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MARCH 30, 2023

Mortgage Rates Hit Lowest Level in 6 Weeks

By Matt Ott

At 6.32%, the average 30-year, fixed-rate mortgage declined from last week’s average 6.42% – a ray of hope for buyers seeking to secure a home this spring.

WASHINGTON – The average long-term U.S. mortgage rate inched down this week to its lowest level in six weeks, just as the spring buying season gets underway.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate fell for the third straight week to 6.32%, from 6.42% last week. The average rate a year ago was 4.67%.

The recent decline in mortgage rates is good news for prospective homebuyers, as many were pushed to the sidelines during the past year as the Federal Reserve cranked up its main borrowing rate nine straight times in a bid to bring down stubborn, four-decade high inflation.

Also helping buyers, home prices appear to be leveling off. The national median home price slipped 0.2% from February last year to $363,000, marking the first annual decline in 13 years, according to the National Association of Realtors.

One thing that hasn’t gotten much better is the supply of homes.

“Over the last several weeks, declining rates have brought borrowers back to the market, but as the spring home buying season gets underway, low inventory remains a key challenge for prospective buyers,” said Sam Khater, Freddie Mac’s chief economist.

Rising borrowing costs can add hundreds of dollars a month in costs for homebuyers and put the brakes on the housing market. Before surging 14.5% in February, sales of existing homes had fallen for 12 straight months to the slowest pace in more than a dozen years.

In 2022, existing U.S. home sales fell 17.8% from 2021, the weakest year for home sales since 2014 and the biggest annual decline since the housing crisis began in 2008, the National Association of Realtors reported earlier this year.

The average long-term rate hit 7.08% in the fall – a two-decade high – as the Federal Reserve quickly cranked up its key lending rate with multiple jumbo hikes in a bid to cool the economy and stymie persistent, four-decade high inflation.

In their latest quarterly economic projections, the policymakers forecast that they expect to raise that key rate just once more – from its new level of about 4.9% to 5.1%, the same peak they had projected in December.

While the Fed’s rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investor expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.

Treasury yields have fluctuated wildly since the collapse of two mid-size U.S. banks two weeks ago. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, was 3.57% Thursday, but had been above 4% early in March.

The rate for a 15-year mortgage, popular with those refinancing their homes, fell this week to 5.56% from 5.68% last week. It was 3.83% one year ago.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Weekly Housing Market Update -2/17/2023

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This week, Chief Economist Danielle Hale discusses what small business optimism, consumer and producer inflation data, and retail sales data signal about the U.S. economy. She also highlights what these data imply for the Fed’s likely path forward.

0:10 – Business optimism trends
0:25 – Inflation trends
1:24 – Mortgage rates
1:40 – Construction trends
2:11 – Real estate listings trends

At 6.14%, Weekly Mortgage Rates Hit Sept. Lows

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JANUARY 19, 2023

It’s down from last week’s 6.33%. Freddie Mac’s chief economist says it provides a “much-needed boost” for the housing market, but inventory is a concern.

Copyright 2023 The Associated Press. All rights reserved.

WASHINGTON (AP) – The average long-term U.S. mortgage rate fell this week to its lowest level since September, a potential boost to the housing market which has been in decline for nearly a year.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate fell to 6.15% from 6.33% last week. A year ago the average rate was 3.56%.

The average long-term rate reached a two-decade high of 7.08% in the fall as the Federal Reserve continued to boost its key lending rate in its quest to cool the economy and tame inflation.

The big rise in mortgage rates during the past year has throttled the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.

Though home prices have retreated as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable for many people, but recent rate declines could give some homebuyers new hope.

“Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”

At its final meeting of 2022, the Federal Reserve raised its rate 0.50 percentage points, its seventh increase last year. That pushed the central bank’s key rate to a range of 4.25% to 4.5%, its highest level in 15 years.

Though inflation at the consumer level has declined for six straight months, Fed officials have signaled that they may raise the central bank’s main borrowing rate another three-quarters of a point in 2023, which would be in a range of 5% to 5.25%.

Rates for 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.

