Nationally: New-Home Sales Jump to Highest Level of 2018

Nationally: New-Home Sales Jump to Highest Level of 2018
National Association of Home Builders | June 26, 2018

The month of May saw a record number of new-home purchases. Sales of newly built single-family homes increased 6.7 percent in May to a seasonally adjusted annual rate of 689,000 units, the Commerce Department reported Monday. It marks the highest number of new-home sales of the year and the second highest in sales since the Great Recession.

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“Sales numbers continue to grow, spurred on by rising home equity, job growth, and reports of a greater number of millennials entering the single-family housing market,” says Randy Noel, chairman of the National Association of Home Builders.

The inventory of new homes for sale was 299,000 in May—a 5.2-month supply at the current sales pace. The median sales price for a new home last month was $313,000.

“We saw a shift to more moderately priced home sales this month, which is an encouraging sign for newcomers to the market,” says Michael Neal, the NAHB’s senior economist. “Since the end of the Great Recession, inventory has tracked the pace of sales growth. While we expect continued gains in single-family housing production, inventory may be partially constrained by ongoing price increases for lumber and other construction materials.”

New-home sales posted the largest increase in the South last month, rising 17.9 percent month over month and reaching a post-recession high. Sales remained unchanged in the Midwest, while sales fell 10 percent in the Northeast and 8.7 percent in the West.

Source: National Association of Home Builders; REALTOR® Magazine Online 062618

Upbeat Sellers Show Readiness to Make a Move

Upbeat Sellers Show Readiness to Make a Move
National Association of REALTORS® | June 21, 2018

Home prices are climbing across the country, and that has made homeowners more bullish when it comes to the prospects of selling. Seventy-five percent of more than 2,700 households recently surveyed say it’s a good time to sell a house; 68 percent say it’s a good time to buy, according to the National Association of REALTORS®’ second quarter Housing Opportunities and Market Experience (HOME) survey.

“Hopefully this strong seller optimism will lead to an increase in inventory later on in the year,” says Lawrence Yun, NAR’s chief economist.

Fifty-five percent of consumers say they believe that home prices will continue to increase in their communities over the next six months, up from the previous quarter (53 percent), according to NAR’s report.

In the second quarter, however, optimism for buying stayed stagnant. Thirty-nine percent of consumers strongly agree now is a good time to buy, while 29 percent moderately agree. A decreasing number of renters are upbeat about buying, dropping from 55 percent in the first quarter to now 49 percent in the second quarter. Optimism for buying is highest among older buyers 65 or over, as well as those living in the South and Midwest regions, the report found.

“Inventory remains the driving force in real estate, affecting everything from rising prices to household formation,” Yun says. “Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers.”

Overall, consumers are more optimistic about the economy. Fifty-eight percent of households surveyed said they thought the economy was improving, with people in rural areas the most upbeat about economic conditions, according to the survey.

Their optimism over the economy has also helped more consumers believe that they would have an easier time to obtain a mortgage. “This is most likely a reflection of the current positive outlook on the direction of the economy,” Yun says. “Healthy job creation and faster wage growth mean that homeownership is viewed as a more attainable goal than it was a year ago.”

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Source: “Q2 Housing Opportunities and Market Experience (HOME) Survey,” National Association of REALTORS® (June 21, 2018); REALTOR® Magazine 062118

Does Consolidating and Refinancing Student Loans Help First-Time Homebuyers?

Does Consolidating and Refinancing Student Loans Help First-Time Homebuyers?
Guest Writer: lendedu.com; Jeff Gitlen

LendEDUcroppedlogoProspective first-time homebuyers today are struggling with a burden not typically experienced by their parents’ generation: overwhelming student debt.

According to a recent survey, 80 percent of people between the ages of 22 and 35 point to their student loans are the direct reason why they haven’t bought a house yet. Only a generation ago, this was never an issue.

There are currently 45 million people in the United States with student loan debt and recent graduates have an average balance of over $27,000.

Monthly student loan payments eat up a substantial amount of income which make banks wary of issuing mortgages to student loan borrowers. Yet, this hasn’t stopped millennials, who carry the most student loan burden, from purchasing homes.

Just how are they convincing banks to approve a mortgage if they also have quite high student loan balances?

Increasingly, first-time homebuyers with student loans are taking advantage of student loan consolidation and refinancing to improve their chances and reduce the associated risks of more debt.

How Your Student Loans Affect Your Home Buying Power

There are a number of factors which influence your eligibility for a mortgage. These include credit score, down payment, and debt-to-income ratio. Your debt-to-income ratio is an indicator of your debt burden on a monthly basis. Essentially, it shows what percentage of your monthly income does it take to pay down your debt.

The allowable debt-to-income ratio for first time home buyers varies from region to region. There are very likely different debt-to-income requirements for someone buying a home in rural Montana than someone looking to purchase in Manhattan. Under most circumstances, mortgage brokers will expect less than a 43 percent ratio. For example, a monthly income of $4,000, and debt repayments of less than $1,720.

If you’ve done a quick mental calculation, and believe you have a higher debt-to-income ratio, there are two options on the table which might help reduce your monthly payments. If paying down your debt isn’t an immediate option, consider one of the following.

Should You Do a Federal Loan Consolidation?

If you have federal loans, consider exploring what federal loan consolidation options are on the table for you. If you carry multiple federal student loans, you may be eligible for federal consolidation.

When you consolidate your federal student loans together with a Direct Consolidation Loan, you will only be responsible for paying one federal loan with an interest rate that is a weighted average of the other loans rounded up to the nearest eighth of a percent. Many borrowers also opt to extend their repayment terms when consolidating their loan with the government – lowering their monthly payments. With lower monthly payments, your debt-to-income ratio will also be reduced which would be a more positive signal to a mortgage lender, so it could help you.

You should be aware that by extending your repayment term, however, you will end up paying more over the life of the loan.

Should You Refinance Your Student Loans?

Student loan refinancing is similar to consolidation in the sense that it pays off multiple loans with one lump sum, except in this case you are consolidating with a private lender.

In most cases, the borrower also benefits from lower interest rates and – depending on the selected term length – lower monthly payments. Just like with a loan consolidation through the federal government, lower monthly payments and longer repayment terms could reduce your debt-to-income ratio. If this can reduce your monthly debt ratio, then it could be a good sign on a mortgage application.

Refinancing is available for both federal and private student loans, but refinancing is only offered by private lenders. As soon as you refinance federal student loans through a private lender you lose eligibility for all the protections and repayment plans that federal student loans come with.

If you think you will need income-driven repayment plans, student loan forgiveness, or deferment and forbearance protections in the future, you should avoid refinancing. You will end up relinquishing these benefits if you decide to refinance. You should also remember that extending your repayment term may cost more in the long run.

Timing Your Student Loan Refinance

If you’ve decided to apply student loan refinancing with a private lender and are also in the market for a mortgage, timing is of utmost importance. Applying for refinancing often requires a hard credit check which your credit score will be temporarily lowered.

As mentioned earlier, credit score is one of the deciding factors for mortgage applications and – although often not as important as the debt-to-income ratio – it still plays a vital role. If you want to refinance your student loans before applying for a mortgage, you may want to do it at least six month in advance so that the hard inquiry does not affect your eligibility or interest rate.

To sum it up, refinancing can help you apply for a mortgage, but it will only be worth it if you can it puts you in a position to more quickly reduce your debt balance. This can be especially handy if you have a high income which would allow you to reduce your debt-to-income ratio sooner rather than later – helping you become buyer-ready.

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Consumer Sentiment Breaks Record—Again

Consumer Sentiment Breaks Record—Again
Fannie Mae   article by Daily Real Estate News | June 11, 2018

House 1049For the second consecutive month, Fannie Mae’s Home Purchase Sentiment Index reached an all-time survey high in May. But as home prices rise, consumer attitudes about buying and selling a home are diverging even more.

The net share of survey respondents who say now is a good to sell rose to 46 percent and is now up 14 percentage points year over year. Meanwhile, the net share who say now is a good time to buy fell to 28 percent and has shown little improvement over the past year, Fannie Mae notes.

The Home Purchase Sentiment Index “edged up to another survey high in May, bolstered in part by a fresh record high in the net share of consumers who say it’s a good time to sell a home,” says Doug Duncan, Fannie Mae’s chief economist. “However, the perception of high home prices that underlies this optimism cuts both ways, boosting not only the good-time-to-sell sentiment but also the view that it’s a bad time to buy, and presents a potential dilemma to repeat buyers.”

Fannie’s Home Purchase Sentiment Index is up 6.1 points compared to last year. In May, it posted a reading of 92.3.

