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Mortgage applications for new homes surged in January as a lack of existing homes continued to fuel the demand for new construction.
Mortgage applications for new home purchases rose 19.1% in January on a year-over-year basis, the 12th consecutive month with an annual increase. Applications were up 38% from the previous month, according to the Mortgage Bankers Association (MBA) Builder Application Survey for January.
According to MBA estimates, new single-family home sales were at a seasonally adjusted annual rate of 700,000 units in January, the highest pace since October 2023. The pace was up 16.9% from December’s rate of 599,000 units.
“Applications for new home purchases were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
In January, conventional loans accounted for 64.5% of loan applications for new homes. Federal Housing Administration (FHA) loans accounted for 24.8% of applications, U.S. Department of Veteran Affairs (VA) loans took a 10.3% share and U.S. Department of Agriculture (USDA) loans accounted for 0.4%.
The average loan size for new homes decreased to $401,282 in January, down from $405,368 in December.
Homebuilders are feeling optimistic about the spring buying season. Homebuilder confidence shot up to a five-month high in February, according to the National Association of Home Builders’ most recent survey.
MBA’s survey tracks new home mortgage application volume from mortgage subsidiaries of homebuilders across the country.
Source: housingwire.com
Executive Vice President of Retail Production, Jim Racine
OneTrust Home Loans is excited to announce the appointment of Jim Racine as Executive Vice President of Retail Production.
— Jim Racine
DETROIT, MICHIGAN, UNITED STATES, February 7, 2024 /EINPresswire.com/ — OneTrust Home Loans, a prominent Ginnie Mae, Fannie Mae, and Freddie Mac approved direct lender and servicer, is excited to announce the appointment of Jim Racine as Executive Vice President of Retail Production. Racine, with an extensive background in the retail mortgage space, brings over 30 years of experience to his new role.
Most recently serving as the Central Division Vice President at Newrez-Caliber Home Loans, Jim Racine has a proven track record in leadership and a commitment to creating exceptional customer experiences. His career spans various leadership positions, including Central Division Vice President at Caliber Home Loans and Regional Vice President for Michigan, Northern Illinois, and Northern Ohio.
Racine’s expertise includes managing teams, building sales forces, and overseeing mortgage operations. At OneTrust Home Loans, he plans to emulate the tagline “Service is Everything!®” by further improving the customer experience with streamlined processes, innovative solutions, and a relentless commitment to providing exceptional service at every step of the mortgage journey.
Jim Racine expressed his enthusiasm for joining OneTrust Home Loans, stating, “I am excited to be part of a company that values customer service as much as I do and values hard work and a culture of teamwork and family that I’ve worked tirelessly throughout my career to build. OneTrust Home Loans’ commitment to excellence aligns perfectly with my vision of creating the best sales force to provide top-notch service to our customers, realtors, builders, and referral sources.”
Bringing on such a dynamic player in the mortgage industry is a huge win for OneTrust Home Loans. In addition to this success, at a time in the industry when rates are high and many companies are exiting, a new direct to consumer team in Maryland has also joined the OneTrust Family of Companies. This further highlights that, even in a challenging market, the company’s vision for the future continues to attract exceptional talent in the industry.
If you are interested in learning more about the career opportunities available, contact Jim directly at (248) 883-3454.
About OneTrust Home Loans
OneTrust Home Loans is a privately-owned Ginnie Mae, Fannie Mae and Freddie Mac approved direct lender and servicer licensed in 49 states and 2 US territories with sales and operations across the country. In addition to the standard loan options like Conventional, FHA, VA, USDA, and Jumbo, OneTrust originates a significant amount of residential, commercial and construction loans for purposes of holding on its own balance sheet. The company supports Reverse Mortgage and Wholesale channels and continues to grow with several joint ventures on the horizon. OneTrust Home Loans places special importance on customer service as evidenced by their tagline, Service is Everything!® For additional information visit www.OneTrustHomeLoans.com.
Rosemarie Pirio
OneTrust Home Loans
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Source: einnews.com
Kim: Fannie Mae removed its explicit call for a recession in 2024 and now expects “below-trend growth.” At this point, how high is the risk for a recession?
Duncan: It was more of a marginal move from our perspective. There’s still a bunch of things that are highly correlated with recessions in the past that are still pointing in that direction.
There is an inverted yield curve, leading economic indicators have fallen for 21 months in a row, monetary aggregates are in decline and temporary work has turned down. There are seven or eight things that we watch that are still pointing that way, but the combination of all of them has not been enough to tip the market over. And with the Fed clearly making a shift in December, financial conditions eased significantly and that’s going to provide some support for them as well.
The market has gotten a little too enthusiastic in our view, so the change in our view on the Fed was only to change the number of cuts from three to four in 2024 with slow growth.
