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The year 2024 has started with cautious optimism that mortgage rates will drop, sparking much-needed activity in the sluggish U.S. housing market.
Mortgage rates, however, have been on a rising trend of late. Recent data shows that the economy is booming, while the Federal Reserve is signaling that it will take its time before cutting benchmark interest rates.
HousingWire’s Mortgage Rates Center showed the 30-year fixed-rate mortgage at 7.21% on Feb. 23. And according to Freddie Mac‘s Primary Mortgage Market Survey, the average rate inched closer to 7% this week.
Fannie Mae, however, remains optimistic that housing market activity will pick up as existing home sales and new single-family housing starts are expected to grow modestly in 2024.
While existing home sales dipped slightly in December by 1% to a seasonally adjusted annual rate of 3.78 million units, an increase in mortgage applications and December pending home sales that led to average closing times of 30 to 45 days indicate that a modest rebound in sales is underway.
With a low supply of existing homes for sale, demand for new homes is likely to remain strong, and the limit on new home sales will be determined by homebuilder production capacity, according to a report released Friday by Fannie Mae’s Economic and Strategic Research (ESR) group.
“Single-family permits in contrast edged up 1.6 percent in January, back in line with the overall starts series,” the report noted. “With single-family permits and starts now back in alignment, we expect new single-family construction to continue to drift upward in coming months.”
Fannie Mae forecasts total mortgage origination volume of $1.92 trillion in 2024, down slightly from $1.98 trillion in its previous forecast. Volume is expected to climb to $2.36 trillion in 2025, compared to the ESR group’s January forecast of $2.44 trillion.
Softening economic growth anticipated
The ESR group upgraded its 2024 macroeconomic growth outlook due to a stronger-than-expected fourth-quarter 2023 gross domestic product (GDP) report, as well as incoming data on recent population growth and immigration trends that point to faster payroll and GDP gains over the forecast horizon.
Fannie Mae’s 2024 GDP outlook is for 1.7% growth in 2024, compared to 3.1% in 2023. The ESR group previously forecast a “mild recession” for 2024.
“An unsustainably low savings rate suggests softer consumer spending going forward, consistent with the pullback in January retail sales, and slowing local and state tax receipts point to slower direct government spending growth,” the report stated.
Further, while payroll growth looks to have reaccelerated in December and January, other labor market measurements indicate softness. The ESR group expects that the labor market “on net” is likely to cool in the near future.
“Market dynamics continue to reflect significant uncertainty regarding the sustainability of stronger-than-expected recent GDP growth, the continuity of the decline of inflation, and the path of monetary policy change, not to mention the many ways in which historical relationships in housing and the larger economy remain out of balance post-pandemic,” Doug Duncan, Fannie Mae senior vice president and chief economist, said in the report.
Source: housingwire.com
Mortgage rates have risen recently but they could be much worse than they are today. As someone who doesn’t believe the Federal Reserve has pivoted and that the Fed enacted a COVID-19 housing policy to keep existing home sales depressed, It’s not shocking to me that rates are still this high, even though we had lower rates with a higher growth rate of inflation data.
The 10-year yield is the key for housing in 2024. In my 2024 forecast, I put the 10-year yield range between 3.21%-4.25%, with a critical line in the sand at 3.37%. If the economic data stays firm, we shouldn’t break below 3.21%, but if the labor data gets weaker, that line in the sand will be tested.
The most important data line for me, along with mortgage rates, is jobless claims data because I value labor data over inflation. The jobless claims data got better recently so it’s not a surprise to me that mortgage rates and the 10-year yield are still high.
Below is a look at the 10-year yield over the past few years.
For those who have followed my travails with the 10-year yield over the past year, you know that the 4.34% has been a critical level for me up and down in the merry-go-round world of tracking rates. If we break above this level, the Fed is playing with fire again like it did last year and the 10-year yield can shoot up to 5% again — putting 8% mortgage rates in play again. Even with a lot of hawkish Fed talk last week, we still haven’t broken above that level.
One part of my 2024 forecast has been wrong so far this year: I forecast that if the 10-year yield reached 4.25%, mortgage rates would hit 7.25%. That hasn’t happened. The 10-year yield went above this 4.25% level briefly, and the highest mortgage rates got was 7.16%. This is because the spreads are doing better this year; if the spreads were average, mortgage rates would be lower.
For the 10-year yield, breaking above 4.34% is a big deal. Also, getting below 3.80%, another critical level for the 10-year yield, will be a big deal. As discussed in a recent HousingWire Daily podcast, we would need softer economic data or a real Fed pivot for that to happen. You can see in the chart below why I suspected the bond yield wouldn’t get much lower than 3.80% after that massive move from 5%. If the economic data was getting softer, then yes, that is one thing, but that hasn’t happened yet.
Mortgage rates were lower in late 2022 and early 2023 with a higher inflation growth rate and the Fed still hiking because the bond market anticipated a Fed pivot or a recession, neither of which happened. Remember, the macro data and Fed expectations run a lot of this. This is why I believe in talking about 10-year yield channels for every year and not a single mortgage rate forecast.
For now, the economic and labor data is holding up, so we are still here with 7% rates. In this recent podcast, I discussed why I don’t believe the Fed will pivot housing here.
My favorite housing data line for 2024 has been seeing the increase in inventory year over year. I firmly believe that housing inventory can grow over time when mortgage rates increase and we see weakness in demand. The trick is keeping rates higher for longer for that to occur, because once rates fall, the inventory growth story is gone.
Here is a look at inventory last week:
New listings data is growing year over year and increasing week to week, but I wish we were seeing more significant growth. As mortgage rates rise, there is weakness in demand and homes don’t go into contract immediately. This data line can grow faster as long as people still list their homes weekly.
Weekly new listing data for the last week over the previous several years:
For some historical reference, during 2008-2011, new listings data was growing between 250,000-400,000 per week.
Every year, one-third of all homes take a price cut before selling — this is a traditional housing activity that happens every year. However, this data can move stronger in either direction when mortgage rates rise or fall aggressively.
The year-over-year price data has been stabilizing since Nov. 9, 2022. Even with 8% rates last year, the data was negative year over year, and we are still showing a decline year over year. As rates increase and the seasonal inventory increases, the year-over-year price cut data should increase versus 2023 levels as more supply enters the marketplace and purchase application data is trending negatively.
Here is the price cut percentage for the last week over the past several years
We are seeing a similar pattern in the purchase application data to last year: when rates rose in February, purchase application data declined. Last week mortgage rates rose from 6.63% to 7.16%, ending the week at 7.08%. That’s created four straight weeks of negative data, similar to last year. This means the recent existing home sales report that showed a bounce is already too old.
Since November 2023, we have had eight positive and four negative purchase application prints after making holiday adjustments. Year to date, we have had two positive prints versus four negative prints. We are seeing a carbon copy of what happened in 2023, which means it’s hard to get real sales growth even working from the lowest sales levels ever. This is why last year, I talked about how the housing market really revolves around the 10-year yield.
We have a bunch of housing reports this week, including new home sales, home price index reports and pending home sales. Pending home sales will be interesting because purchase apps have been weaker, so they should decline. If they don’t, they will be pushed into next month. Sometimes, old monthly data lags current forward-looking data by a month or two.
However, the Fed’s main inflation index, the PCE inflation report, will show that the inflation growth rate has cooled down from the pandemic’s peak but is still not good enough for them to pivot. As always, keep an eye out for Thursday’s jobless claims data. That’s the most critical data line we have today.
Source: housingwire.com
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China’s central bank has cut its key mortgage reference rate by a record amount, as it ramps up efforts to stem a prolonged property crisis.
The People’s Bank of China (PBOC) announced Tuesday that it would cut its five-year loan prime rate (LPR) from 4.2% to 3.95%, while keeping the one-year LPR unchanged at 3.45%.
The 25 basis point cut to the five-year LPR is the biggest reduction the central bank has made since it revamped its LPR system in 2019. That August, the central bank announced that the LPR would become the new reference rates for lending by Chinese banks.
The latest cut was also the first reduction to the five-year LPR since June 2023.
The LPR is the rate at which commercial banks lend to their best customers. The five-year rate usually serves as a reference for mortgages.
“Today’s 25 (basis point) cut to the five-year LPR is clearly aimed at supporting the housing market,” analysts from Capital Economics said in a note on Tuesday.
“On its own, it will not revive new home sales. But coupled with efforts to provide increased credit support to developers, today’s cut should help to reduce pressure on the property sector somewhat,” they said.
China’s economy has been hobbled by a real estate downturn since 2021, when a government crackdown on developers’ borrowing triggered a liquidity crisis in the sector.
The property market has since entered a prolonged slump, marked by an ongoing decline in both investment in and sales of property. Dozens of major developers have defaulted on their debt, with Evergrande, once the country’s second largest homebuilder, ordered to liquidate last month.
The crisis has triggered widespread protests by unpaid construction workers, buyers of unfinished homes and frustrated investors facing financial losses. It has also spilled over to the country’s massive shadow banking industry, with Zhongrong Trust declaring itself severely insolvent last year after failing to repay its debt.
Beijing has scrambled to revive the property sector, which accounts for as much as 30% of China’s gross domestic product.
Measures unveiled include slashing interest rates, reducing the size of down payments, encouraging banks to extend maturing loans to developers and loosening restrictions on home purchases in Chinese cities.
China’s economy faces a litany of other problems, including deflation, low confidence and accelerated capital flight.
The country’s direct investment liabilities, a measure of foreign direct investment, reached $33 billion in 2023, according to data released by the State Administration of Foreign Exchange on Sunday.
The gauge, which measures direct investments by foreign-owned entities in China, was down 82% from 2022 and stands at its lowest level since 1993.
While an uncertain economic outlook and rising geopolitical tensions are partly to blame for the exodus, foreign companies and investors have also grown wary of increasing political risks in China, including the possibility of raids and detentions.
The country’s stock markets have suffered a prolonged slump since their recent peaks in 2021, with more than $6 trillion in market value having been wiped out from the Shanghai, Shenzhen and Hong Kong markets.
Source: cnn.com
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
Rates for 30-year mortgages dropped again, but homes remain unaffordable in most areas. (iStock)
Mortgage rates dropped to 6.63% this week, according to Freddie Mac’s Primary Mortgage Market Survey. Rates for 30-years fixed-rate mortgages were 6.69% last week, dropping by 0.06 percentage points.
Rates for 15-year mortgages also dropped slightly from 5.96% last week to 5.94% this week. Both 15-year mortgages and 30-year mortgage rates are still higher than they were last year.
A year ago, 30-year mortgages sat at 6.09%, on average, while 15-year mortgages averaged 5.14%, Freddie Mac reported.
“Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation we expect rates to decline further,” Freddie Mac Chief Economist Sam Khater explained.
“The economy continues to outperform due to solid job and income growth, while household formation is increasing at rates above pre-pandemic levels. These favorable factors should provide strong fundamental support to the market in the months ahead.”
As mortgage rates drop, you may decide it’s the right time to finally buy a home. To find the right mortgage for your needs, Credible can show you multiple mortgage lenders all in one place and provide you with personalized rates within minutes.
HOMEOWNERS INSURANCE RATES ON THE RISE, MAINLY DUE TO INCREASE IN NATURAL DISASTERS
After remaining for high most of the year, home prices are dropping slightly in some metro areas.
Data from a recent S&P report showed prices in 12 out of 20 metro areas decreasing. This decrease in prices has led some households to move across state lines in search of more affordable areas.
Charlotte, Providence and Indianapolis saw the largest increase in buyers as they fled high-cost cities, stated a Zillow report.
Households that made these moves found homes were $7,500 less, on average, than where they left.
Cities that saw the highest outflow in households included Chicago, San Diego and Cincinnati. These metro areas often have higher housing costs and less robust economies, Zillow found.
If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders, all without affecting your credit score.
HOMEOWNERS MOVING ACROSS STATE LINES, SEEKING AFFORDABILITY, FIND IT IN CERTAIN CITIES
The housing market is trudging toward recovery, largely thanks to mortgage interest rates dropping in recent months.
“The surge in pending home sales and new home sales, both determined by contract signings in the early stages of the buying process, indicates increased participation from buyers in the market,” explained Realtor.com Economist Jiayi Xu in response to Freddie Mac’s recent mortgage rates update. “Simultaneously, the recent rise in listing activity suggests that sellers are closely monitoring mortgage rates and adjusting their selling strategies accordingly.”
Potential homebuyers won’t see a full recovery anytime soon, however. JP Morgan experts predict that the real estate market will become affordable again about three and a half years from now. This is largely dependent on continued interest rate decreases.
“Despite the promising increase in listing activity, inventory is likely to remain low as sellers may not respond as swiftly as anticipated. In other words, a more substantial improvement in mortgage rates is necessary to attract more sellers to the market,” Xu said.
Until rates drop more substantially, mortgage payments are likely to stay high. In November 2023, the average monthly mortgage payment was $2,198, up from $1,993 a year earlier, a National Association of Realtors report found.
If buying a home is your near future, make sure you’re getting the best mortgage lender and rates with the help of Credible. Credible helps you compare rates and lenders and get a mortgage pre-approval letter in minutes.
JUST OVER 15% OF HOME LISTINGS WERE CONSIDERED AFFORDABLE IN 2023: REDFIN
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Source: foxbusiness.com
Welcome to Summerlin, the epitome of tranquility and luxury living in the heart of Las Vegas.
With its meticulously designed neighborhoods and vast array of exclusive amenities, Summerlin truly embodies the perfect blend of opulence and serenity.
From exquisite gated communities to world-class golf courses and award-winning schools, every aspect of life in Summerlin is centered around providing the utmost comfort and convenience.
And people have started to take notice.
Summerlin has seen an influx of new residents in the past few years, fast becoming Nevada’s top-selling community.
In the first half of 2023 alone, an impressive total of 544 new homes were sold in the master-planned community, pushing it to rank #5 nationally in new home sales in a recent midyear report by national real estate consultant RCLCO.
Celebrities too have been flocking to the area, with A-listers like Mark Wahlberg ditching the glamorous L.A. lifestyle and buying homes in Summerlin, Nevada.
To get a better feel of the local real estate market, we’ve reached out to industry expert Cami Lincowski, a prominent luxury Las Vegas real estate agent and former star of HGTV’s Say Yes to the Nest.
Talking about the appeal of the area of its rise in popularity, Cami tells us that “Summerlin is not only thriving, but when you throw in the latest and greatest shopping & high-rated restaurants the valley has to offer; there’s no denying that this area ranks amongst the top cities to call home.”
So let’s take a closer look at what makes this Las Vegas Valley community such a great place to live.
Summerlin is synonymous with luxury.
This master-planned community boasts some of the most prestigious homes in Las Vegas, offering residents an unparalleled level of elegance and sophistication. From sprawling mansions to stylish townhouses, Summerlin has something to suit every taste and preference.
The meticulously designed neighborhoods of Summerlin showcase architectural excellence and attention to detail.
Gated communities like The Ridges, Tournament Hills, The Lakes, and Red Rock Country Club provide residents with a sense of exclusivity and security. Impeccably landscaped streets and manicured lawns add to the overall aesthetic appeal, creating a sense of grandeur at every turn.
More recently, The Summit Club has emerged as the pinnacle of luxury living in Summerlin. The 555-acre resort community south of The Ridges (and only 9 miles away from the Las Vegas strip) is the only fully private residential golf and lifestyle club community in all of Las Vegas.
In addition to the stunning homes, Summerlin offers a wealth of amenities that cater to the luxury lifestyle.
Residents have access to world-class golf courses, private country clubs, and state-of-the-art fitness centers. The community also boasts a wide range of recreational facilities, including tennis courts, swimming pools, and parks, ensuring that there is always something to do for those seeking an active lifestyle.
The real estate market in Summerlin is thriving, thanks to its reputation as one of the most desirable places to live in Las Vegas. But you do have to have deep pockets – or an outstanding credit score – to afford to buy here.
The demand for homes in Summerlin has been steadily increasing over the years, leading to a rise in property values. The community’s prime location, coupled with its exceptional amenities and quality of life, make it an attractive choice for both homebuyers and investors.
But despite being a top luxury home destination, Summerlin’s house prices can accommodate a wide range of budgets — and are considerably less prohibitive compared to those found in other top luxury markets on the West or East Coasts.
“Anyone can call Summerlin home,” luxury agent Cami Lincowski tells us. “With price ranges starting at $400k & tipping the scale at $15m+, this city is not just made of city lights, but all walks of life.”
The community offers a wide range of housing options, from single-family homes to luxury condominiums and townhouses.
Whether you are looking to buy a home or invest in real estate, Summerlin offers a wealth of opportunities. The community’s diverse housing options cater to a range of budgets and lifestyles, ensuring that there is something for everyone.
With the Mansion Tax adding fuel to the California exodus, many of the Golden State’s affluent residents started flocking to new luxury markets — with A-listers and famous individuals choosing to make Las Vegas their new primary residence.
Naturally, Summerlin emerged as a top choice.
Celebrities to have called Summerlin home include actor Mark Wahlberg (who sold his sprawling $55 million LA mansion to move here), Grammy Award-winning singer Celine Dion, who sold her freshly-built Summit Club house for a record $30 million, and several Golden Knights players.
NHL pro Max Pacioretty played only four seasons with the Vegas Golden Knights (2018-2022) but went all in when it came to making himself at home in Sin City. The Carolina Hurricanes left winger owned a 10,000+ sq. ft. home in The Ridges community, which he sold for top dollar last year.
Pacioretty’s spectacular estate “netted” a cool $11 million, a record for the high-end The Ridges community.
Rob Roy, the CEO, founder, and chairman of Switch Communications Group, also paid $33 million for 5 acres to build a luxury estate in the same Summerlin resort community.
And while Wahlberg recently sold one of his Summerlin homes for $16.6 million one year after buying it, he made it clear he loves living here and has no plans of leaving the Las Vegas community. He’s just waiting for his other mansion to be completed.
Summerlin is home to a number of top-notch neighborhoods, each with its own unique charm and character. Here are some of the most sought-after areas in the community:
Located at the base of the Red Rock Canyon, The Ridges is an exclusive gated community known for its luxurious homes and breathtaking views. With its private golf course and world-class amenities, it is one of the most coveted neighborhoods in Summerlin.
Situated around the TPC at Summerlin Golf Course, Tournament Hills offers residents the opportunity to live near one of the best golf courses in Las Vegas. The neighborhood features a mix of custom-built homes and luxury estates, providing a premium living experience.
Nestled among lush green landscapes and scenic walking trails, The Gardens is a peaceful and picturesque neighborhood in Summerlin. With its tree-lined streets and well-maintained parks, it offers residents a serene and idyllic setting.
One of the most remarkable aspects of Summerlin is its breathtaking natural beauty.
Nestled against the majestic Red Rock Canyon, the community offers stunning views of the surrounding desert landscape. The vibrant hues of red and orange against the clear blue sky create a picturesque backdrop that is hard to find elsewhere in Las Vegas.
Summerlin is a nature lover’s paradise, with over 150 parks and more than 150 miles of trails to explore. Whether you enjoy hiking, biking, or simply taking a leisurely stroll, there is a trail for every skill level. The community is also home to numerous lakes and ponds, perfect for fishing or enjoying a peaceful picnic by the water.
For those seeking a more tranquil experience, Summerlin offers an abundance of peaceful retreats. The community’s botanical gardens and meditation centers provide a serene environment for relaxation and introspection. Escape the hustle and bustle of city life and immerse yourself in the tranquility that this community has to offer.
Summerlin is not just a place to live; it is a lifestyle.
The community offers an impressive array of amenities and recreational activities that cater to residents of all ages. From world-class golf courses to community centers and sports facilities, there is something for everyone.
Golf enthusiasts will be delighted by the exceptional courses that Summerlin has to offer.
The TPC at Summerlin is a championship golf course designed by renowned architect Bobby Weed. With its challenging fairways and breathtaking views, it is a favorite among golfers of all skill levels. The community is also home to the Red Rock Country Club, which features two Arnold Palmer-designed courses and a host of other amenities.
In addition to golf, Summerlin offers a wide range of recreational activities. The community’s numerous parks and trails provide ample opportunities for outdoor enthusiasts to stay active.
Tennis courts, basketball courts, and soccer fields are available for those who enjoy team sports. And for those who prefer indoor activities, the community’s state-of-the-art fitness centers and swimming pools provide plenty of options.
Summerlin is not only known for its luxury homes and amenities; it is also home to some of the best schools in Las Vegas. The community offers a wide range of educational options, from top-rated public schools to prestigious private institutions.
The Clark County School District serves the majority of students in Summerlin, offering a comprehensive curriculum and a strong emphasis on academic excellence. The district’s schools consistently rank among the best in the state, providing students with a quality education that prepares them for future success.
For those seeking a private education, Summerlin is home to several esteemed institutions.
The Alexander Dawson School is a renowned independent school that offers a challenging and well-rounded education. The Meadows School, another prestigious private institution, is known for its rigorous academic program and strong college preparatory curriculum.
When it comes to shopping and dining, Summerlin has it all. The community is home to The Shops at Summerlin, a premier shopping destination that offers a wide range of retail and dining options.
From high-end fashion boutiques to popular chain stores, there is something for every shopper.
Food enthusiasts will also be delighted by the diverse culinary scene in Summerlin. The community boasts a wide range of restaurants, offering everything from casual dining to fine dining experiences. Whether you are craving sushi, steak, or Italian cuisine, you will find it all in Summerlin.
One of the unique aspects of living in Summerlin is its close proximity to the Las Vegas Strip. While the community offers a peaceful and serene environment, the bustling energy of the Strip is just a short drive away.
Residents can easily access all the excitement that Las Vegas has to offer, from world-class entertainment and nightlife to renowned restaurants and shopping.
The convenience of being near the Strip allows residents of Summerlin to enjoy the best of both worlds. They can retreat to the tranquility of their luxurious homes after a night out on the town, providing the perfect balance between opulence and excitement.
To sum things up, Summerlin is a community that embodies the perfect blend of luxury and tranquility. Its meticulously designed neighborhoods, breathtaking natural beauty, and array of exclusive amenities make it an ideal place to live in Las Vegas.
Whether you are seeking a luxurious retreat or a place to call home, Summerlin offers a lifestyle unlike any other. From world-class golf courses to award-winning schools and gourmet dining, every aspect of life in Summerlin is centered around providing the utmost comfort and convenience.
Escape the hustle and bustle of the Strip and immerse yourself in the beauty and serenity of Summerlin.
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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
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Thu, Jan 25 2024, 2:48 PM
Who doesn’t think swearing parrots are funny? Although you wouldn’t want your parrot talking about the clap when Aunt Beatrice comes over for Sunday dinner. I’m sure that every LO has heard their share of salty words, and they deal with much more for their clients than just a loan. Working with their client’s debts, assets, rental insurance until they buy a home, even servicing after the loan funds, you name it. Everyone across the nation is feeling the brunt of seemingly usurious homeowner insurance rates, and The Mortgage Collaborative’s Rundown tomorrow has Andrew Hellard, SVP of Products with Matic, discussing why homeowner’s insurance costs have skyrocketed. IMBs have not been retaining servicing. They needed the cash. Companies like Freedom, AmeriHome, Pennymac, and Planet Home have been buying up servicing. They will retain that customer if and when refinancing kicks in. Rate and term refis will probably go to the aggregators. They bought the servicing; they want to keep that customer. What percentage of customers will go back to the original lender, increasing the recapture rate? It may very well depend on what the customer service was like initially. (Today’s podcast can be found here and this week’s is brought to you LoanCare, successfully navigating clients and homeowners through market change for 40 years. The mortgage subservicer delivers superior customer experience through personalization and convenience via its portfolio management tool, LoanCare Analytics™, supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Angel Oak Mortgage Solutions’ Tom Hutchens on his real estate market outlook for 2024 and securitizations in the Non-QM space.)
Broker and Lender Products, Programs, and Software
Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once insurance costs are factored in. Matic, a home insurance marketplace built for the mortgage industry, helps borrowers save time by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration options, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how mortgage enterprises like New American Funding and PRMG are partnering with Matic, book a demo today.
Ready to help more borrowers tackle affordability? Click n’ Close has provided more than 1.5 billion dollars in DPA-related financing to over 6,000 borrowers through its SmartBuy suite of products, with an average of nearly $12,500 in assistance per transaction. Unlike state or municipal DPA programs, SmartBuy isn’t subject to budgetary shortfalls and offers tremendous flexibility to accommodate a wider range of borrower scenarios, making it ready to help your borrowers achieve homeownership. From start to finish, SmartBuy offers a streamlined process for all parties. With lower capital requirements and short turn times, Lenders can be up and running with SmartBuy in a snap. In addition, wholesale loan program information is available in today’s leading product pricing engines (PPEs), including Optimal Blue, MeridianLink’s Price My Loan, Lender Price, and Polly. Reach out to our wholesale (Adam Rieke, Kerry Webb and Soliman Martinez) or correspondent team (Julas Hollie) to learn more.
‘App’ [noun] – an application designed for a mobile device. ‘Optimal Blue PPE’ [proper noun] – the mortgage industry’s most widely used product, pricing, and eligibility engine. These terms probably aren’t new to you, even if vocabulary wasn’t your best subject in school. But one piece of information you won’t find in a dictionary is that the Optimal Blue PPE is now available in a native mobile app for Android and iOS. That’s right: Loan officers can put “pricing in their pocket” with complete access to scenario pricing and more, the exact moment they need it. It’s time to leave your dictionary AND your laptop behind and take the power of the Optimal Blue PPE wherever business takes you. The enhanced iOS app even includes publicly accessible pricing analysis from the Optimal Blue Mortgage Market Indices. Simply have your company’s account admin enable access today.
“Planet Management Group is your trusted and proactive partner for residential and commercial asset management. Our private clients gain access to specialized technology, expert advisory services, and clear insights into residential and commercial market opportunities. Embrace performance. Experience PMG. email or call (585) 512-1030 and discover the PMG difference today.”
Successfully managing MSR portfolios can be a lucrative endeavor, but navigating regulatory compliance, risk management, and understanding market values can be daunting. Join MQMR and MCT for a webinar on February 15th at 11am PT entitled MSR Risk Management, Compliance, and Current Market Strategies, where panelists will dive into operational and regulatory best practices, share invaluable tips to avoid common MSR management pitfalls, and provide insights into current pricing trends. The joint webinar will also explore crucial topics such as servicing regulatory developments (FHFA, GSEs, NCUA, GAAP compliance), a bulk MSR market update, trends in retained vs. released vs. co-issue, and understanding the value of your portfolio. Don’t miss this opportunity to enhance your portfolio management skills and elevate your lending income. Register today for a comprehensive session that will empower your financial strategies.
STRATMOR on Profitability
In his 1943 paper, “A Theory of Human Motivation,” Abraham Maslow identified five levels of human needs, from the most basic to the most advanced. In STRATMOR Group’s January Insights Report, Senior Partner Jim Cameron borrows from Maslow’s famed “hierarchy of needs” theory to offer mortgage lenders a real-world approach to shaping their strategies in 2024. STRATMOR’s January InFocus article, “Maslow and Mortgages – The Path to Actualization in Today’s Market,” outlines a similar hierarchy that recommends lenders get back to consistent profits before embarking on their longer-term strategic goals. Check out STRATMOR’s full January Insights Report here.
News and Industry Updates
“AnnieMac Home Mortgage is delighted to share a momentous announcement that symbolizes our commitment to progress and innovation: the unveiling of our new brand… Our new brand is a reflection of AnnieMac’s journey, capturing the spirit of adaptability and forward momentum that has defined our organization. At the heart of this evolution is the distinctive chevron symbol.” (Editor’s note: Cynics would say that “momentous” might be a stretch, reserved for things like landing on the moon, finding Amelia Earhart’s plane, or scaling Mt. Everest. But hey, if it gets more business…!)
Pennymac was recently alerted to an appraiser fraud scheme where appraisal reports were completed by an unlicensed appraiser unlawfully using the identities of other actively licensed appraisers. The appraisal reports were completed over the past two-year period and there is no evidence the appraisers whose identities were used were aware of or involved in the activity. Details are posted on the in Pennymac Announcement 24-04.
Do your clients need to access home equity? Kind Lending offers Closed End Seconds (CES) financing through piggyback and standalone programs. CES financing allows borrowers to access cash from their home equity without impacting their original loan rate.
Per the Pennymac Announcement 24-02, Jumbo LLPAs will be updated effective for all Best Efforts Commitments taken on or after Monday, January 8, 2024 as follows: Improving values on the ‘Occupancy Adjustments’ LLPA grid. Updating values for the ‘Purchase’ LLPA on the ‘Loan Purpose Adjustments’ LLPA grid.
Capital Markets
The United States cannot be an island of prosperity. This week has been an excellent example of how international events can impact domestic mortgage rates. Germany’s economy is in the doldrums. Houthi rebel attacks on ships and allied responses in the Red Sea have resulted in a spike in producer costs that is likely to be passed along to consumers, hurting the Fed’s quest to return U.S. inflation to its 2 percent target. China has ramped up stimulus, saying it will reduce the reserve requirement ratio for banks by 50 basis points in early February, a move that will add $139 billion in liquidity to the market, but also stoked fears of larger contagion. The release of flash Manufacturing and Services Purchasing Manager Indices readings from major world economies mostly showed an ongoing contraction, providing markets ammo for pricing in early and deep Fed rate cuts. And quarterly corporate earnings results for companies around the globe, with a particular focus on forward looking guidance, has investors less convinced of signs that the Fed’s historic tightening cycle will tilt the economy into recession.
In this country, bond prices, and therefore rates, are based on supply & demand and we learned yesterday that the Treasury sold $61 billion in 5-year notes to weak demand. Part of that stems from stock market highs and consumer sentiment in January rebounding to the highest level since mid-2021, but also from cautious “Fed speak” recently and stronger than expected data. Attention now turns to GDP from Q4 of last year. Real GDP growth is seen slowing from Q3’s unsustainably robust 4.9 percent annualized increase and is expected to show that the economy expanded at a 2 percent annual rate in the final three months of 2023. Household spending is expected to be the main driver of both stronger growth and overall spending than was anticipated at the start of the quarter. Those factors may keep the economy from dipping into a recession even if there isn’t much help from other sources of growth. In fact, household incomes are now outpacing inflation.
Today’s economic calendar begins a deluge of data over the next several sessions and was kicked off by advanced Q4 Gross Domestic Product (+3.3 percent). GDP was expected to increase 1.3 percent versus 4.9 percent previously, with final sales 2.5 percent higher versus 3.6 percent in Q3. The core Personal Consumption Expenditure (PCE) Deflator registered +2.0 percent, unchanged from last month’s reading. The Price Index +1.5 percent.
We’ve also received Durable Goods Orders (flat on the month, ex-transportation +.6 percent), weekly jobless claims (+214k, 1.833 million continuing), advanced indicators for December (previous goods balance…, retail inventories …, and wholesale inventories…), and the Chicago Fed National Activity Index for December. Later today brings December new home sales, KC Fed manufacturing for January, the Treasury auctioning off $41 billion 7-year notes, and Freddie Mac’s latest Primary Mortgage Market Survey. Norges Bank was out with its latest monetary policy decision overnight (no change), as well as the European Central Bank’s decision (no change) with ECB head Lagarde’s press conference. We begin the day with Agency MBS prices a few ticks (32nds) better, the 10-year yielding 4.14 after closing yesterday at 4.18 percent, and 4.35 on the 2-year.
Jobs
“Attention Mortgage Brokers: Are you feeling isolated? Are you lacking support or struggling to establish relationships in this shifting market? Take your career to new heights with RWM Home Loans, a trusted name in home financing with over 30 years of excellence. With our FNMA, FREDDIE and GNMA approvals, we offer a wide range of products and direct loan servicing, empowering our sales team to fund both in-house and with brokered solutions. Whether you’re assisting first-time homebuyers, navigating Jumbo, Non-QM, reverse mortgages, or managing construction loans, we have the solutions to meet your clients’ needs. Do you want a voice at the table and the ability to provide 5-star service, best in class technology, and competitive pricing for your borrowers? If you are evaluating your options and looking for a top tier lending partner, contact us now for a confidential conversation.”
A strategic CFO is available on short notice. Experience in conventional/conforming markets, non-QM, Fix & Flip, and DSCR products, in distributed retail and wholesale channels in public and private lenders, backed by PE and venture capital. 15+ years’ experience in start-up, high growth middle market and public companies. Fintech lender experience including AI, machine learning and predictive modeling. Comfortable working at both a strategic level and a hands-on operational level. Also open to work on M&A transactions or restructurings. Interested companies should contact Chrisman LLC’s Anjelica Nixt to forward your note.
“PrimeLending offers Branch Managers the flexibility to structure their branch for maximum growth and profitability. As a Branch Manager at PrimeLending, you’ll have the power to make operational decisions, construct your team and truly lead. Branch structures range from a traditional Retail Model to our Modern Originator Model leveraging both retail and virtual production teams to our Expense Management Model giving you unparalleled control over how you invest in your business. Don’t settle for the status quo… Explore all your options and take more control over your future. We’re looking for talented, driven Branch Managers and Loan Originators! Contact Nic Hartke today!”
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Source: mortgagenewsdaily.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…]
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