The rate for a 15-year mortgage, popular with those refinancing their homes, also declined this week, to 5.28% from 5.52% last week. It was 2.79% one year ago.

NAR: 3Q Home Prices Up in 98% of Metros

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By Kerry Smith -NOVEMBER 11, 2022

Home prices rose 8.6% in 3Q, with 46% of metros seeing double-digit price growth – a drop from 80% in 2Q. Of the top 10 high-price-increase metros, 7 are in Fla.

WASHINGTON – An overwhelming majority of metro markets saw home price gains in the third quarter of 2022, according to the National Association of Realtors® (NAR). That increase was in spite of rising mortgage rates that approached 7% and declining sales.

Of the 185 metros NAR tracks, 46% had double-digit price increases, though that’s down from 80% in the second quarter.

The national median single-family existing-home price climbed 8.6% year-to-year to $398,500. While still a notable price increase, it’s down from the 14.2% recorded in the previous quarter.

“Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising,” says NAR Chief Economist Lawrence Yun. “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic back in 2019.”

Among the major U.S. regions, the South registered the largest share of single-family existing-home sales (44%) and the greatest year-over-year price appreciation (11.9%) in the third quarter. Prices were up 8.2% in the Northeast, 7.4% in the West, and 6.6% in the Midwest.

Fla. has 7 of top 10 metros for price growth

  1. North Port-Sarasota-Bradenton – 23.8%
  2. Lakeland-Winter Haven – 21.2%
  3. Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. – 21.1%
  4. Panama City – 20.5%
  5. Deltona-Daytona Beach-Ormond Beach – 19.6%
  6. Port St. Lucie – 19.4%
  7. Greenville-Anderson-Mauldin, S.C. – 18.9%
  8. Kingsport-Bristol-Bristol, Tenn.-Va. – 18.8%
  9. Tampa-St. Petersburg-Clearwater – 18.8%
  10. Ocala (18.8%

10 most expensive markets in the U.S.

  1. San Jose-Sunnyvale-Santa Clara, Calif. – $1,688,000; 2.3%
  2. San Francisco-Oakland-Hayward, Calif. – $1,300,000; -3.7%
  3. Anaheim-Santa Ana-Irvine, Calif. – $1,200,000; 9.1%
  4. Urban Honolulu, Hawaii – $1,127,400; 7.6%
  5. San Diego-Carlsbad, Calif. – $900,000; 5.9%
  6. Los Angeles-Long Beach-Glendale, Calif. – $893,200; 3.8%
  7. Boulder, Colo. – $826,900; 7.5%
  8. Naples-Immokalee-Marco Island – $746,600; 16.7%
  9. Seattle-Tacoma-Bellevue, Wash. – $741,300; 4.6%
  10. Boston-Cambridge-Newton, Mass.-N.H. – $698,900; 6.2%

“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun says. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”

Higher cost for monthly payments

In the third quarter of 2022, stubbornly high home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840. That’s a marginal increase from the second quarter ($1,837) but a significant year-to-year jump of $614 – or 50%.

Families typically spent 25% of their income on mortgage payments, down from 25.3% in the prior quarter, but up from 17.2% one year ago.

“A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rates down to around 6%,” Yun says. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”

First-time buyer challenges

First-time buyers looking to purchase a typical home during the third quarter of 2022 continued to feel the impact of housing’s growing unaffordability. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 – nearly identical to the previous quarter ($1,807) but an increase of almost $600 (49%), from one year ago ($1,210).

First-time buyers typically spent 37.8% of their family income on mortgage payments, up from 36.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 59 markets, up from 53 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 17 markets, down from 23 in the previous quarter.

© 2022 Florida Realtors®

Real Estates Current Market Silver Lining

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For those looking for the good news about today’s real estate market. A bit of a deep dive, about 60 minutes worth but excellently delivered. Three main facts tell us it’s not all doom and gloom. Combine them with the time of year and the general fear that has most buyers/sellers on the sidelines, spells opportunity. (40:00). We can help should you decide to take advantage of today’s market.