Kim: Compared to the beginning of January, more investors believe that an interest rate cut in May is more likely than a cut in March. Why do you think investors are throwing their hats in for a delayed rate cut by the Fed?
Duncan: I think that the markets were overenthusiastic, and a couple of Fed governors went on and walked it back, making statements along the lines of ‘let’s make sure we’re moving carefully.’ I think that was the primary thing.
Consumer spending numbers that came in at the end were quite strong, at least to the headline piece of that. On the flip side of that, consumer delinquencies for credit cards and auto loans are rising fairly quickly, which is a sign of stress in the consumer.
Kim: What is your expectation for the Fed’s timeline to cut benchmark rates?
Duncan: May, June, December and somewhere in the middle of there, where they may pause after the June meeting to see what the data looks like. It’s an election year, so it’s a little tricky to figure out exactly when they’ll do that.
Could they possibly move it up to March and May to get it out of the way of the election? They could, but I don’t think they’re going to be influenced that much by the election.
Kim: As mortgage rates increased, borrowers paid more points to buy them down. Do you think this will be a more permanent shift in the mortgage market even as rates stabilize?
Mark Palim: Part of what made it economical for the builders to offer rate buydowns was that the bond market was skeptical that the high rates would last long. So, the cost of buying down rates wasn’t as high as it might otherwise be from the perspective of borrowers and the builders subsidizing it with a buydown. I think it depends on the conditions and what the expectations are for rates.
Duncan: The 2% buydown saves you X amount of dollars monthly for as long as the market rates reach the level that you bought it down to. You have to make a judgment on how long rates will stay above that level for you to save that amount of money.
Kim: Overcapacity in the industry has resulted in lenders slimming down through layoffs and consolidations. How close are we from being done?
Duncan: I sat in on a meeting with about 30 small and midsized mortgage company CEOs where they said they made so much profit in 2020 through 2022, some of them are actually running at a loss knowingly to keep their best people.
Some are calibrating when they think volumes will pick up, how much of that pickup would be their business and what the cost is of carrying employees for this period. It may be the case that some of the employees would be willing to take a pay cut during that time period, knowing that the alternative is they lose their job.
When I was at the Mortgage Bankers Association, we had a model that worked pretty well to forecast what the downturn would be. Lenders held on to employment for six months. That was the window in which they wanted to see, ‘Will the trend change?’ so we don’t have to do layoffs, because it’s expensive to lay people off and rehire them.
One of the things that has undoubtedly changed is the advent of technology, centered around getting to the consumer faster. It’s a speed game for independent mortgage companies. They will do loans at a loss to get them done quickly, and keep the volume flowing through the business and covering their variable costs.
So, I think that those couple of alternative strategies and the advent of more technological development has changed the degree to which you see the volatility across the cycle.
Palim: The other thing I would add — two points — is that the projections for the size of the U.S. labor force are not vigorous. Growth is going to be substantially lower than it has been historically. You see pretty low levels of layoffs in the economy and questions about labor hoarding. So, it would make sense that given how hard it was to attract talent, I can see mortgage companies being reluctant to downsize unless they really have to.
Second point is, we do have a pickup in mortgage originations if rates and the economy go where they’re supposed to go next year and the following year.
Source: housingwire.com
A strong U.S. economy will be a boon for the housing market, Mortgage Bankers Association’s (MBA) chief economist said on Thursday, as it will buoy demand and as inflation continues to fall, mortgage rates will decline as well making home loans more affordable for buyers.
The U.S. economy accelerated at a faster-than-expected clip in the fourth quarter of 2023 at 3.3 percent, the Commerce Department’s Bureau of Economic Analysis revealed on Thursday.
Meanwhile, the personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred measurement of inflation’s progress—jumped by 1.7 percent during the quarter. Core PCE, which excludes the often volatile food and energy prices, increased by 2 percent.
These dynamics bode well for the housing market that has been struggling under the weight of record-high mortgage rates, sparked in part by the Fed’s hiking of rate at the most aggressive clip since the 1980s to fight soaring inflation.
The Fed’s funds rate currently sits at 5.25 to 5.5 percent—the highest they have been in two decades—and policymakers have signaled that they will slash rates should inflation come down to their 2 percent target.
But an economy that may avoid a recession as inflation moderates without the Fed’s tight monetary policy doing too much damage to the jobs market would help the housing sector.
“Stronger economic growth will benefit the housing market, keeping demand robust,” Mike Fratantoni, MBA’s chief economist, said in a statement shared with Newsweek. “Moreover, today’s report also showed further reductions in inflation, which will enable the Federal Reserve to cut rates later this year—as they have been hinting.”
Mortgage rates ticked up slightly for the week ending January 25, Freddie Mac said on Thursday, with the 30-year fixed rate averaging 6.69 percent.
