Home builders have a unique perspective when it comes to gauging whether or not people are buying new homes. Because of this, the National Association of Home Builders’ Housing Market Index – which measures builders’ confidence in the market for newly built, single-family homes – has become an important indicator of the housing market’s health. The Index scores builders’ perceptions on a scale where any number above 50 indicates that more builders view conditions as good than poor. In June, the index posted a four-point gain, reaching a level of 49. Kevin Kelly, NAHB’s chairman, said after several months of little fluctuation, a four-point increase is a welcome sign that builders have some renewed confidence in the market. All three components of the index improved in June, with the component measuring current sales conditions seeing an increase of six points. Components gauging sales expectations for the next six months and buyer traffic both rose three points. Regionally, three-month moving averages show the Midwest falling a point, the West holding steady, and the South and Northeast up a point. More here.
After rising sharply over the past two years, home price increases are now becoming smaller, more balanced, and more widespread. In fact, for the first time since July 2012, none of the 100 largest metropolitan areas experienced a price gain of 20 percent or more, according to the most recent Price Monitor from Trulia. That means, home price increases are normalizing and becoming more stable after years of volatility. It also means more homeowners – who may have been waiting to put their homes up for sale because they expected prices to continue to surge – may now be encouraged to sell. This is a positive sign for housing, as rising for-sale inventory and sustainable price increases would bring even more balance to the market. Asking prices, according to the release, rose at their slowest pace in 13 months, climbing 8 percent year-over-year. And, though an 8 percent increase is still historically above average, it is slower than it has been in recent months. Also, only four metro areas saw declining prices, which sets a post-recession low and indicates that – in addition to being more sustainable – home price improvement is becoming more widespread. More here.
Though most Americans say they’d like to own their own home one day, there are a number of misconceptions about the buying process and current market that cause many to believe they won’t be able to get financing or can’t afford homeownership. According to a recent article from Christina Boyle, Freddie Mac’s vice president and head of single-family sales and relationship management, not being able to come up with a 20 percent down payment is the top myth keeping Americans from entering the market. Boyle says, though a lender may ask for 20 percent down, it isn’t always a necessity and, in general, you should expect to have a down payment of about 5 or 10 percent. Another common assumption is that you’ll need a perfect credit score in order to get a mortgage. While you’ll definitely have more options with a higher credit score, your score doesn’t need to be perfect to secure a loan. Boyle also points to recent increases in mortgage rates and the belief that homeownership is too expensive as reasons potential home buyers stay on the sidelines. But despite recent rate increases, mortgage rates are still well below historical norms and, according to recent research, owning a home is actually cheaper than renting in the 100 largest metropolitan areas across the country. More here
According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage application demand surged following the Memorial Day holiday. In fact, the Market Composite Index, which is a measure of both purchase and refinance demand, rose 10.3 percent from the week before. Individually, the Refinance Index saw an 11 percent increase – largely due to two-months of downward trending mortgage rates – and the Purchase Index was up 9 percent. But despite recent trends, average mortgage rates increased across all loan categories last week, including 30 and 15 year fixed rate loans as well as FHA-backed mortgages. It was the first significant increase in rates in many weeks. Also in the release, the refinance share of total mortgage activity rose to 54 percent of applications, up from 53 percent the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
A record number of surveyed Americans say they think now is a good time to sell a house, according to the most recent National Housing Survey from Fannie Mae. The results of the latest survey show 43 percent of respondents think now is the time to sell. And that’s good news for prospective home buyers because – as more homes become available to buy – not only will there be more homes to choose from but home price increases will begin to moderate as well. Still, the number of Americans who say it is a good time to buy a house fell slightly from the month before, dipping to 68 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said this year’s spring and summer home buying season has gotten off to a slow start despite mortgage rates trending downward for the past two months. According to Duncan, this is because consumers are worried about their income and the direction of the overall economy. Though Americans have been generally optimistic about the housing market in recent months, a decreasing number of respondents say their household income has risen over the past year and 57 percent say the economy is headed in the wrong direction. These persistent concerns about personal finances and economic conditions may be keeping more consumers from entering the housing market as either a home buyer or seller. More here.
