There is no shortage of Americans who want to buy homes. In fact, buyer demand has been high all year. But despite growing interest in homeownership, home sales have not had a breakthrough year. Why is that? Well, according to Lawrence Yun, the National Association of Realtors’ chief economist, it has to do with inventory. “Steady employment gains, slowly rising incomes, and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales,” Yun said. “Sales have been unable to break out because there are simply not enough homes for sale.” In fact, the latest numbers show home sales in August were just 0.2 percent above where they were one year earlier. But what that means for hopeful home shoppers this fall depends on where you live. For example, sales were up 10.8 percent in the Northeast and 2.4 percent in the Midwest, which indicates that conditions may be more favorable for buyers in those regions than other locations. Buyers also should be prepared to move quickly, as the NAR’s most recent data shows more than half the homes sold in August were on the market for less than a month. More here.
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According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly steady last week, with small increases seen for 30-year fixed-rate mortgages, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Average rates for jumbo loans fell slightly from the week before. Despite mortgage rates still hovering in lower-than-normal range, however, demand for mortgage applications was down 9.7 percent for the week. Some of that fall may have had to do with the hurricanes in Texas and Florida. Joel Kan, an MBA economist, told CNBC the effect the storms had was dramatic. “Florida had a 22 percent decrease in overall mortgage application activity over the week,” Kan said. “Texas rebounded from Harvey’s impact, showing a 27 percent increase in applications last week.” Whatever the case, it is clear that the weekly report may have been particularly volatile as a result of the hurricanes. The MBA’s survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
A new survey of millennials from the National Association of Realtors and American Student Assistance finds that nearly 80 percent of respondents said they took out a student loan in order to pay for college. Among them, just over half have a balance of more than $40,000. Obviously, having that much student debt becomes a factor when considering whether or not to buy a house. Lawrence Yun, NAR’s chief economist, says it may be holding first-time buyers back. “The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions,” Yun said. In fact, millennials say debt has caused them to delay things like marriage and career changes as well. Still, recent surveys show that young Americans are very interested in becoming homeowners and demand for affordable homes is high. An improving job market is also reason for optimism, as better jobs and higher wages can help make homeownership an attainable goal for young Americans who’d like to buy a home of their own. More here.
The market for newly built single-family homes is an important barometer for the health of the overall housing market. Where new homes are being bought and sold, home prices and inventory levels are usually more balanced and home buyers have more choices. For that reason, the National Association of Home Builders tracks how builders perceive the market now and what their expectations are for the coming months. In September, the NAHB’s Housing Market Index found builder confidence down slightly from the month before, though it remains at a high level. According to NAHB chairman, Granger MacDonald, the recent hurricanes may have something to do with the decline. “The recent hurricanes have intensified our members’ concerns about the availability of labor and the cost of building materials,” MacDonald said. “Once the rebuilding process is underway, I expect builder confidence will return to the high levels we saw this spring.” Regionally speaking, the NAHB’s survey found that the West and Northeast have seen confidence levels rise over the past three months, while the Midwest and South have experienced slight declines. More here.
Many people assume that renting is always going to be cheaper than buying a house. Mostly, this is because of the upfront costs associated with buying. Having to come up with closing costs and a down payment, in addition to taking on a monthly mortgage payment can be intimidating for someone who wants to buy but feels it’ll be easier and more affordable to rent. New data shows this is particularly true right now and it’s driving up the costs of renting a single-family home. Dr. Svenja Gudell, Zillow’s chief economist, says the current environment is causing the increase. “Those who want to buy are finding it difficult to find the right one, or may need a bit more time to come up with a down payment, but still want the advantage of space that single-family residences often provide,” Gudell said. “This, coupled with the foreclosure crisis turning millions of homeowners into renters, is a big reason why demand for single-family rental homes has risen over the last few years.” What this means is that, if you hope to buy but aren’t sure you’re ready, it’s important to research your options. In many markets, buying is still more affordable than renting, and may be especially so if you’re looking to rent a single-family home rather than an apartment. More here.
The American Dream is an abstract concept but always seems to include the idea of owning a home. Buying a home, for generations of Americans, has been seen as an achievement to strive for and be proud of. But do young Americans today feel the same way about homeownership? Well, according to one recent survey, they do. In fact, 81 percent of participating Millennials named owning a home when asked what they most associated with achieving the American Dream. Additionally, large majorities said they expect the idea to still be relevant to their children. To some extent, this is contrary to conventional wisdom, which often portrays Millennials as having been turned off of the idea of homeownership by the housing crash and financial crisis. Millennials, the thinking goes, are more interested in an urban, mobile lifestyle that makes renting a better fit. And yet, survey after survey shows young Americans are just as interested in owning their own home as their parents and grandparents were before them. Still, though Millennials aspire to become homeowners, they don’t expect it to be easy. In fact, they think it’s harder to achieve for their generation than it has been in the past. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week for 30-year fixed-rate loans with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. The decline continues a downward trend that started in mid-July. At this point, mortgage rates are now at their lowest point in nearly a year. In response, demand for mortgage applications spiked last week. In fact, Joel Kan, an MBA economist, told CNBC that – though demand increased almost 10 percent last week – the improvement would have been even greater, if not for the hurricanes that struck Texas and Florida. “To illustrate the impact of the two major hurricanes, over the past two weeks, mortgage applications for the state of Texas ran about 25 percent lower than the state’s weekly average for the year to date, reflecting the impact of Hurricane Harvey,” Kan said. Similarly, Florida saw a dramatic drop in demand last week as well. Still, demand for loans to buy homes was up 11 percent for the week and is now 7 percent higher than at the same time last year. More here.