“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Rates look to have stabilized, Khater suggested, encouraging buyers to jump off the fence.
“Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” he said.
A slowdown in rates could have a negative impact on home buyers, some analysts say.
A decline in the cost of home loans would encourage more purchases, and this increase in demand will spark competition at a time when there is a limited supply of homes for sale.
More buyers who can afford mortgages entering the market will push up prices, analysts from Goldman Sachs said this week.
The investment bank’s experts project prices to soar by 5 percent in 2024, a marked revision from their earlier expectation of a 2 percent jump. That trend will continue through next year when prices are forecast to increase by nearly 4 percent, which is also a change from a previously estimated increase of close to 3 percent.
Amid the price increases, Goldman Sachs analysts anticipate that rates will fall to 6.63 percent for the year. This drop in rates from the near 8 percent highs of November 2023, will make house loans more affordable, sparking more demand for properties.
“We have very low inventory of houses for sale, which is generally supportive of prices, along with generally stable demand that is coming from things like household formation,” Roger Ashworth, senior strategist on the structured credit team at Goldman Sachs, said this week.
On Thursday, new home sales climbed up by 8 percent in December, according to government data, while prices declined to two-year lows. The fall in prices and a rise in sales was partly due to builders offering inducements to buyers, according to Yelena Maleyev, a senior economist at KPMG.
“Builders have pivoted to building smaller homes and offering more discounts and concessions, such as mortgage rate buydowns, to bring in buyers sidelined by rising mortgage rates,” she said in a note shared with Newsweek.
But the data from the U.S. Census Bureau also showed that inventory of newly built homes fell last month after going up the previous months. There were 453,000 houses available for sale at the end of December, which accounts for 8.2 months’ worth of supply.
This constituted a 3.5 percent decline from the same time a year ago, Maleyev pointed out.
The lack of inventory also comes at a time when the used homes market has struggled. Sales are down in that segment amid a lack of supply of homes as sellers are reluctant to give up their low rates for new home loans hovering in the mid-6 percent.
This lack of supply will be key to how prices shake out and the outlook for the year is not encouraging.
“If mortgage rates fall below 6 [percent] in 2024, more owners will feel comfortable listing their homes for sale, alleviating some of the shortages, but not enough to close the supply gap,” Maleyev said.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
“Home prices are likely stabilizing as well, so smart homebuyers will get in on the market ASAP, as the average monthly mortgage payment is not going to get that much cheaper in the months ahead.” Alicia Huey, chairman of the National Association of Home Builders, pointed out the role of scarce existing home inventory and … [Read more…]
(Bloomberg) — A gauge of pending US existing-home sales rebounded sharply in December to a five-month high, suggesting the recent drop in mortgage rates is helping to stabilize the resale market.
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The National Association of Realtors’ index of contract signings increased 8.3% to 77.3 after holding at a record low a month earlier, according to data out Friday. Last month’s advance — the largest since mid-2020 — exceeded all estimates in a Bloomberg survey of economists.
“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices,” Lawrence Yun, NAR’s chief economist, said in a statement. “Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand.”
While 30-year fixed mortgage rates remain below 7%, a sustained decline is needed to encourage more homeowners to list homes that are financed at much lower levels. Until that develops, a limited inventory of previously owned homes will make it difficult for the resale market to rapidly gain traction.
A lack of listings have also worked to keep existing-home prices elevated. At the same time, builders have been filling the void with new construction. The number of new houses for sale at the end of 2023 rose to a more than one-year high, helping push those prices down.
The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold. Those sales are expected to increase 13% this year, according to NAR’s economic outlook. They slumped 18.7% in 2023.
The NAR’s report showed the index of contract signings for existing homes jumped nearly 12% in the South, the biggest US housing market. That was the largest advance since June 2020. Pending sales also surged 14% in the West and climbed 5.6% in the Midwest.
–With assistance from Kristy Scheuble.
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Source: finance.yahoo.com
New home sales finished 2023 on a positive note, posting seasonally adjusted numbers higher than in both November and the prior December. The U.S. Census Bureau and the Department of Housing and Urban Development said sales of newly constructed homes during the month were at an annual rate of 664,000 units. Further, the November rate was adjusted from 590,000 to 615,000 units. The December estimate is 8.0 percent above the revised November estimate and a 4.4 percent improvement over the pace in December 2022. Analysts polled by Econoday had a consensus forecast of 650,000.
New home prices slipped slightly from a year earlier. The median price of a home sold in December 2023 was $413,200 compared to $432,100 in December 2023. The average price fell from $495,600 to $487,300.
On an unadjusted basis, sales last month were estimated at 50,000 units, up from 42,000 in November. For the entirety of 2023, sales totaled 668,000 units, a 4.2 percent increase over the 2022 sales of 641,000.