A lack of savings, debt, and poor credit are among the biggest obstacles preventing young adults between the ages of 18 and 34 from becoming homeowners. In fact, according to a new consumer survey from Trulia, 50 percent of participating millennials said their personal finances were preventing them from buying a home and they would have to ask their parents or grandparents for help with a down payment in order for them to be able to buy a house. Michael Corbett, Trulia’s real estate expert, said saving for a down payment is a big obstacle and it can make the home buying process even more intimidating. But despite their lack of savings, younger Americans say they aren’t willing to sacrifice luxuries like vacations, gym memberships, and new clothes. In fact, 15 percent of survey respondents said they wouldn’t even give up their Netflix subscription to help save money to buy a house. The top three things millennials said they wouldn’t give up were their car, smartphone, and cable. Eating out, organic shopping, and their morning latte rounded out the top 10 must-have items for young Americans struggling to save money to buy a house. More here.
According to the National Association of Home Builders Leading Market Index, 83 percent of the nation’s local housing markets have improved since last year. The Index – which measures how quickly individual areas are returning to previous levels of normal economic and housing activity – found that the nationwide average is 88 percent back to normal. Kevin Kelly, NAHB’s chairman, said markets are gradually returning to normal levels and, as we see more sustainable levels of job growth, more home buyers will enter the marketplace. The index looks at the average permit, price, and employment levels for 350 metropolitan areas over the past year and compares it to where they were in 2000-2003, before the financial crisis and recession. Of those 350 metro markets, 56 have returned to or exceeded their last normal levels of economic and housing activity and more than a third of all markets are operating at 90 percent of previous norms. In fact, among the index’s three components, only single-family housing permits are trailing behind. Prices and employment levels are operating at, or above, previous normal levels, while building permits are still just 43 percent of the way back. More here.
Of the 569,000 new single-family homes that were built in 2013, most had air conditioning and two or more stories, according to a joint report released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The annual report collects data on single-and multi-family housing built and sold in the last year. Among the highlights of this year’s Characteristics of New Housing Report, the average size of a new single-family home was 2,598 square feet, even bigger than during the housing-bubble era when larger homes were more popular. By comparison, the average new home built in 1983 was 1,725 square feet. New houses built last year also had more bedrooms, with 251,000 having four or more and only 59,000 having two or fewer bedrooms. Similarly, houses with three or more bathrooms outpaced those with one and one-half bathrooms or less. The majority of new homes sold in 2013 had 2-car garages and 207,000 had at least one fireplace. The data reflects recent trends indicating that the higher end of the housing market is booming, while the market for first-time buyers and smaller homes lags behind. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages with both conforming and jumbo balances fell again last week. Interest rates on 15-year fixed-rate and FHA-backed loans also declined. Average mortgage rates have been dropping recently and have now reached their lowest level in close to a year. Despite favorable rates, however, demand for mortgage applications was down last week. The Market Composite Index, which measures total mortgage application volume, was down 3.1 percent from the week before. The Purchase Index was down 4 percent and the Refinance Index dropped 3 percent. Still, the refinance share of total mortgage activity ticked up to 53 percent, which continues a gradual trend upward after falling below 50 percent last month. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Gallup’s U.S. Economic Confidence Index hit its highest monthly reading of the year in May, though it’s still trailing last year’s level. The Index measures Americans’ confidence based on their views of current economic conditions as well as their perceptions of whether the economy is getting better or worse. Last May, the index reached an all-time high, setting a record for best reading since tracking began in 2008. But following those highs, confidence fell significantly in the fall. Since then, Americans’ attitudes about the economy have continued to improve gradually, with recent gains indicating an uptick in optimism and stability. In fact, Americans are not only feeling more confident but also spending more money. Gallup reports that consumer spending reached a 6-year high in May, with reports of daily spending up to $98 – $10 higher than April and $8 up from last year. The recently released economic data suggests Americans are becoming increasingly more comfortable with their personal finances and more confident in the broader economy. More here and here.