Here’s a closer look at other results in the May survey (based on 1,000 respondents):

  • 49 percent: The net share of Americans who say home prices will rise in the next 12 months, unchanged from the month prior.
  • 78 percent: The net share of Americans who say they are not concerned about losing their job, rising 2 percentage points month over month to reach a new survey high.
  • 21 percent: The net share of Americans who say their household income is significantly higher than it was 12 months ago, up 3 percentage points month over month to reach a new survey high.

Source: Fannie Mae; REALTOR® Magazine Online, Daily Real Estate News 061118

Rates Hit Highest Level in 7 Years

Rates Hit Highest Level in 7 Years
Freddie Mac   article by Daily Real Estate News | May 18, 2018

Mortgage rates reversed course and soared to the highest averages in seven years, Freddie Mac reports. The 30-year fixed-rate mortgage averaged 4.61 percent this week, which matches the highest level since May 19, 2011.

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“Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” says Sam Khater, Freddie Mac’s chief economist. “Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season. While this year’s higher mortgage rates have not caused much of a ripple in the strong demand levels of buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”

Freddie Mac reports the following national averages with mortgage rates for the week ending May 17:

  • 30-year fixed-rate mortgages: averaged 4.61 percent, with an average 0.4 point, rising from last week’s 4.55 percent average. Last year at this time, 30-year rates averaged 4.02 percent.
  • 15-year fixed-rate mortgages: averaged 4.08 percent, with an average 0.4 point, increasing from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.27 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.82 percent, with an average 0.3 point, rising from last week’s 3.77 percent average. A year ago, 5-year ARMs averaged 3.13 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 051818

States Where Owners Are Likely to Move

States Where Owners Are Likely to Move
ATTOM Data Solutions   article by Daily Real Estate News | May 17, 2018

Nevada has the highest share of homeowners who are likely to move, according to a new report released by ATTOM Data Solutions. Homeowners in Delaware, Florida, Colorado, and Virginia rounded out the top five places where homeowners are showing the greatest likelihood of moving.

ATTOM Data Solutions, a real estate research firm, culled data from purchase loan applications on residential real estate transactions for its first quarter Pre-Mover Housing Index. The index is based on the ratio of homes with a “pre-mover” flag during a quarter to total single-family homes and condos in a geographic area. An index reading above 100 indicates a home will likely be sold in the next 90 days in a given market.

By metro area, the top 10 highest pre-mover locales are in: Colorado Springs, Colo. (280 reading); Manchester-Nashua, N.H. (213); El Paso, Texas (213); Washington, D.C. (208); Orlando, Fla. (201); Tampa-St. Petersburg, Fla. (200); Las Vegas (199); Charleston, S.C. (198); Nashville, Tenn. (185); and Jacksonville, Fla. (184).

“The pre-mover index provides insight into which markets are poised to see a high percentage of homeowners moving this spring and which markets are likely to see a high percentage of homeowners staying put,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Markets with a high pre-mover index tend to be in areas where homes are still somewhat reasonably priced and have a growing job market, allowing for greater upward mobility. Markets with a low pre-mover index tend to be in areas with a struggling job market or with home prices that are out of reach for the average wage earner.”

The metros with the lowest pre-mover index were Cleveland (46 reading); Rochester, N.Y. (48); Boston (49); Pittsburgh (51); and Providence, R.I. (53).

Where Homeowners Are Moving in Q2 2018

 

Source: ATTOM Data Solutions; REALTOR® Magazine Online, Daily Real Estate News 051718

Mortgage Rates Barely Stirred This Week

Mortgage Rates Barely Stirred This Week
Freddie Mac   article by Daily Real Estate News | May 11, 2018

Mortgage rates have mostly taken a pause after a series of rises in April. The 30-year fixed-rate mortgage averaged 4.55 percent last week, unchanged from a week ago.

“The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth, and restrained inflation,” says Sam Khater, Freddie Mac’s chief economist. “As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season.”

Still, mortgage rates are up 50 basis points from a year ago, Khater notes. This has “put pressure on the budgets of some home shoppers” as “weak inventory levels are what’s keeping the housing market from a stronger sales pace.”

Freddie Mac reports the following national averages with mortgage rates for the week ending May 10:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, unchanged from a week ago. A year ago, 30-year rates averaged 4.05 percent.
  • 15-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.4 point, falling from last week’s 4.03 percent average. A year ago, 15-year rates averaged 3.29 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.77 percent, with an average 0.3 point, rising from last week’s 3.69 percent average. A year ago, 5-year ARMs averaged 3.14 percent.

Source: Freddie Mac; REALTOR® Magazine Online, Daily Real Estate News 051118