Mortgage Rates See Slight Increase Last Week

Average mortgage rates were up last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. Mortgage rates increased across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, 15-year fixed-rate loans, and mortgages backed by the Federal Housing Administration. Despite the increase, however, rates remain roughly within the same range they’ve been since they jumped last November. Joel Kan, MBA’s associate vice president of industry surveys and forecasting, says last week’s increase was related to expectations that the Fed might raise interest rates soon. “Rates were up last week as markets assessed that the Fed might increase rates sooner than expected on the strength of a recent pick-up in inflation readings” Kan told CNBC. Whatever the reason, higher mortgage rates have taken a toll on refinance activity, which dropped again last week. Demand for loans to buy homes also fell last week and, according to Kan, isn’t as high as it usually is at this time of year. Typically, buyers are beginning the mortgage process in anticipation of the spring season. This year’s lull may be due to higher interest rates, though it may also be the result of there being fewer homes available for sale in many markets across the country. More here.

Why New Homes Matter Even If You Don’t Buy One

If you follow real estate, you’ve heard a lot about inventory lately. That’s because, inventory – which refers to the number of homes available for sale – plays a big role in how much house the typical buyer can afford. When there are more homes for sale than there are interested buyers, home prices fall. These days, there are a lower-than-usual number of homes available to buy in many markets, which is why prices have continued to rise across the country. Of course, one good way to boost inventory is to build new homes. New home construction produces more choices for buyers and more competition among sellers, which helps balance the market. For this reason, the National Association of Home Builders regularly surveys builders to get a feel for whether they are optimistic about the market and likely to build more homes. The NAHB’s Housing Market Index scores builders answers on a scale where any number above 50 indicates more builders feel conditions are good than poor. In February, the index fell two points but remains in positive territory at 65. Granger MacDonald, NAHB’s chairman, says builders are generally optimistic. “While builders remain optimistic, we are seeing the numbers settling back into a normal range,” MacDonald said. Regionally, the Northeast and South were down, while the Midwest rose one point and the West was unchanged at 79. More here.

Despite Challenges Outlook Sees Growth Ahead

The housing market is always evolving – and at different rates depending on where you live. Whether you’re looking at new home construction or mortgage rates, the numbers are always in flux. Because of this, Fannie Mae’s monthly Economic & Strategic Research Group releases a monthly Economic and Housing Outlook to analyze where things may be headed. According to their most recent release, it’s difficult to forecast how things may play out through the rest of this year. On the one hand, lower inventory and higher mortgage rates suggest that affordability conditions will make it tougher for buyers looking for a house this year. On the other, the job market, wages, and economic optimism have all been trending upward recently, which could help offset some of the challenges ahead for buyers. Overall, Doug Duncan, Fannie Mae’s chief economist, says housing should continue to grow. “We expect housing expansion to continue, albeit at a more moderate pace than last year given continued pressure on affordability,” Duncan said. “Depressed inventory, particularly in the more affordable segments, will likely constrain sales and push home price gains that outpace income growth.” The report notes, however, that early indicators show buyer demand is still strong. In fact, both pending home sales and demand for loans to buy homes have recently shown an upswing. More here.

Buying A Home Remains An Affordable Choice

Despite rising prices and higher mortgage rates, an analysis of homes sold during the final quarter of 2016 found that 59.9 percent of both new and existing homes were affordable to a family earning the median income of $65,700. The numbers – from the National Association of Home Builders Housing Opportunity Index – show that the majority of homes available for sale are still within reach for Americans hoping to buy this year. Robert Dietz, NAHB’s chief economist, says buying remains an affordable choice, despite the fact that affordability conditions fell slightly from the previous quarter. “Affordability remains positive nationwide even as demand is outstripping supply in many markets,” Dietz said. “Though mortgage rates are rising, incomes should rise faster as well, helping to keep home prices affordable.” The report found the national median home price increased to $250,000 in the fourth quarter, up from $247,000. Still, a stronger job market and rising wages should help offset the effects of higher prices and rising mortgage rates. In addition, builders remain confident that the market will continue to improve this year, which could lead to more new homes being built. As more homes become available for sale, price increases should begin to moderate, which would help improve affordability conditions even further. More here.

Mortgage Rates Mixed In Latest Survey

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up and down last week. For example, rates for 30-year fixed-rate loans with conforming balances fell, while jumbo loans moved up slightly. On the other hand, mortgages backed by the Federal Housing Administration saw a decline and rates for 15-year fixed-rate loans were unchanged from the week before. But despite the fact that rates remained within a fairly steady range last week, demand for mortgage applications was down overall. Refinance activity fell to an eight-year low – mostly due to mortgage rates moving higher over the past few months. At the same time, purchase activity is 3 percent higher than it was at the same time last year, though down from the week before. In other news from the MBA, mortgage credit availability increased for the fifth consecutive month in January. That’s good news for prospective buyers. When lending standards are easing, it makes it more likely that qualified home buyers will be approved for a loan. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of retail residential mortgage applications. More here.

Homeowners Often Overestimate Their Home’s Value

For home buyers and sellers, appraisals are important. They represent an official reading of what a particular property is actually worth, as opposed to what its owner hopes to sell it for. Based on similar properties in the same area, an appraiser will look at a house, compare it to recently sold homes in the neighborhood, and determine what the home’s current market value is. Of course, their estimation may catch the current owner by surprise if it comes in either higher or lower than they expected. And, according to one index that tracks price perceptions, they often do. In fact, Quicken Loans’ Home Price Perception Index found the average appraisal value was 1.47 percent below homeowners’ estimates when looked at nationally, though that percentage varies widely depending on where you look. For example, in many western cities – including Denver, Portland, San Francisco, and Los Angeles – appraised values were as much as 3 percent higher than homeowners estimated, while appraisals came in below expectations more often in cities on the East Coast and in the Midwest. If you’re selling, refinancing, or buying a home, it’s a good idea to familiarize yourself with what homes are currently selling for in your area. That way, if and when you call for an appraisal, you’ll be less likely to end up surprised by the result. More here.

How Your Pets Influence What Home You Buy

Most people treat their pets like they’re a member of the family. In fact, a recent survey from the National Association of Realtors, found a full 99 percent of pet owners agreed their animals were considered part of their family. And a lot of us have them. William E. Brown, NAR’s president, says a majority of Americans have a pet or are planning on getting one. “In 2016, 61 percent of U.S. households either have a pet or plan to get one in the future, so it’s important to understand the unique needs and wants of animal owners when it comes to homeownership,” Brown said. “Realtors understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.” So, if pets are thought of as family members, it shouldn’t come as any surprise that they play a large role in how Americans make decisions about buying or selling a house. But what are some of the things a prospective home buyer might be looking for specifically to accommodate their furry friends? According to the survey, a fence around the yard is the top priority for pet owners, though a dog door and laminate flooring also ranked high. More here.