  • Historical trends, what happens after quantitative tightening (12:00)
  • Demographics, there’s a lot of millennials (24:50)
  • Inventory levels, yes they are still historically low (22:00)

Weekly Market Report: Week Ending Oct. 16

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Access this weekly report for real-time data on residential market activity across the Bright MLS footprint.
October 17,  2022 Lisa Sturtevant, PhD

Here are the highlights for the week ending October 16, 2022:

  • Inventory continues to increase throughout the Bright footprint. The average number of active listings during the week ending October 16 was up 17.5% compared to the same week a year ago. Active listings edged up 0.9% compared to last week, which is the second weekly increase in a row. Despite these increases, overall supply across the region remains very low.
  • Market activity is still below 2019 levels as buyers and sellers continue to remain on the sidelines. On the buyer side, both closed sales and new purchase contracts were down significantly compared to last year at this time and were even lower than before the pandemic. Closed sales this week were about 14% lower than the same week during 2019, while the number of new purchase contracts tracked 22% lower than during the same week in 2019.
  • There was a slight uptick in both new purchase activity and new listings compared to a week ago. Typically, both the number of new purchase contracts and new listings decline during the second week of October. This year, however, there were slight increases, with new purchase contracts 2.1% higher than a week ago and new listings up 3.0% week-to-week. These weekly increases could indicate some buyers and sellers are starting to act in anticipation of higher mortgage rates later this fall.
  • Homes are still selling relatively quickly. The median days on market was 15 during the week ending October 16, which is up four days compared to last year and is one day longer than a week ago. The median days on market is still much lower than 2019, when homes typically took 25 days to sell.
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Scott Bradley Brixen – ListReports Blog

Real Estate News

Interest rates for the average 30-yr, fixed-rate mortgage according to Freddie Mac’s PMMS hit:

4% in March 😟
5% in April 😰
6% in early-September 😨
7% (well, almost) in late-September 😱

The slowdown continues, but we have yet to see the impact of the most recent (massive) jump in mortgage rates on homebuyer demand.

August existing home sales dropped for the 7th straight month. Price growth decelerated further to “just” 8% YoY. [Source: Realtor.com]

Meanwhile, pending sales for August dropped 2% MoM and 24% YoY. The NAR now forecasts existing home sales to fall 15% YoY in 2022, with new home sales down 21% YoY. [Source: NAR]

Case-Shiller Index

Home price growth slowed to 15.8% YoY in July, from 18.1% YoY in June. That may not seem like much, but it’s the biggest 1-month drop in the index’s history.

Case-Shiller is the gold standard for home price appreciation because it tracks the sales prices of very similar homes across 20 big cities. It’s an ‘apples to apples’ comparison. But that accuracy comes at a cost…the data is 2 months old by the time we get it.

Mortgage Market

An extremely volatile week for the bond market (after the Fed raised rates 75bps) saw 30-year, fixed-rate mortgages briefly exceed 7% [with no points], before dropping back to around 6.75%. [Source: Mortgage News Daily]

Freddie Mac’s closely watched PMMS survey saw the interest rate on the average 30-year, fixed-rate mortgage climb to 6.7%. Keep in mind that this figure includes an average 0.9 points purchased. Without those points, the rate would have been at/ahead of 7%.

Still a Seller’s Market

Demand is falling and inventory has risen, but in most markets, well-priced homes are still selling very, very quickly.

In fact, the average Days on Market for sold properties has only edged up from 14 (in June & July) to 16 in August. In 2011 that figure was 96! Looked at another way, 81% of homes sold in August had been on the market less than a month.

That said, the average number of offers received for each property sold has plunged from a frenzied 5.5 in April 2022 to 2.5 in August. That’s actually getting pretty close to “normal” pre-pandemic levels of competition.

National Housing Stats

They Said It

“Success demands singleness of purpose. You need to be doing fewer things for more effect instead of doing more things with side effects. It is those who concentrate on one thing at a time who advance in this world.” — Gary Keller, The One Thing

“Our house is clean enough to be healthy and dirty enough to be happy” — Robyn Griggs Lawrence

Inspiration

The average duration of homeownership in the US is around 12 years. So if someone in your sphere of influence (SOI) bought a home in the last few years, there’s no reason to actively stay in touch with them, right? Wrong. Take the inverse of 12 (that’s 1/12) and you get 8.3%.

