Americans Place High Priority on Ownership

Americans Place High Priority on Ownership
National Association of Home Builders     article by Daily Real Estate News | June 6, 2017

Chart 1000More than two-thirds of Americans believe that owning a home is an essential part of the American dream, according to a new survey released by the National Association of Home Builders of more than 11,300 registered voters.

“Americans continue to place a high priority on homeownership and work hard to achieve this goal for their families,” says NAHB Chairman Granger MacDonald.

Other recent surveys also have shown a high desire for homeownership, despite the homeownership rate remaining stalled near a historical low of 64 percent. About 80 percent of millennials recently surveyed by rental website Apartment List say they hope to one day buy a home.

However, being able to afford one is the main obstacle, millennials say, that is holding them back. Thirty-six percent of the 24,000 millennial renters born between 1982 and 2004 surveyed said they’ll likely need to wait more than five years before they’ll have saved enough to buy. More than two-thirds of survey respondents say they don’t even have $1,000 in down-payment savings.

Source: National Association of Home Builders and “Wannabe Buyers Aren’t Saving Enough,” REALTOR® Magazine online (May 30, 2017); REALTOR® Magazine Online, Daily Real Estate News 060617

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First-Time Buyers at Lowest Level in Decades

First-Time Buyers at Lowest Level in Decades
Article by Daily Real Estate News | November 03, 2014

REALTORlogoDespite an improving job market and low interest rates, the share of first-time buyers fell to its lowest point in nearly three decades, according to an annual survey released today by the National Association of REALTORS®.

NAR’s Profile of Home Buyers and Sellers dates back to 1981. The average rate of first-time buyers during that time has been around four out of 10 purchases. In this year’s survey, the share of first-time buyers dropped 5 percentage points from a year ago to 33 percent, representing the lowest share since 1987 (30 percent).

“Rising rents and repaying student loan debt makes saving for a downpayment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” says Lawrence Yun, NAR chief economist. “Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”

When asked about the primary reason for purchasing, 53 percent of first-time buyers cited a desire to own a home of their own. Most in this group say they plan to stay in their home for 10 years and they are 10 percent more likely to purchase a townhouse or a condo than repeat buyers. The median age of first-time buyers was 31, unchanged from the last two years, and the median income was $68,300 (up from $67,400 in 2013). The household composition of all buyers responding to the survey was mostly unchanged from a year ago; 65 percent were married couples, 16 percent single women, 9 percent single men, and 8 percent unmarried couples. Thirteen percent of survey respondents were multi-generational households, including adult children, parents and/or grandparents.

The typical first-time buyer purchased a 1,570 square-foot home costing $169,000. The survey also found that 47 percent of first-time buyers said the mortgage application and approval process was much more or somewhat more difficult than expected (an increase of four percent over last year). Among 23 percent of first-time buyers who said saving for a downpayment was difficult, more than half (57 percent) said student loans delayed saving, up from 54 percent a year ago.

In addition to tapping into their own savings (81 percent), first-time buyers used a variety of outside resources for their downpayment. Twenty-six percent received a gift from a friend or relative, with 6 percent receiving a loan from a relative or friend. Ten percent sold stocks or bonds, or tapped into a 401(k) fund. Ninety-three percent of entry-level buyers chose a fixed-rate mortgage, with 35 percent financing their purchase with a low-downpayment Federal Housing Administration-backed mortgage (down from 39 percent in 2013), and 9 percent using the Veterans Affairs loan program with no downpayment requirements.

“FHA premiums are too high in relation to default rates and have likely dissuaded some prospective first-time buyers from entering the market,” says Yun. “To put it in perspective, 56 percent of first-time buyers used a FHA loan in 2010. The current high mortgage insurance added to their monthly payment is likely causing some young adults to forgo taking out a loan.”

Source: “NAR Annual Survey Reveals Notable Decline in First-time Buyers,” National Association of REALTORS® (Nov. 3, 2014); Realtor Magazine Online, Daily Real Estate News 110414

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Builder Confidence Rises Across the U.S.

Builder Confidence Rises Across the U.S.

NAHB-LogoBuilder Confidence Rises Two Points in August

August 18, 2014 – Builder confidence in the market for newly built, single-family homes rose two points to 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today. This third consecutive monthly gain brings the index to its highest level since January.

“As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “However, builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in August. The indices gauging current sales conditions and expectations for future sales each rose two points to 58 and 65, respectively. The index gauging traffic of prospective buyers increased three points to 42.

“Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring,” said NAHB Chief Economist David Crowe. “Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand.”

Every region saw a gain in its three-month moving average HMI score in August. The Midwest posted a seven-point increase to 55 and the West registered a four-point gain to 56. The Northeast posted a two-point gain to 38 and the South was up one point to 52.

Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

Source National Association of Home Builders (NAHB), 081814

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The Return of the First-Time Home Buyer?

The Return of the First-Time Home Buyer?
Daily Real Estate News | July 11, 2014

1403 RobertELee 1Young people are starting to leave their parent’s home and move out on their own. The Current Population Survey for 2013 showed a drop in the percentage of 20-somethings living with parents, marking the first decline since 2005.

