Mortgage Rates Barely Budge This Week

After last week’s first rate of the year, mortgage rates 

showed little change this week—a welcome sign for the week’s kickoff to the spring home shopping season.

But home buyers and borrowers should expect several rate increases over the next few months, economists caution.
“The Federal Reserve raised interest rates [this week]—a much-anticipated move that comes as both U.S. and global economic fundamentals continue to strengthen,” says Len Kiefer, Freddie Mac’s deputy chief economist.

“The Fed’s decision to raise interest rates by a quarter of a percentage point puts the federal funds rate at its highest level since 2008.

The decision, while widely expected, sent the yield on the 10-year Treasury soaring.” (Read: Fed Raises Rates: What This Means for Mortgages)

The 30-year fixed-rate mortgage rose 1 basis point this week and averaged 4.45 percent, according to Freddie Mac.

“So far, U.S. housing markets remain resilient in the face of higher mortgage rates,” Kiefer notes. The National Association of REALTORS® reported earlier this week that existing-home sales in February increased 3 percent month over month on a seasonally adjusted basis and are up 1.1 percent from a year ago.

Freddie Mac reports the following national averages with mortgage rates for the week ending March 22:

• 30-year fixed-rate mortgages: averaged 4.45 percent, with an average 0.5 point, rising from last week’s 4.44 percent average. Last year at this time, 30-year rates averaged 4.23 percent.
• 15-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.5 point, rising from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.44 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.68 percent, with an average 0.4 point, rising from last week’s 3.67 percent average. A year ago, 5-year ARMs averaged 3.24 percent.

Source: Freddie Mac

Homebuyer Demand Skyrockets

Despite Inventory Lows, Spill-over buyers and record-breaking 

industry lows are creating one of the most competitive buying seasons in years, according to a survey released by Realtor.com. February 2018 indicated, inventory was moving 8 percent more quickly than in February 2017. The median age of properties listed through the was 83 days.

'We're only a few weeks into March and already seeing the market heat up,'  'Holdover buyers hoping for greener pastures this spring are likely to find sparse options that require them to pay top-dollar or make other concessions.'

Even as prices continue to climb—increasing by 10 percent year-over-year—and are predicted to reach new record highs this spring and summer, buyer demand is booming. A portion of this demand is originating from buyers who are considered holdovers from last summer and previous buying seasons. The survey shows that 40 percent of today’s buyers have been searching for more than seven months, 34 percent for four to six months, while only 26 percent of those surveyed have been searching for three months or less.

Some U.S. homeowners are getting started early. Really early. Americans taking the plunge. More than 99,000 members of Generation Z — those born in 1995 and after, who are now 23 or younger — have mortgages, according to the credit agency TransUnion TRU, -1.81% Their average mortgage balance: $140,000. 

“I’m a little surprised to see the numbers as large as they are,” said Rob Dietz, chief economist and senior vice president for economics and housing policy for the National Association of Home Builders. “The traditional life cycle is to rent, especially for younger consumers who might have student loans.”

Members of Generation Z seem to value home ownership, nevertheless. Some 62% of the older members of Generation Z say owning a home is a key component of the American Dream — about the same number as the members of older generations, according to a survey released last year.

Inventory is down 8.5 percent from a year ago, and 35 percent of respondents indicated they anticipate “a lot of competition,” while 36 percent expect only “some.” When asked about strategies heading into the spring buying season, 42 percent responded that they were checking listing sites every day, while 40 percent of buyers plan to put more than 20 percent cash down. Additionally, 33 percent are setting price alerts, 31 percent plan to put a larger earnest money deposit down, while 26 percent are willing to offer above asking price.

Despite the bleak outlook, 53 percent of buyers expect to close on their future homes in less than six months, while 18 percent expect the process to take four seven to nine months, 15 percent have estimated their buying process to take  ten to twelve months, and only 15 percent expect the process to exceed more than a year.

Are you ready to Sell? The decision to rent or buy is a personal one that depends on your financial situation, future plans and lifestyle. If you’re interested on a wealth of information to help you get started visit Precision Realty & Assoc. LL or if you prefer a more personal touch, reach out to a us, CALL 801-809-9866 today.