This means that, mathematically, 8% of your SOI is going to move in the next year…for reasons that you (and often they) couldn’t have predicted. Hockey legend Wayne Gretzky said “you miss 100% of the shots you don’t take.” In real estate, you probably lose 80–90% of the past clients that you don’t stay in contact with.

As the Federal Reserve raised its key interest rate Wednesday, what does it mean for home sellers and buyers?

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Weekly Housing Market Update – 9/16/22 – Chief NAR Economists, Danielle Hale, not only forecasted the rate hike she also highlights her thoughts around 2:35 of the video regarding home sellers and home buyer.

August 2022 Monthly Housing Market Trends Report

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Sabrina Speianu, Economic Data Manager, realtor.com®

  • The national inventory of active listings increased by 26.6% over last year. 
  • The total inventory of unsold homes, including pending listings, increased by just 1.3% year-over-year due to a decline in pending inventory (-21.9%). 
  • Selling sentiment declined and listing activity followed, with newly listed homes declining by 13.4% on a year-over-year basis.
  • The median list price grew by 14.3% in August, a deceleration from recent highs.
  • Time on market was 42 days, 5 days more than last year but 22 days less than typical pre-pandemic levels.
  • Regionally, large Western markets which saw some of the most growth last year and earlier this year are now showing the greatest signs of deceleration, with larger inventory increases, more price reductions, and more quickly decelerating price growth than other regions. 

Read the FULL article

NAR Chief Economist Addresses Senate Committee

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JULY 22, 2022

By Kerry Smith

Sales will weaken and for-sale inventory will grow, but it won’t do much to help affordability, Chief Economist Lawrence Yun said.

WASHINGTON – National Association of Realtors® (NAR) Chief Economist Lawrence Yun spoke before the U.S. Senate Committee on Banking, Housing and Urban Affairs as they dig deeper in an attempt to understand what’s happening in the U.S. housing market.

Yun told the committee that he doesn’t foresee a nationwide decline in home prices despite indications that price growth is set to slow. He testified that the potential for weaker sales should increase available for-sale inventory in some markets, but not enough to diminish persistent affordability constraints that, for many Americans, have kept homeownership out of reach for years.

“In the near term, I do not expect the situation to change appreciably,” Yun said Thursday. “Historic undersupply in the market, combined with continued demand, will likely drive ongoing issues with affordability for many Americans.

“Any short-term price adjustments, if they occur, will be less consequential compared to the immense longer-term housing affordability challenges we face as a country.”

Thursday’s hearing, Priced Out: The State of Housing in America, was recorded and can be viewed online.

The committee hearings come as the nation confronts a 6-million-unit housing shortage. The decades-in-the-making phenomenon has helped sustain year-over-year price growth for a record 124 consecutive months. A study of other circumstances influencing the market is also particularly compelling given COVID’s impact on U.S. housing and the more recent fluctuations in mortgage interest rates.

“When the Federal Reserve essentially went all-in in the early months of the pandemic … the decline in mortgage rates and the cautious reopening of the economy boosted housing demand,” said Yun. “The housing market always responds to changes in mortgage rates.”

Interest rates, which had been consistently in the 4-to-5% range in the decade preceding COVID-19, hovered near record lows of around 3% throughout much of 2020 and 2021. NAR’s most recent existing home sales report found that the average commitment rate for a 30-year, conventional, fixed-rate mortgage in June was up to 5.52%.

“Any increases in available inventory observed over the first half of this year have been offset by the corresponding increases in consumer costs,” Yun said on Capitol Hill, explaining that rate increases of roughly 2.5 percentage points have added about $800 per month to a median-priced house payment.

“This affordability crunch is felt most acutely as we move down the income scale and by minority households, given the current income distribution in America,” he continued. “That is why housing supply must be addressed to moderate home price and rent gains.”

© 2022 Florida Realtors®