Dominique Delcourt

Sales of existing homes were relatively flat in August from the month before, according to new numbers from the National Association of Realtors. Home sales were down just 0.4 percent month-over-month. With the sales season coming to a close and the market softening overall, that’s not a surprise. But though sales were flat, homes still sold quickly. In fact, 81 percent of homes sold during the month were on the market less than 30 days. The typical property was on the market only 16 days – one day faster than last year at the same time. Why are homes selling so quickly? Simply put, the inventory of homes for sale remains low. That means fewer choices for home buyers. Lawrence Yun, NAR’s chief economist, says it’ll likely stay this way for a while. “Inventory will remain tight in the coming months and even for the next couple of years,” Yun said. “Some homeowners are unwilling to trade up or trade down after locking in historically low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage demand was up almost 4 percent last week from the week before. The increase was the first in six weeks and included a 1 percent gain in the number of borrowers applying for loans to buy homes. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the improvement is evidence that the market is still volatile. “As with the swings in rates and other uncertainties around the housing market and broader economy, mortgage applications increased for the first time in six weeks but remained well below last year’s levels, with purchase applications 30 percent lower and refinance activity down 83 percent,” Kan said. “The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as LaborDay-adjusted results the prior week.” Also in the report, rates moved higher last week, with increases to 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The MBA’s survey has been conducted since 1990 and covers 75 percent of all retail residential mortgages. (source)

During the frenzied days of last year’s housing market, home buyer competition and bidding wars were common. Buyers often had to offer well above a seller’s asking price, if they hoped to have a chance at having their offer accepted. But now that the market has softened somewhat, should buyers still expect to pay more than a home’s list price? According to one recent analysis, maybe not. The analysis looked at 51 metro areas and found the average close-to-list price ratio in August was 99 percent, meaning homes sold for 1 percent less than the asking price. That’s down from 101 percent in July and 104 percent in April. In other words, home buyers shouldn’t expect to find any bargains when they start shopping for homes, but they’re much less likely to have to offer more than a seller’s asking price than they were last year at this time. (source)

The National Association of Home Builders conducts a monthly survey of builders to gauge their perception of the market for newly built single-family homes. The NAHB’s Housing Market Index is a closely followed indicator since builders have a unique perspective on the new-home market. According to the results of their September survey, home builder optimism fell from the month before, as the housing market continues to adjust to higher mortgage rates and home prices. Robert Dietz, NAHB’s chief economist, says because of the current market’s challenges, there’s been an increasing number of builders offering incentives to buyers. “In this soft market, more than half of the builders in our survey reported using incentives to bolster sales, including mortgage rate buydowns, free amenities, and price reductions,” Dietz said. It’s true. The number of home builders reporting that they reduced prices rose to 24 percent in September, up from 19 percent the month before. That’s encouraging news for prospective buyers interested in purchasing a newly built home. (source)

Summer’s great for a lot of reasons, but it may not be the best time to buy a home. A hot summer market means competition, higher prices, and faster sales. That can be stressful for home buyers. But things begin to change near the end of September, as the fall market begins. And, according to a new analysis from the National Association of Realtors’ consumer website, early fall may be the best time of the year to buy a house. “If you’re flexible on your timing and can budget for higher rates, early fall can be a great time to secure a home, with a number of factors aligning to make it the best time of the year both in terms of price and competition,” Danielle Hale, the website’s chief economist, says. “This is especially true for first-time buyers and others who are not trying to sell a home at the same time as their purchase.” The analysis found that fall buyers can expect approximately 46 percent more available homes for sale compared to the average week to date. It also found, relative to summer’s peak, buyers would save an average of around $20,000 on the price of their home. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week from the week before. Rates were up across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says rates are reacting to uncertainty. “The spread between the conforming 30-year fixed mortgage rate and both ARM and jumbo loans remained wide last week, at 118 and 45 basis points, respectively,” Kan said. “The wide spread underscores the volatility in capital markets due to uncertainty about the Fed’s next policy moves.” Despite higher rates, though, demand for home purchase loans was relatively unchanged last week, moving 0.2 percent higher from the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Conditions are better for buyers when there are more homes for sale. That’s why it’s good news that active listings are finally moving higher after years of being historically low. According to one recent analysis, the number of active listings available on a typical day in August was 26.6 percent higher than it was at the same time last year. That’s a little less than the previous month when active listings were 30.7 percent higher year-over-year. Still, the fact that listings continue to grow at a near-record pace is undoubtedly good for buyers. Danielle Hale, chief economist for the National Association of Realtors’ consumer website, says the market is finding better balance. “As we soak up the last days of summer, the housing market is beginning to find more balance between buyer-friendliness and still favorable selling conditions,” Hale said. “For many of today’s buyers, the uptick in for-sale home options is taking away the sense of urgency that they felt during the past two years, when inventory was scarce.” (source)

The housing market has slowed down this year. Mortgage rates increased from record lows, buyer demand calmed, and home price increases have begun to moderate. But while market conditions have definitely shifted, it’s still a good time to be a homeowner. In fact, according to one recent analysis, homeowners continued to gain near-record equity during the second quarter of this year. The numbers – from CoreLogic’s Homeowner Equity Insights report – show average homeowner equity increased $60,000 from last year at the same time. Selma Hepp, interim lead of the office of the chief economist, says the gains put homeowners in good position. “For many households, home equity is the only source of wealth creation,” Hepp said. “As a result, recent record gains in equity and record declines in loan-to-value ratios will provide many owners with a financial buffer in case economic conditions worsen. In addition, record equity continues to provide fuel for housing demand, particularly if households are relocating to more affordable areas.” (source)

You can tell a lot about home buyers by what – and where – home builders are building homes. Their business depends on giving buyers what they want. So the homes they’re building are a good reflection of what’s popular with today’s buyers. For that reason, the National Association of Home Builders recently looked at the past two and a half years of home building activity. Their Home Building Geography Index offers insight into where buyers want to live. What it found was a shift away from large, metro areas toward lower-density markets in the outer suburbs. Robert Dietz, NAHB’s chief economist, says there are several reasons for the shift. “This shift was first caused by the initial impact of Covid on housing demand, which favored lower density neighborhoods,” Dietz says. “The shift continued in recent months due to housing affordability conditions that are causing both prospective renters and buyers to expand their geographic search for housing, aided by hybrid work patterns that allow for a combination of remote and office work.” Whatever the reason, the data is clear. The index shows the market share for single-family home building in large metros and inner suburbs fell about 3 percent over the past two years, while building in the outer suburbs was up almost 2 percent. (source)

Each month, Fannie Mae asks Americans how they feel about the housing market, mortgage rates, prices, and whether it’s a good time to buy or sell a home. Their monthly survey is a good gauge of what’s happening in today’s market and what’s ahead for buyers and sellers. In August, survey results were mixed. For example, the number of respondents who said it’s a good time to buy a house improved from July, rising 8 percent month-over-month. But while buying sentiment improved, it was balanced by a decline in the number of participants who said it’s a good time to sell. Survey respondents also said they think mortgage rates will fall over the next 12 months but were split over what will happen to home prices. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the change in price expectations was significant. “The share of consumers expecting home prices to go down over the next year increased substantially in August,” Duncan said. “We also observed a large decline in consumers reporting high home prices as the primary reason for it being a good time to sell a home, suggesting that expectations of slowing or declining home prices have begun to negatively affect selling sentiment.” (source)