Spring Home Sales Kickoff

Low inventory levels and accelerating home prices 

couldn’t put a lid on existing-home sales in February. Following two consecutive months of declines, existing-home sales rebounded 3 percent in February month over month and reached a seasonally adjusted annual rate of 5.54 million, the National Association of REALTORS® reported Wednesday. 

Sales of existing homes, which include single-family homes, townhomes, condos, and co-ops, are now 1.1 percent higher than a year ago.

“A big jump in existing-home sales in the South and West last month helped the housing market recover from a two-month sales slump,” says Lawrence Yun, NAR’s chief economist.

“The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

5 Housing Indicators to Gauge the Market

Here’s a closer look at findings from NAR’s latest housing report.

• Home prices: The median existing-home price for all housing types was $241,700 in February, up 5.9 percentfrom a year ago.

• Inventories: The number of homes for sale at the end of February increased 4.6 percent to 1.59 million. That is still 8.1 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace.

• All-cash sales: All-cash sales comprised 24 percent of transactions in February, the highest since last February (27 percent). Individual investors tend to account for the biggest bulk of all-cash sales. They purchased 15 percent of homes in February, unchanged from a year ago.

• Distressed sales: Foreclosures and short sales made up 4 percent of sales in February, down from 7 percent a year ago. Broken out, 3 percent of February sales were foreclosures and 1 percent were short sales.

• Days on the market: Forty-six percent of homes sold last month were on the market for less than a month. Overall, properties stayed on the market for an average of 37 days in February, down from 45 days a year ago. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply,” says Yun. “To fully satisfy demand, most markets right now need a substantial increase in new listings.”

Is Millennials America’s largest generation?

Will Millennials Move Out? Get ready for a new king to be crowned. 

According to a new report from the Pew Research Center, it's expected that Millennials — those born between 1981 and 1996 — will overtake Baby Boomers as the largest generation, with 73 million people in 2019. What happens when a group that large decides to start buying homes.

“Adulting” is getting harder for younger generations, which is stymieing the housing market from reaching its full potential, according to Freddie Mac’s latest March Insight report. The report compares young adults to previous generations and the impact to household growth.  

“For today’s young adults, ‘adulting’ is hard because the economic environment has been tough in recent years; wage growth has been weak and housing costs have risen rapidly,” researchers note in the report. “On top of that, education and health care costs have skyrocketed.” Compared to 2000, the average annual expenditures of young adults in 2016 has jumped 36 percent. The average annual expenditures on health care and education have more than doubled, according to the report.

Housing costs and labor market outcomes are the two biggest factors behind the decline in household formation rates among young adults, according to the insight report. From 2000 to 2016, real median home prices rose by 29 percent. However, young adult per capita incomes increased by only 1 percent. Further, the labor force participation rate for young adults has seen a “substantial decline in recent years, particularly for men,” researchers note.

Millennials are the largest generation since the baby boomers. Nearly 45 million adults aged 25 to 34 lived in the United States as of 2016, according to U.S. Census data. That is 4 million more than those aged 35 to 44.

If millennials had formed households at the same rate as young adults in 2000, they would have formed 1.6 million additional households in 2016, according to Freddie’s research.

But millennials have been slower than previous generations to reach milestones such as buying a home, getting married, and having children.

Don’t count them out yet, researchers say.Millennials and the generation after them, Generation Z, are expected to add between 19 million and 21 million net new households by 2025. 

The good news is that this ing giant of homeownership won't stay dormant for long.We expect that young adults will add around 20 million households to the U.S. economy, driving housing demand over the next decade. As always, house prices will be a factor.

If housing costs continue to rise, we could see about 600,000 fewer households over the next decade. Alternatively, we could see housing costs stabilize and the labor market improve, driving young adults' household formations up 300,000 higher than our estimates.

As many young adults start looking to become homeowners, Freddie Mac will be there with mortgage products and resources that help potential borrowers achieve the dream of homeownership...and make 'adulting' a little less hard.

• Down Payment Assistance provides flexible sources of down payment funds within our Home Possible Mortgages^®; it also helps consumers and their lenders identify additional, eligible down payment programs.
• CreditSmart^® is a free, online curriculum that  teaches the steps to homeownership, from the importance of good credit to qualifying for a loan and selecting a lender.
• My Home by Freddie Mac^® is a consumer–focused website featuring tools, resources and information on renting, buying and owning a home.

