, the average loan size for refinances set a new record at $316,000. Demand for loans to purchase homes, on the other hand, fell 4 percent from the week before, though they are now 30 percent higher than at the same time last year. 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 Market Still Poised For Growth

The most recent National Association of Home Builders Housing Market Index shows builder confidence in the new-home market slipped in February. The index asks home builders for their perception of the current and upcoming market for new homes. Their answers are then scored on a scale where any number above 50 indicates that more builders view conditions as good than poor. In February, the Index fell three points to 58. David Crowe, NAHB’s chief economist, said the dip in confidence is reflective of the current economic mood in the country but that the fundamentals are still strong. “Builders are reflecting consumers’ concerns about recent negative economic trends,” Crowe said. “However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations, and significant pent up demand all point to a gradual upward trend for housing in the year ahead.” A closer look at the survey’s individual components supports Crowe’s optimism. For example, while the components gauging current sales conditions and buyer traffic declined, the measure of sales expectations for the next six months rose one point to 65. More here.

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More Mortgages Are Approved On Sunny Days

Before you can buy a home, you have to be approved to borrow the money. For the most part, whether or not you qualify for a mortgage will depend on your financial situation, income, amount of debt, credit history, etc. However, according to a new paper from the Federal Reserve Bank of Cleveland, the weather could have an effect as well. Using data from the National Oceanic and Atmospheric Administration, the paper looked at more than 2,000 counties over 12 years and discovered sunny days led to a .80 percent bump in approvals for credit applications. On the flip side, overcast weather can result in approvals dropping by 1.41 percent. Though a seemingly small amount, those percentages can amount to big numbers when looked at nationwide. According to the paper, “A rough estimate of the extra credit approved on one perfectly sunny day relative to one fully overcast day is about $150 million nationwide or $91,000 per county-day.” Of course, this is no reason to think you can make a mess of your finances as long as you apply for a loan on a nice day. Having a steady income, good credit, and some money in the bank is still going to be your best path to obtaining financing and purchasing a home. More here.

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Money Keeps Middle Aged Buyers At Bay

A recent survey found that nearly 30 percent of all non-homeowners say they can’t afford a down payment. Conducted by Princeton Survey Research Associates International on behalf of Bankrate, the survey also revealed that 16 percent of respondents felt their credit wasn’t good enough to qualify for a mortgage. These are persistent concerns for Americans who don’t own or have never owned a home. Worries about money and financial qualifications can keep prospective buyers on the sidelines despite the fact that there are many programs and financing options available that are aimed at helping buyers with these exact issues. For example, depending on the type of loan, a potential home buyer may be be able to put as little as 3.5 percent down when buying a house. And surprisingly, money worries aren’t just the problem of young Americans looking to save up for their first home. In fact, the survey found more than 4-in-10 middle aged Americans don’t own a home and, among them, 31 percent cited not being able to afford a down payment as the reason. Holden Lewis, Bankrate’s senior mortgage analyst, says – for middle-aged Americans who aren’t buying – the issues are a bit more difficult than those affecting young Americans. “For people in the prime child-rearing years of 30 to 49, it’s more complicated,” Lewis says. “A lot of them have income and credit issues that might have roots in the recession.” More here.