As of now, the percentage drop appears minimal: Those aged 18 to 24 living with parents or a related subgroup dropped from 56 percent to 55 percent in one year. However, Brad Hunter, chief economist at Metrostudy, notes in a Builder online article that the one-percentage-point decline represents 300,000 people who are now looking for a household of their own that who were previously living with their parents.

Indeed, a recent report by Harvard University’s Joint Center for Housing Studies predicts that 2.7 million more households will form among people in their 30s over the next decade.

First-time buyers usually make up about 40 percent of home buyers. However, lately, the share has been in the 35 percent to 38 percent range, Hunter says. For existing-home sales, first-time buyers’ share is less than one-third of all buyers, at 27 percent in May, according to the National Association of REALTORS®.

The delay in millennials branching out on their own has greatly reduced household formation in recent years. Household formation rates usually average 1.4 million per year. Lately, the rate has been a fraction of that, about 500,000 to 700,000 a year.

“We are seeing some evidence that young people who had moved in with their parents or relatives are now finding the means and the motivation to move out and get their own place,” Hunter notes. “While most of these newly-emerging twenty-somethings will be going into rentals, the movement out of the parental home is nonetheless expected to support a series of positive steps from rentals to entry-level re-sales to entry-level new homes, and on up the ladder.”

Source: “First-Time Buyers and New-Home Demand: Reverting to Normal,” Builder (July 10, 2014); Daily Real Estate News (071114)

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Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage Applications Decrease in Latest MBA Weekly Survey
Article by MBA | June 4, 2014

MBA-LogoWASHINGTON, D.C. (June 4, 2014) — Mortgage applications decreased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 30, 2014. This week’s results include an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 14 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 15 percent compared with the previous week and was 17 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 53 percent of total applications from 52 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

Interest rates for most products fell to their lowest levels in close to a year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.26 percent from 4.31 percent, with points decreasing to 0.13 from 0.15 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.22 percent from 4.23 percent, with points decreasing to 0.11 from 0.16 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.99 percent from 4.04 percent, with points decreasing to -0.46 from -0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.39 percent from 3.42 percent, with points increasing to 0.07 from 0.06 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.11 percent from 3.13 percent, with points decreasing to 0.05 from 0.19 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

### The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: www.mba.org. ###

Source: MBA Weekly Mortgage Application Survey, 060414

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Modest Gain in Builder Sentiment for Spring

Modest Gain in Builder Sentiment for Spring
Article by Daily Real Estate News; March 18, 2014

Builder confidence in the single-family new-home market ticked up by only one point in March as builders remain concerned about several challenges in the sector, according to the latest reading on the National Association of Home Builders/Wells Fargo Housing Market Index.

“The March HMI mirrors last month’s sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and labor,” says NAHB Chairman Kevin Kelly.

Several factors are raising concerns about meeting demand for the spring buying season, says NAHB Chief Economist David Crowe.

“These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale,” Crowe says.

NAHB’s index gauges builder perceptions of current single-family home sales and sales expectations for the next six months, as well as buyer traffic. Overall, builder sentiment in March was 47; any number below 50 indicates that more builders view conditions as poor than good.

Broken out, the component gauging current sales conditions was 52 in March; the component measuring sales expectations for the next six months was 53; and the component measuring buyer traffic rose two points to 33.

Source: National Association of Home Builders; Daily Real Estate News (031814) | Blog, In The News, distribution provided by Kenneth Bargers and Bargers Solutions, member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

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Mortgage Rates Climb on Strengthening Economy

Fixed Mortgage Rates Jump
Article by Freddie Mac; December 5, 2013

CLEAN, VA–(Marketwired – Dec 5, 2013) – Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage increasing strongly following better than expected reports on private job growth and new home sales.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.46 percent with an average 0.5 point for the week ending December 5, 2013, up from last week when it averaged 4.29 percent. A year ago at this time, the 30-year FRM averaged 3.34 percent.
  • 15-year FRM this week averaged 3.47 percent with an average 0.4 point, up from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 2.67 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.99 percent this week with an average 0.4 point, up from last week when it averaged 2.94 percent. A year ago, the 5-year ARM averaged 2.69 percent.
  • 1-year Treasury-indexed ARM averaged 2.59 percent this week with an average 0.4 point, down from last week when it averaged 2.60 percent. At this time last year, the 1-year ARM averaged 2.55 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.

Quotes Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates increased this week following stronger than expected economic data releases. Private companies added 215,000 new jobs in November according to the ADP employment report, well above the consensus. In addition, revisions added 54,000 jobs in the prior month. Lastly, new home sales rose 25 percent in the month of October to a seasonally adjusted 444,000 annual pace, though this followed a weaker than expected September report and downward revisions over the summer months.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. For more information please visit www.FreddieMac.com and Twitter: @FreddieMac.

Source: Freddie Mac (120513) | Blog, In The News, distribution provided by Kenneth Bargers and Bargers Solutions, member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee