Mortgage Rates Fall to 3-Month Low

Mortgage Rates Fall to 3-Month Low
Freddie Mac | July 6, 2018

Mortgage rates were back down across the board again this week, offering some temporary relief to home buyers. Rates posted a rapid increase throughout most of the spring but have recently reversed course, declining in five of the past six weeks. The 30-year fixed-rate mortgage is now at its lowest average since April.

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“The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points,” says Sam Khater, Freddie Mac’s chief economist. “What that means for buyers is good news. Mortgage rates may have a little more room to decline over the very short term.”

Freddie Mac reports the following national averages with mortgage rates for the week ending July 5:

  • 30-year fixed-rate mortgages: averaged 4.52 percent, with an average 0.5 point, dropping from last week’s 4.55 percent average. Last year at this time, 30-year rates averaged 3.96 percent.
  • 15-year fixed-rate mortgages: averaged 3.99 percent, with an average 0.4 point, falling from last week’s 4.04 percent average. A year ago, 15-year rates averaged 3.22 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.74 percent, with an average 0.3 point, falling from last week’s 3.87 percent average. A year ago, 5-year ARMs averaged 3.21 percent.

Source: Freddie Mac; REALTOR® Magazine 070618

Falling Mortgage Rates Offer Affordability Relief

Falling Mortgage Rates Offer Affordability Relief
Freddie Mac | June 29, 2018

Mortgage rates declined this week, marking the fourth drop in the past five weeks, Freddie Mac reports.

“The decrease in borrowing costs is a nice slice of relief for prospective buyers looking to get into the market this summer,” says Sam Khater, Freddie Mac’s chief economist. “Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis points higher than this week a year ago.”

Overall, Khater says the economy and the housing market are on “solid footing” this summer, which should support continued strength in housing demand. “Home price growth is still high, but is expected to moderate, and while sales activity has slowed, it’s primarily because of stubbornly low supply,” Khater says.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 28:

  • 30-year fixed-rate mortgages: averaged 4.55 percent, with an average 0.5 point, falling from last week’s 4.57 percent average. Last year at this time, 30-year rates averaged 3.88 percent.
  • 15-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.5 point, which is unchanged from a week ago. Last year at this time, 15-year rates averaged 3.17 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.87 percent, with an average 0.3 point, rising from last week’s 3.83 percent average. A year ago, 5-year ARMs averaged 3.17 percent.

Source: Freddie Mac; REALTOR® Magazine 062918

Yun: Spring Was the Season of ‘Unmet Expectations’

Yun: Spring Was the Season of ‘Unmet Expectations’
National Association of REALTORS® | June 27, 2018

1806_May_PHSFor the fifth consecutive month, pending home sales dropped in May—a sign that the recently ended spring buying season didn’t live up to the hype typical for real estate’s traditionally busiest time of year, the National Association of REALTORS® reported Wednesday. Contract signings also eased last month, and a significant sales decline in the South offset gains in other regions of the country.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 0.5 percent in May to a reading of 105.9. The index is down 2.2 percent on an annual basis. NAR Chief Economist Lawrence Yun says this year’s spring buying season will be remembered as one of “unmet expectations,” with pending home sales at the second lowest level in the past year. He says inventory shortage is the main culprit. “REALTORS® in most of the country continue to describe their markets as highly competitive and fast-moving, but without enough new and existing inventory for sale, activity has essentially stalled,” Yun says.

However, buyer demand hasn’t slowed, which is evident in quicker sales and strong price growth, Yun says. The troubling reality is that gains in home prices continue to outpace income growth, housing inventory has fallen for 36 consecutive months, and listings typically go under contract in just over three weeks.

“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market,” Yun says. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”

Source: National Association of REALTORS®; REALTOR® Magazine Online 062718

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

4 Outdoor Projects That Offer the Most Paybacks

4 Outdoor Projects That Offer the Most Paybacks
realtor.com | June 25, 2018

Shower Image7Outdoor projects can help boost a home’s value by up to 10 percent, according to a new realtor.com® report. Outdoor showers, barbecue stations, entertainment pools, and firepits are the top projects that realtor.com® researchers found with the biggest potential increases to a home’s price.

For its research, realtor.com® analyzed listings at its site for summer-related outdoor features in single-family homes listed for $150,000 or more.

An outdoor shower offers the biggest return on investment, according to realtor.com®’s research. Researchers found that homes with outside bathing areas had a 97 percent price-per-square-foot premium. They speculate that such a feature may be appealing since it’s usually found in homes that are near a beach or an expensive property with other luxury amenities.

Researchers also found that homes with barbecue stations are 26 percent more expensive than those without. In Utah, homes with barbecue stations tend to be listed for 58 percent more per square foot than other homes in the state.

Also, entertainment pools—with enough space around them for others to lounge—could give a home a 26 percent increase in its value. In New York state, homes with such entertainment pools were 224 percent pricier per square foot than those without.

Firepits and backyard fireplaces are also proving to be a hot way for homeowners to boost their home prices. Homes with firepits or backyard fireplaces had a 25 percent premium, according to researchers.

“Outdoor features can give a home a special quality in the market,” says Javier Vivas, realtor.com®’s director of economic research. “And anytime you have a unique feature, it can bolster the prospective value of a home.”

Source: “Top Price-Boosting Summer Fun Home Features,” realtor.com® (June 21, 2018); REALTOR® Magazine 062518

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