Housing Continues to be on Fire
The New Home Sales report was just released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.  This report showed a lot of strength in the national housing market for the month of October.  
This report showed that there were 999,000 houses sold, which is a slight drop of 0.3% from September.  This drop was on the heels of a 4.5% revision to September’s number.  Without this revision, we would have seen a positive monthly increase of new home sales.  Also, when comparing to October of last year, sales are up by about 41.5%!  The median home price was up by 2.5% to 330,000, but remember this doesn’t tell you appreciation, this just tells you the number that is in the middle of all the homes sold. A better read into appreciation would be from the Case Shiller Home Price Index, which was recently released at 7%.   In regards to the supply of new homes, inventories were very low, and there were only 278,000 “new” homes for sale, which represents a supply of more than three months at the current sales rate.  Imagine how many more sales there would be if the supply was even slightly higher!  This report, like many other recent housing reports, most certainly points to a very hot housing market.


October Home Sales Crush Expectations!

According to the National Associations of Realtors (NAR), sales of existing homes in October crushed market expectations, rising 4.3% versus September and 26.6% annually, to a seasonally-adjusted, annualized rate of 6.85 million units.  The 26.6% annualized rate marks the highest rate since February 2014.  Lawrence Yun, NAR’s chief economist, stated, “It’s quite amazing, even if home sales were to go down to 6 million, I would be happy.”  Yun went on to say, “With news that a Covid-19 vaccine will soon be available, and with mortgage rates expected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” 

In addition, strong demand for housing continues to push home prices higher and higher.  The medium existing home price in October was $313,000, up 15.5% from October of 2019.  Last month’s national increase marks 104 straight months of year-over-year gains.  With those two extremely positive reports, interest rates remaining at all time lows, and home builder confidence soaring to meet buyer demand, the housing market is as strong as it has ever been, despite economic challenges during this pandemic.

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.



Interest Rates Still Historically Low, but Will They Go Up?

According to the Mortgage Bankers Association, interest rates are about 1% lower than where they were this time last year.  These lower rates are one of the factors causing purchase volume to be up 16.5%, and refinance volume up 67% from a year ago.  

As we can see, mortgage volume is on fire, especially with refinances.  But what happens if rates increase slightly?  According to Selma Hepp, Deputy Chief Economist at CoreLogic, “Rising interest rates likely will create affordability concerns for some prospective home-buyers, given that home price appreciation has picked up in pace in recent months.” But that shouldn’t stop the housing market’s momentum, as better employment prospects could lead to more home sales in 2021.  How much do increasing rates affect affordability?  The principal and interest on a $250,000 loan at 3% equals about $1,054.  Now say that interest rates revert to where they were about a year ago and increase by 1% back to 4%.  That same loan now will have a principal and interest payment of $1,193, which is an increase of about $139 more per month. Using a 20% debt-to-income ratio for the 3% loan, the borrower’s income would need to be around $63,000 to get this loan.  When comparing to the 4% loan which is 1% higher in rate, their income would have to increase not by the same 1% but much less, closer to around a quarter of a percent (0.25%) to make up for the $139 extra per month. Affordability is typically found using monthly payments and monthly income to generate debt to income ratios.

It is important to work the numbers with a true mortgage advisor and discuss affordability regularly if you are planning on refinancing or purchasing.  Some borrowers can afford more then they think just by working the numbers.   


Housing Continues to be Stable and Healthy

The National Association of Realtors released their Pending Home Sales Report for the month of September, with the headlining number showing that signed contracts on existing homes were down 2.2%, which is much less than the expected 3% gain.  From a distance, this could look like a weak report, but let’s dig a little deeper.  Currently, the supply of existing homes, which this report examines, is currently down approximately 20% from a year ago.  Also, annual sales are actually up by 20.5%.  The way we look at it is, this report isn’t showing weakness in the purchase market, but showing weakness in the supply of homes or housing inventory.  If there were more available homes to be purchased, the numbers would look a lot better.

Another housing report that was recently released was the Federal Housing Finance Agency’s House Price Index (HPI).  The latest HPI showed that single-family homes increased 1.5% in August and 8.0% year over year.  This index is a broad measure of price changes in single-family house prices across the country that were purchased with conforming loan amounts.  All 50 states experienced positive annual growth. Tight supply, low interest rates and buyer demand all point to a continued stable and healthy housing market.

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.



Home Prices See Biggest Gain in Two Years!

According to the S&P CoreLogic Case-Shiller Index, which is a national composite of home prices from twenty cities, home prices rose 5.7% in August, as compared to a year ago.  This is the largest year-over-year gain since 2018.  The 5.7% increase follows a 4.8% increase in July.  Strong demand for housing, matched with limited inventory, continues to be the catalyst in increasing home prices.  Matthew Speakman, an economist at Zillow, stated, “By some measures, home prices are rising faster than they ever have, an incredible feat considering the market is rising from an already elevated level.”

Though home prices continued to rise in August, homebuyer demand continues to rise due to record low interest rates.  New home sales in August rose 4.6% year-over-year, marking the highest pace since 2006.  Now all we need is for the supply to match the demand, and it looks like we are heading in that direction.  According to the US Census Bureau, single-family housing starts rose to an annual rate of 1.108 million in September, which is a level not seen since 2007, and is up from the 1.021 million in August.  Overall, these are all strong reports that continue to indicate that the housing market shows no signs of slowing down.

Call your Advisors Mortgage Loan Officer today to discuss the current market in more detail and to learn what you qualify for.



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