Archive for March 2014

Mortgage Demand Flat Despite Rate Dip

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell slightly last week across all loan categories, including 30 and 15-year fixed-rate loans, jumbo and conforming loans, and those backed by the Federal Housing Administration. Despite the drop, demand for loans to purchase homes was essentially flat, falling 1 percent from the week before. The Refinance Index also decreased 1 percent, contributing to a 1.2 percent drop in the Market Composite Index, which measures total mortgage loan application volume. Mortgage application demand has now fallen for two consecutive weeks following a 10 percent spike at the beginning of the month. The refinance share of total mortgage activity also fell, slipping to 56.5 percent from 57 percent the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all U.S. retail residential mortgage applications. More here.

Housing Starts Show Signs Of Stabilization

New home construction was flat in February, falling just 0.2 percent from the previous month according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development. Combined with upwardly revised January numbers, the results are a sign that the housing market may be regaining its footing after a particularly harsh winter slowed activity across much of the country. The coming months should provide an additional boost to new residential construction with inventory low in many parts of the country and buyer demand increasing as the weather warms. Also in the release, there was a 7.7 percent increase in permits to build privately-owned housing units. Despite the gains, however, the improvement was largely due to a spike in permits to build multi-family housing rather than single-family homes. Permits to build single-family homes fell slightly from the month before and are now at a seasonally adjusted annual rate of 588,000, down from 599,000 in January. More here.

Builder Confidence Edges Up In March

The National Association of Home Builders Housing Market Index measures builder confidence in the market for newly-built, single-family homes. The index gauges builders’ perceptions of current sales, buyer traffic, and expectations for the next six month on a scale where any number above 50 indicates more builders view the market as good than poor. In March, the index rose a point to 47 after a 10-point drop in February resulted in the first monthly reading below 50 since May of last year. Kevin Kelly, NAHB’s chairman, said the March reading mirrors last month’s sentiment, as builders continue to be affected by poor weather and difficulty finding available lots and labor. The results of the index’s individual components show increasing optimism about current conditions and traffic but concerns over future sales. Still, despite falling, the component tracking sales expectations over the next six months remains in positive territory with a reading of 53. Regionally, three-month moving averages for the Northeast, Midwest, South, and West all declined in March. More here.

Foreclosure Filings Drop To 7-Year Low

Foreclosure filings – including default notices, scheduled auctions, and bank repossessions – dropped 10 percent in February and were down 27 percent from one year earlier, according to RealtyTrac’s most recent U.S. Foreclosure Market Report. The decline brought foreclosure activity to its lowest level since December 2006. Daren Blomquist, vice president of RealtyTrac, said cold weather and a short month contributed to the drop in foreclosure activity in February but the reality is that new activity is no longer the biggest threat to the housing market when it comes to foreclosures. According to Blomquist, properties that have been lingering in the foreclosure process for years are now a bigger issue, as these properties are often left vacant with no one taking responsibility for maintenance and upkeep of the home. These homes bring down property values in their surrounding neighborhoods and contribute to low for-sale inventory in markets across the country. More here.

Younger Buyers More Confident In Market

The Millennial generation, which includes people born between 1980 and 1995, are now reaching the age of the typical first-time home buyer. And, according to the 2014 National Association of Realtors Home Buyer and Seller Generational Trends study, younger buyers are now purchasing the most homes and are the most optimistic about their home’s value as an investment. Lawrence Yun, NAR’s chief economist, said Millennials aspire to own their own home and, since they are the largest generation in history after the Baby Boomers, it means there is potential for strong underlying demand. In fact, young adults were the most likely to say their reason for buying a home was to own a house of their own, as opposed to older adults who cited retirement or the need to move closer to family and friends. Younger buyers were also more likely to move to an urban area, stay close to their previous residence, and place higher importance on commuting costs as opposed to energy efficiency, landscaping, and community features. According to the study, the median age of Millennial home buyers was 29 and they typically bought a 1,800-square-foot home that cost $180,000. More here.

Mortgage Rates Rise, So Does Credit Availability

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates increased last week across all loan categories, including those with conforming and jumbo balances as well as those backed by the FHA. The increase resulted in a 2.1 percent dip in the Market Composite Index, which measures both purchase and refinance demand. The Purchase Index was down 1 percent, while the Refinance Index dropped 3 percent. The rise in rates follows the previous week’s decrease, which led to a nearly 10 percent spike in demand for mortgage loan applications. The MBA also released their monthly Mortgage Credit Availability Index this week. February’s results show a slight increase from the month before. It was the third consecutive monthly improvement and continues a two-year trend upward. After tightening following the financial crisis, mortgage-credit standards have been easing, making it possible for more would-be borrowers to obtain financing. More here and here.

Recovery Continues Despite Recent Volatility

Consumer attitudes about the economy and housing market have been up-and-down over the past few months. But despite the volatility, Fannie Mae’s February 2014 National Housing Survey finds that the overall outlook among Americans remains positive. Doug Duncan, senior vice president and chief economist at Fannie Mae, said it’s similar to the noisy economic and housing data published over the past few month. The housing recovery is continuing, according to Duncan, and the month-to-month changes in respondents’ perceptions of home-price expectations or the ease of getting a mortgage are a reflection of short-term factors rather than the long-term trend. Generally, Americans’ attitudes about economic conditions and the housing market are in positive ranges. In fact, the percentage of participants who said now is a good time to buy a home was up 3 percent in February, reaching 68 percent of survey respondents. Expectations for home prices and mortgage rates also rose, while the share of Americans who feel the economy is on the right track and expect their personal financial situation to improve over the next year fell. More here.