At the end of the reporting period, an estimated 453,000 new homes were available for purchase, projected to be an 8.2-month supply at the current sales pace. This is nearly identical to the assumed inventory in December 2022.
December was a strong month in the Northeast. Sales increased 32.0 percent from November, although it was also the only region coming in lower (they were down 2.9 percent) on an annual basis. In the Midwest, sales were up 9.2 percent and 6.0 percent over the previous two sales periods and the South posted increases of 10.6 percent and 3.7 percent, respectively. Sales in the West eked out gains of 0.9 percent month-over-month and 0.4 percent on an annual basis.
Source: mortgagenewsdaily.com
Mortgage rates stabilized in the past week but remain close to the narrow range observed since the start of this month.
The 30-year fixed-rate mortgage averaged 6.69% as of Jan. 25, an increase from last week’s figure of 6.60%, according to Freddie Mac’s Primary Mortgage Market Survey released on Thursday. Meanwhile, the 15-year fixed rate averaged 5.96% this week, up from 5.76% during the prior week. And HousingWire’s Mortgage Rates Center showed that Optimal Blue’s average 30-year fixed rate for conventional loans was 6.713% on Thursday, up from 6.709% at the same time last week.
“Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market,” Freddie Mac chief economist Sam Khater said in a statement. “Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace.”
In the short term, all eyes are turned toward the meeting of the Federal Open Market Committee (FOMC) next Tuesday and Wednesday. According to Realtor.com economist Jiayi Xu, December’s higher-than-expected inflation reading made a dent in market confidence concerning the Federal Reserve’s readiness to implement interest rate cuts.
“The Federal Reserve is now facing a new challenge: determining the optimal timing for a shift to rate cuts,” Xu said in a statement. “The central bank faces the dilemma of potential negative impacts on the economy if the current restrictive policy persists longer and the risk of a dangerous rebound in inflation in 2024 if rates are cut prematurely.”
Mat Ishbia, chairman and CEO of United Wholesale Mortgage, told CNBC on Monday that he believed the Fed might start to cut rates as soon as March, April or May.
Meanwhile, the Bright MLS forecast for 2024 calls for mortgage rates to decline further this year, reaching 6.2% by the fourth quarter. But inventory is likely to remain an issue for homebuyers this year, cautioned Lisa Sturtevant, chief economist at Bright MLS. To stay within budget, buyers will have to talk through trade-offs and compromises with a real estate professional who understands local market conditions, Sturtevant said in a statement.
In January, builder confidence came in strong on the strength of declining mortgage rates. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report rose seven points month-over-month to a reading of 44 in January.
Source: housingwire.com
Housing starts in December came in at a seasonally adjusted annual rate of 1.46 million, above consensus expectations of 1.43 million. Single-family housing starts (1.03 million) were 16% higher than a year ago, and permits for single-family homes reached their highest level since May 2022. Homebuilders are expressing greater optimism for two reasons: the anticipation … [Read more…]
New U.S. home construction fell in December for the first time in four months, despite a sharp drop in mortgage rates.
Housing starts decreased 4.3% last month to an annual rate of 1.46 million units, according to new Commerce Department data released Thursday. Refinitiv economists had projected a pace of 1.42 million units. The decline stemmed from a substantial drop in single-family home construction, which fell by the most since July 2022.
However, applications to build – which measures future construction – rose in December, increasing 1.9% over the course of the month to an annualized rate of 1.49 million units. When compared with the same time last year, building permits are up about 6.1%.
“Building permits, a leading indicator of future construction, accelerated in December as builders expect the housing market to improve as borrowing costs fall,” said Jeffrey Roach, chief economist at LPL Financial.
HOME FORECLOSURES ARE ON THE UPSWING NATIONWIDE
The data comes one day after the National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, rose five points to 44. The increase followed a three-point increase in December.
Any reading below 50 is considered negative.
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“Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall by higher borrowing costs,” said Alicia Huey, NAHB chair and a custom home builder and developer from Birmingham, Alabama.
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Sentiment among builders began steadily falling at the end of the summer after mortgage rates shot above 7%, throttling demand among would-be homebuyers. But borrowing costs have retreated over the past two months as many investors believe the Federal Reserve is done with its aggressive interest-rate hike campaign – and will soon pivot to cutting rates.
Rates on the popular 30-year fixed mortgage are currently hovering around 6.66%, according to Freddie Mac, down from a high of 7.79% at the end of October but well above the pre-pandemic average of 3.9%.
The recent decline has prompted a burst of optimism among homebuilders that the worst may be over. However, the housing market is facing new headwinds heading into 2024, including higher prices and shortages of labor and lumber.
Source: foxbusiness.com