“Persistently high inflation and the recent spike in lending rates will trigger a correction in the UK (Aa3 negative) housing market,” Moody’s Investor Service said in a report.
Matt Cardy | Getty Images News | Getty Images
LONDON – The U.K.’s biggest bank temporarily withdrew mortgage deals via broker services on Thursday, as the effect of higher interest rates ripples through the British housing market.
HSBC told CNBC Friday that it was reviewing the situation regularly, but did not specify whether the new deals would differ from its previous offerings. Higher rates are a possibility, given that the Bank of England is continuing to increase interest rates.
It comes eight months after hundreds of mortgage deal offers were pulled in one day after market chaos at the time sparked concerns about rising base rates.
In a statement issued Friday, HSBC said: “We occasionally need to limit the amount of new business we can take each day via brokers. All products and rates for existing customers are still available, and we continue to review the situation regularly.”
The banking group said the protocol was in order to ensure it meets “customer service commitments” and stressed that it remains open to new mortgage business.
Soaring rates
The HSBC decision comes as analysts expect mortgage rates to soar and housing prices to plummet in response to the increased base rate.
A large number of fixed-rate mortgage deals is set to expire this year, leaving homeowners vulnerable to the impact of interest rate hikes, according to economic research company Capital Economics.
The organization made an upward revision to its mortgage rate forecasts, which showed borrowers would be “subject to a larger interest rate shock than … previously envisaged.”
“Those coming to the end of a 2-year fix will see a particularly large increase in the cost of their mortgage. While those refinancing a 5-year fix this month may see their mortgage rate jump from 2.1% to 4.9%, those on a 2-year fix will see an increase from 1.4% to 5.2%,” Capital Economics said in a note published Thursday.
There are also warnings that house prices will tumble in the next two years, with credit ratings agency Moody’s forecasting a 10% decline.
“Persistently high inflation and the recent spike in lending rates will trigger a correction in the UK (Aa3 negative) housing market,” Moody’s Investor Service said in a report.
The Halifax House Price Index showed that U.K. house prices were flat in May after a 0.4% fall in April, while the average U.K. property now costs £286,532 ($360,000).
In February, U.K. house prices experienced their sharpest contraction since November 2012, according to building society Nationwide.
Prices tumbled 1.1% year-on-year, logging their first annual decline since June 2020.
The Bank of England raised its interest rate to 4.5% from 4.25% as the central bank attempts to tackle high inflation that currently sits well above the 2% target, at 8.7%.
The Organization for Economic Cooperation and Development predicts the U.K. will have the highest inflation rate out of all advanced economies this year.
Lenders and homeowners will be watching the central bank closely for its next base rate decision on June 22. It is widely expected the bank will agree its thirteenth consecutive increase.
Perhaps one of the most confusing aspects of getting a mortgage is knowing who you actually pay once the thing funds. And to that end, when your first mortgage payment is due.
While Bank X may have closed your loan, an entirely different company could send you paperwork and a payment booklet. What gives?
Well, this highlights the difference between a mortgage lender and a mortgage servicer.
Mortgage Lender vs. Mortgage Servicer
The bank or mortgage lender processes and funds the home loan
Once it closes it may be sold off to a loan servicer or retained in portfolio
The job of a loan servicer is to collect monthly mortgage payments
And manage escrow accounts if your home loan has impounds
As noted, a mortgage loan servicer, also known simply as a loan servicer, is the company that collects your monthly mortgage payments.
They also manage your escrow account if your home loan has impounds, collecting a portion of property taxes and homeowners insurance each month, before making those payments on your behalf when due.
So really, there’s a good chance you’ll deal with your loan servicer a lot more than your mortgage lender, who may have only been in the picture for a month or so while your loan was originated.
You see, many mortgage lenders focus on loan origination as opposed to servicing, so they’re happy to fund your loan and quickly sell it off for a profit, then rinse and repeat.
The same goes for mortgage brokers, who fund your loan on behalf of a wholesale mortgage lender, which also may sell off the loan to a different servicing company shortly after it closes.
Further complicating all this is the fact that your mortgage lender could also be your loan servicer because some big banks and mortgage companies can profit from it.
One thing mortgage companies figured out in recent years was that keeping in touch with their past customers was a great way to generate repeat business.
But if they sell all their home loans off to other companies, they may lose out if mortgage rates fall and these customers are ripe for a mortgage refinance.
There are also mortgage subservicers, companies that perform loan servicing tasks on behalf of a lender, instead of completing those things in-house.
Anyway, without getting too convoluted here, it’s important to note this distinction between lender and servicer so you know who you’re dealing with.
And to ensure you’re sending monthly mortgage payments to the right place!
What Do Loan Servicers Do?
Collect monthly mortgage payments
Manage escrow accounts (property taxes and homeowners insurance)
Provide customer service if borrowers have any questions
Generate loan payoff statements
Perform loss mitigation (loan default, loan modifications, foreclosure, credit reporting)
Ensure compliance with federal, state, local regulations
The list above should give you a better idea of what loan servicers do, and why banks and lenders may choose to outsource these things.
If you have any questions regarding your home loan post-closing, it’s generally best to get in touch with your loan servicer as opposed to your mortgage broker or lender.
They should be able to answer any questions you have, whether it’s knowing where to send payments, how to make extra payments or biweekly mortgage payments, loan amortization questions, and so on.
Additionally, if having payment troubles in the future, your loan servicer should be the one to call to discuss options.
Remember, the lender is typically just there to help process and close your loan, then hands off the reins to a servicer from there.
Mortgage Servicing Transfers
Many home loans are transferred to loan servicing companies shortly after funding
You should receive a letter within 15 days of your loan being transferred
The new company’s contact information should be prominently displayed
It will also include the date when the old servicer will no longer accept payments
And the date when the new servicer will start accepting monthly payments
One of the most important things to do after your mortgage closes is to take note of who your loan servicer is.
Unfortunately, mortgage servicing rights are frequently transferred shortly after your loan funds, which can make it confusing to know who to pay.
Add in all the junk mail you might receive as a new homeowner (like mortgage protection insurance) and it could get really murky.
The good news is lenders and loan servicers must adhere to certain rules regarding the transfer of servicing rights.
After your mortgage funds, look out for a letter in the mail from the entity that closed your loan regarding a servicing transfer. You may also receive a letter from your new loan servicer as well.
It should clearly explain who will be processing your mortgage payments going forward, and is required to be sent 15 days prior to your loan’s servicing rights being transferred to the new servicer.
The letter should include all the relevant contact information you’ll need to ensure payments are sent to the right company at the right time.
Take note of when they’ll begin accepting payments, and when the old company will stop accepting payments.
In my opinion, it doesn’t hurt just to call the company and make sure everyone is on the same page before you send your payment, just to avoid a mess.
If you do make a payment mistake, there are some protections in place if it’s within 60 days of the servicing transfer, per the CFPB.
During this time, the new loan servicer can’t charge you a late fee or mark the payment as late if your payment was sent to your old servicer by its due date or within the grace period.
Who Are the Top Mortgage Servicers in the Country?
1. Quicken Loans 2. Regions Mortgage 3. Huntington National Bank 4. TD Bank 5. Chase 6. M&T Mortgage 7. SunTrust Mortgage (Truist) 8. Bank of America 9. Guild Mortgage 10. Citizens Mortgage
Quicken Loans was the highest-ranked mortgage servicer for the seventh consecutive year in 2020, per the latest U.S. Primary Mortgage Servicer Satisfaction Study from J.D. Power.
Both USAA and Navy Federal actually have higher rankings than all the companies listed above, but don’t meet the survey’s award criteria.
In other words, you should have a very good customer experience with those two companies as well.
Who Are the Largest Mortgage Servicers in the Country?
These are listed in alphabetical order since I don’t have figures available to rank them by total servicing volume. But they are some of the largest mortgage servicers in the country.
All of these companies service billions of dollars in home loans for customers, which they either originated themselves or acquired from other banks and mortgage lenders.
If you have a mortgage, there’s a good chance one of the companies on this list handles your loan servicing.
Tip: Always take the time to make sure you’re actually dealing with your loan servicer and not some phony entity.
Millions of Americans would love to become homeowners—if they could only find an affordably priced home to purchase, that is.
Cue the builders. After years of focusing on the more profitable move-up, custom, and luxury homes, they are finally figuring out how to put up starter homes that first-time and other cash-strapped homebuyers can afford.
“Buyers should expect that over the next 12 to 24 months there will be a notable increase in the number of entry-level homes available,” says Ali Wolf, chief economist of Zonda, a building consultancy.
Homebuilders have begun to focus on this group in the wake of rising mortgage interest rates dramatically cooling off the housing market. Many current homeowners who don’t have to trade up into a new home at a higher monthly rate are choosing to stay put.
And that’s left much of the demand for housing coming from first-time and other buyers who aren’t finding the kinds of homes they want on the resale market.
Before the COVID-19 pandemic, about half of all new homes cost $300,000 or less, according to Zonda. However, lumber prices soared over that period and global supply chain snafus led to high prices and long delays in receiving materials, appliances, and other building components. In the first quarter of this year, just 15% of new construction was available at that price range.
To produce housing more inexpensively, builders downsized the median new-home footprint about 3% year over year, to about 2,270 square feet in the first quarter of this year, according to the National Association of Home Builders. The logic goes that smaller homes on less land typically cost less to construct than larger residences on more acreage. So builders can sell these properties at lower prices.
Townhome construction has also risen as builders can put up more residences on less land. Two years ago, townhomes made up 11.5% of all single-family construction, according to NAHB. It has since risen to 15% in the fourth quarter of 2022.
“Whenever you see an increase in interest rates and a decline in housing affordability, the market shifts a little bit toward somewhat smaller homes,” says NAHB Chief Economist Robert Dietz.
However, buyers shouldn’t get their hopes up too high.
Builders are expected to erect just 6% more entry-level homes this year compared with last, according to the May homebuilder survey from John Burns Research and Consulting.
“Builders will increase their supply of entry-level homes, but it won’t be enough,” says Dietz. This kind of home “will probably remain undersupplied. That’s frustrating news for first-time buyers.”
Why builders aren’t producing more starter homes
Fixing the housing shortage might seem simple: Builders need to put up more homes. But like most things, it’s easier said than done.
In the run-up to the Great Recession, builders erected homes at what seemed like a breakneck pace. But when the housing market went bust in the 2000s, many builders went belly up. Construction workers found other jobs, and sites sat fallow. Even as housing demand has soared over the past decade, builders have struggled to ramp back up. They have also been more cautious this time around, preferring to construct homes they are confident they can sell.
More new construction did go up during the pandemic, and many builders profited from the increase in home prices. But the challenges to putting up more affordable homes aren’t exaggerated.
The shortage of skilled construction workers has persisted, supply chain issues have caused delays and pricier building materials and appliances, and there is a lack of land in many parts of the country. Builders must also contend with zoning restrictions and community opposition to smaller homes. Many local governments also charge builders impact fees, which can total tens of thousands of dollars in some places, to pay for new roads, schools, and water and sewer lines.
Then throw in higher mortgage rates hampering demand for these abodes and a banking crisis that’s likely to make it harder for builders to get loans to erect new homes.
“There is a desire and an acknowledgment of the need for more entry-level housing, but there are also a lot of constraints that prevent that from happening,” says Wolf.
Where are starter homes going up?
While there is a need for starter homes across the country, not every community will see them rise. Builders will focus on areas where there is more land available and fewer costly regulations. They include states such as Texas and Florida in the Southeast as well as swaths of the Midwest.
Starter homes will still be built in the Northeast and West, but costly land, labor, and regulatory expenses tend to push construction prices out of reach of cost-constrained buyers.
“Where the zoning permits it, you are seeing builders trying to provide more affordable homes,” says Dietz.
How homebuilders are making starter homes more affordable
About 42% of builders plan to reduce the square footage of the homes they produce.
(JIM WATSON/AFP via Getty Images)
The trade-off that buyers will face as more affordably priced, new construction goes up for sale is that it likely won’t be as luxurious as new homes have traditionally been.
“The home probably won’t feel particularly premium at a low price point right now,” says Wolf.
More than half of builders are changing things on the exterior or in the interior of their homes to bring down costs, according to the John Burns survey. This could be vinyl countertops instead of granite and carpeting instead of hardwood floors.
About 42% of builders plan to reduce the square footage of the homes they produce, 22% will offer smaller lots, and 20% will construct more attached homes, such as townhomes and duplexes, according to the survey.
For example, the nation’s largest homebuilder, D.R. Horton, is shrinking the average square footage of its homes by 2% in the second quarter of this year to address affordability concerns, according to a company spokesperson.
“When affordability gets stretched, buyers will accept smaller square footage and less expensive finishes in order to purchase a home,” says Devyn Bachman. She is the senior vice president of research and operations at John Burns.
Another tool that builders have at their disposal is buying down mortgage rates. Many have their own financing arms, which allow them to offer buyers savings through temporary and permanent mortgage rate buydowns.
The 2-1 buydown allows buyers to shave 2 percentage points off of their mortgage in their first year of homeownership, 1 percentage point in the second, and then it reverts to whatever the rate was when the borrower took out the loan for the rest of the mortgage. That means if rates are currently 6.5%, borrowers would have a 4.5% rate in the first year, a 5.5% rate in the second, and then the rate would revert to 6.5% for the remaining 28 years of a 30-year fixed-rate loan.
“When housing demand pulls back, builders try to provide a more affordable product,” says Dietz.
Mortgage rates are rising, refinances are trending, and older news is looming. Let’s cover all of it in this week’s Mortgage Monday update!
Rates Update
Last week, mortgage rates hit their highest since October 2019 – but let’s rewind a bit. For the week ending February 3, Freddie Mac actually reported generally stable rates from the average lender. Like many experts, they believe our economic recovery following Omicron will result in rate increases; what their weekly survey didn’t account for, however, was last Friday’s market changes.
On February 4, the US Bureau of Labor Statistics released their monthly jobs report for January. In short, things are looking up – there were significant job increases last month even in the face of Omicron – and markets were forced to respond. A return to a better economy will also inevitably mean a return to higher rates, and last week’s mortgage rate increases are already reflecting that.
We’ll likely see Freddie’s PMMS catch up with last week’s rate spike on Thursday. But for now, get in touch with your Total Mortgage loan officer if you’ve been considering a home purchase or refinance. Rates are rising faster than ever and are projected to continue doing so, especially after the Fed’s recent hinting at further increases in March.
Refinances are Trending as Rates Rise
Because rates are rising, refinance numbers are up and trending. In late January, mortgage refinancing accounted for 57.3 percent of applications in The Mortgage Bankers Association’s Refinance Index. As rates rise, the window to refinance at something lower naturally closes; we predict that refi numbers will continue along this trend through February until mortgage rates hit pre-pandemic levels.
In the meantime, our door is always open if you’re looking to refinance. The opportunity to do so is certainly dwindling, so be sure to act fast and get in touch with us. Find your mortgage banker today!
Older, But Still Important News
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:
Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.
These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.
Last month, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.
In Closing
So far, 2022 has shown us just how reactive the markets (and mortgage rates) can be. In just a couple of months, rates have gradually shifted to their highest in years – meaning that the historic lows we’ve been used to seeing are now behind us. If homeownership is one of your goals for the year, it would be best to act sooner than later. Contact us at any time to get started!
As always, we’ll continue to monitor mortgage rates, industry news, and more to keep you informed. Enjoy the rest of your week!
Depending on which rate tracker you look at, mortgage rates decreased, moved sideways or increased on a week-over-week basis.
Since June 1, the yield on the benchmark 10-year Treasury moved up 18 basis points to close at 3.78% on Wednesday.
But the spreads remain abnormally wide, and that likely contributed to the divergent movements among different trackers that use different methodology. The normal spread between the 10-year Treasury and the 30-year fixed-rate mortgage is between 150 and 200 basis points; no matter which tracker is used, they currently are in the 300 basis point range.
Freddie Mac’s Primary Mortgage Market Survey, which takes in rates on submissions to its Loan Product Advisor automated-underwriting system, reported an 8 basis point decline in the 30-year fixed-rate mortgage to 6.71% for June 8 from 6.79% one week prior. For the same week in 2022, the 30-year FRM averaged 5.23%.
The 15-year FRM fell to 6.07% from 6.18% week-to-week but rose from 4.38% on a year-over-year basis.
“Mortgage rates decreased after a three-week climb,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective home buyers.”
Optimal Blue, a division of Black Knight, reported the 30-year conforming mortgage at 6.746% as of June 7, based on data submitted to its product and pricing engine. That compared with 6.719% on May 31; on June 1 it fell to 6.649% before tracking higher over the following days.
Zillow’s rate tracker, based on offers, was at 6.61% on Thursday morning, unchanged from the morning of June 1, and down one basis point from the previous week’s average.
“After some mild oscillations, mortgage rates are right where they were this time last week as investors await more conclusive signs of progress on inflation and monetary policy,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement issued Wednesday night. “Last week’s stronger-than-expected employment report caused Treasury yields — and mortgage rates that follow them — to increase.”
But the services sector slowed down in May, according to the Institute for Supply Management purchasing managers’ index report. The price component had its weakest reading in two years, which is likely to be seen in the next Consumer Price Index reading.
“Cooling inflation and a general economic slowdown would put downward pressure on long-term interest rates like the 10-year Treasury yield,” Divounguy said.
On Wednesday, the Mortgage Bankers Association reported a 10 basis point decline in the 30-year FRM to 6.81%.
“The housing market has gotten off to a slow start this summer due to higher mortgage rates, low inventory and economic uncertainty,” a Thursday morning statement from MBA President and CEO Bob Broeksmit said. “The labor market continues to be exceptionally strong, which could bring more buyers back into the market once rates move away from their recent highs.”
Divounguy forecasts that mortgage rate movement should remain muted over the next seven days, “but upward bias remains as investors await next week’s CPI inflation report and Federal Open Market Committee forward guidance.”
Economic data is one of the most basic and reliable inputs for the bond market. The bond market, in turn, dictates day to day interest rate movement. In general, weaker economic data pushes rates lower and that was today in a nutshell.
Weekly Jobless Claims came in at the highest levels since 2021 and the bond market reacted immediately. It wasn’t a huge move in the bigger picture, but enough to counteract the jump to higher rates seen on Wednesday.
Bigger volatility remains a bigger risk surrounding next week’s Consumer Price Index data on Tuesday and the Fed Announcement on Wednesday.
Fewer applications show borrowers’ demand for mortgage loans fell this week, despite a decline in rates due to concerns of an economic recession, according to the Mortgage Bankers Association (MBA).
The survey, which includes adjustments to account for the long Fourth of July weekend, shows mortgage applications down 5.4% for the week ending July 1, compared to a week earlier.
“Mortgage rates decreased for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury yields lower,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. But he added: “Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed.”
The Refinance Index decreased 7.7% from the previous week and was 76% lower than the same week one year ago, as homeowners still have reduced incentive to apply for the product.
The seasonally adjusted Purchase Index fell 4.3% from the previous week and 7.8% compared to the same week in the previous year because borrowers face an ongoing affordability challenge and a low inventory problem.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) decreased to 5.74%, from 5.84% the previous week, falling 24 basis points during the past two weeks. Jumbo mortgage loans (greater than $647,200) went from 5.42% to 5.28%.
Another index, the Freddie Mac PMMS, showed purchase mortgage rates dropped 11 basis points last week to 5.70%, ending a two-week climb.
Refis were 29.6% of total applications last week, decreasing from 30.3% the previous week, the survey shows.
The adjustable-rate mortgages (ARM) share of applications declined from 10.1% to 9.5%, still demonstrating continued popularity among borrowers. According to the MBA, the average interest rate for a 5/1 ARM fell to 4.62% from 4.64% a week prior.
The FHA share of total applications remained unchanged at 12%. Meanwhile, the V.A. share went from 11.2% to 11.1%. The USDA share of total applications remained at 0.6%.
The survey, conducted weekly since 1990, covers 75% of all U.S. retail residential mortgage applications.
With high mortgage rates deterring unnecessary borrowing, a whopping one-third of U.S. home buyers are buying homes in cash, the highest share in close to a decade, according to a report Wednesday from Redfin.
In April, 33.4% of buyers across the country dipped into their cash reserves, up from 30.7% from a year ago and the highest level since 2014.
With interest rates at a 15-year high, it’s no surprise that cash purchases are now accounting for a larger share of deals, with buyers who would rely on mortgages shunning the market far more than their cash-spending counterparts.
Case in point, across the 40 most populous U.S. metros the report analyzed, overall home sales were down 41% year over year in April, while all-cash sales logged a smaller 35% decline.
The 30-year fixed-rate stood at 6.79% as of Wednesday, close to November’s high of just over 7%, according to lending giant Freddie Mac.
“A home buyer who can afford to pay in all cash is weighing two potential paths,” Redfin senior economist Sheharyar Bokhari said in the report. “They can use cash to pay for the home and avoid high monthly interest payments, or take out a loan and pay a high mortgage rate. In that case, they could use the money that would have gone toward an all-cash purchase to invest in other assets that offer bigger returns, which could partly cancel out their high mortgage rate.”
Of course cash buyers can still be deterred by high interest rates and may decide that their money is better spent on investments that benefit from higher returns, the report said.
Meanwhile, buyers who can’t afford to pay in all cash “also have two potential—but different—paths,” Bokhari said. “They can avoid a high mortgage rate by dropping out of the housing market altogether, or they can take on a high rate. That discrepancy is the reason the all-cash share is near a decade high even though all-cash purchases have dropped: Affluent buyers have the choice to pay cash instead of dropping out of the market.”
A smaller “but still noteworthy reason” for the increase in all-cash sales is competition among home buyers, the report said. A chronic lack of homes for sale in certain areas is motivating some shoppers to make an all-cash offer to beat out the other potential buyers.
The housing market is getting stranger by the day.
While affordability has arguably never been worse, prices are rising and there are virtually no homes for sale.
This is making it difficult for both housing bulls and bears to make the case for a boom or a crash.
When all is said and done, we might just experience a stagnant market that fails to keep up with inflation.
And a severe economic downturn in the housing industry due to a lack of sales volume.
New For Sale Listings Hit Seasonal Low in June
First things first, new real estate listings are off a whopping 25% from a year ago, according to a new report from Redfin.
This covers the four-week time period ending on June 4th. Just 89,249 homes were listed.
And the real estate brokerage noted that new listings fell in all metros analyzed.
The declines were the most pronounced in Las Vegas (-42.3% YoY), Phoenix (-40.9%), Seattle (-40.4%), Oakland (-39.8%), and San Diego (-37.2%).
These happen to be areas that saw massive home price appreciation, then big home price corrections.
It seems homeowners are now staying put in these areas, perhaps as they come to terms with the inability to make a move from a financial standpoint.
Ultimately, the mortgage-rate lock in effect continues to make it both unfavorable and sometimes impossible for existing homeowners to move.
Simply put, selling your home with a 2-3% mortgage rate, only to buy one with a 7% mortgage rate, doesn’t pencil.
And rents aren’t cheap either, so it’s not a viable option to sell and rent for much less.
Active Real Estate Listings Are Falling When They Typically Rise
Meanwhile, active listings (the number of for-sale homes available at any point during the period) declined 4.6% from a year earlier.
This was just the second decline in 12 months, the first being a week earlier when actives fell 1.7%.
Redfin noted that active listings were also down month-to-month at a time of year when they typically rise.
Because of the lack of new listings, the total number of homes on the market fell to its lowest level on record for an early June.
Long story short, there is no housing inventory, which is somewhat good news because there aren’t a lot of buyers either.
As noted, affordability isn’t great with mortgage rates at/near 7% and home prices still historically high.
This explains why the median home sale price was down just 1.6% from a year ago at $379,463.
That represented the smallest decline in the past three months as many markets that were down year-over-year begin to turn things around.
Housing Supply Is Up Slightly from a Year Ago
While new listings and active inventory are down, housing supply inched up a bit from last year.
As of June 4th, supply was at 2.6 months, which is the amount of time it would take to clear inventory at the current sales pace.
But while it’s up 0.5% from a year ago, it’s still well below the 4-5 months that represents a healthy, balanced housing market.
The reason it’s higher is because homes are sitting on the market longer and taking more time to receive offers.
Again, you can blame affordability for this as there are fewer eligible buyers out there. And perhaps fewer who are interested even if they can afford it.
About a third of homes that went under contract received an accepted offer within the first two weeks on the market, down from 38% a year ago.
And homes that sold were on the market for a median 28 days (the shortest span since September), but much longer than the record low 18 days a year earlier.
So it’s clear the housing market isn’t thriving at the moment, but due to a continued lack of inventory, prices remain sticky.
But that could change if mortgage rates remain elevated during the softer part of the calendar year (summer/fall/winter).
Still, the resilience of home prices continues to exceed expectations and defy the housing bears.
Read more: When will the housing market crash again?
Done deal: The TJ Ribs location on Siegen Lane was sold for $2.5 million this week to SDP LA Baton Rouge 1 LLC, which shares an address with Streamline Development Partners of Oxford, Mississippi. Burke Moran, the son of founder TJ Moran, was the seller, as previously reported by Daily Report. While the restaurant still has a six-month lease, the new owner’s plans for the property have not been announced.
Homebuying trends: Mortgage rates have fallen from recent highs, but demand for home loans dropped for the fourth straight week, declining by 1.4% last week compared to the week before, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications to refinance a home loan fell 1% for the week and were 42% lower than the same week a year ago. CNBC has the full story.
Plan B: Biden administration officials are quietly planning for the possibility that the Supreme Court will strike down President Joe Biden’s sweeping student loan forgiveness program. Should the court block the program, the administration would likely pursue more targeted policy options as well as measures aimed at helping borrowers who would be required to resume making payments on their loans. Read the full story from The Wall Street Journal.