Spring Has Sprung! Here Today, Gone Tomorrow

Homes for Sale: “As we head into spring and the traditional 

season when sales heat up, buyers will find that desirable homes won't be on the market for long,' said David Berson, SVP and Chief Economist at Nationwide. “Today, the average home is on the market almost half the length of time that it was six years ago.”

That news, of course, is a sweet elixir for would-be sellers. Just how sweet? In 2017, the typical home sat on the market—meaning from listing to inking a contract—for 67 days, HoHM data shows. 

If there’s a home on the market stuffed with to-die-for features, it’s probably not going to last long, according to the latest Nationwide Health of Housing Markets (HoHM) report. What’s precipitating the blink-and-you’ll-miss-it market? Heavy demand and a rock-bottom level of for-sale homes, the report says.

Despite the challenges confronting buyers, Berson’s outlook on the U.S. housing market remains rosy.

“Household formations have offset much of the negative price impacts,” he said. “The labor market is strong, and wages are increasing. Affordability remains a concern, especially for entry-level homebuyers in today's low-inventory conditions, but mostindicators point to healthy, sustainable local markets with only a few extreme exceptions.”

While the challenges related to the supply of homes will remain during the year, and the Fed is expected to raise rates again, the report forecasts 30-year mortgage rates ranging between 4.4 percent and 4.6 percent in 2018 and 2019respectively. 

The five-year ARMs are expected to see greater swings in the rates that are expected in the range of 3.8 percent in 2018 and 4.1 percent in 2019.

“On housing, home sales got off to a rough start in 2018, bottle-necked by the persistent challenges of the inventory shortage. Of course, there’s a flipside to the demand-supply imbalance, and strong home price appreciation continues to come as welcome news to existing homeowners,” Duncan said.

Are you ready to Sell? The decision to rent or buy is a personal one that depends on your financial situation, future plans and lifestyle. If you’re interested on a wealth of information to help you get started visit Precision Realty & Assoc. LL or if you prefer a more personal touch, reach out to a us, CALL 801-809-9866 today.

Equity Increase 12.2 Percent Year over Year

Homeowners with mortgages have seen their equity increase 12.2 percent year over year, 

according to CoreLogic’s newly released Home Equity Report. Homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017—the highest growth in home equity in four years, according to the report. Western states saw the largest increases.

• National share of homes with negative equity ended 2017 at 4.9 percent.
• 675,000 borrowers moved into positive equity in 2017.
• Nevada saw the largest improvement in the negative equity share over the past year, falling 5.5 percentage points.

“Home-price growth has been the primary driver of home-equity wealth creation,” says Frank Nothaft, chief economist for CoreLogic. “Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”

Meanwhile, the number of borrowers who are in a negative equity territory is decreasing. The total number of mortgaged homes in negative equity—those who owe more on their mortgage than their home is currently worth—dropped to 2.5 million homes, or 4.9 percent of all mortgaged properties in the fourth quarter of 2017. 

“There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” says Frank Martell, president and CEO of CoreLogic.

“The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”

Source: Homeowners Keep Getting Richer and Richer

First Decline of Mortgage Rates in 2018

Following nine consecutive weeks of increases, borrowers finally 

got some relief this week with mortgage rates. The 30-year fixed-rate mortgage posted its first week-over-week decrease of 2018. 
“Tuesday’s Consumer Price Index report indicated inflation may be cooling down; headline consumer price inflation was 2.2 percent year over year in February,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Following this news, the 10-year Treasury fell slightly. Mortgage rates followed Treasurys and ended a nine-week surge. The U.S. weekly average 30-year fixed mortgage rate fell 2 basis points to 4.44 percent in this week’s survey, its first decline this year.”
Freddie Mac reported the following national averages with mortgage rates for the week ending March 15: 

• 30-year fixed-rate mortgages: averaged 4.44 percent, with an average 0.5 point, ping from last week’s 4.46 percent average. Last year at this time, 30-year rates averaged 4.30 percent. 
• 15-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, ping from last week’s 3.94 percent average. A year ago, 15-year rates averaged 3.50 percent. 
• 5-year hybrid adjustable-rate mortgages: averaged 3.67 percent, with an average 0.4 point, increasing from last week’s 3.63 percent average. A year ago, 5-year ARMs averaged 3.28 percent. 

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. 

Source: Freddie Mac