Loan Applications on the Rise and Home Sales Bouncing Back

The Mortgage Bankers Association released their weekly loan application report, and we see that while weekly purchase applications were slightly lower, they are up about 7% since this time last year.   Refinances are up about 8% for the week and 30% from a year ago.  Both of these readings are very favorable since they came from a week where interest rates ticked slightly higher.

Existing Homes Sales data was reported, showing that for the month of April there were 5.19 million homes sold across the nation. This came in slightly lower than last month’s number of 5.21 and about 4.4% lower than where we were this time last year.  When digging deeper into this report, we see that even though this number is slightly lower, it appears that the trend is improving.  Since the decline is lessening, this report actually points to a favorable trend and that more homes are beginning to sell.  This report serves as a good gauge of the housing market, since there are more existing homes than new homes.

With historically low rates, strong levels of demand, and forecasts of appreciation on the rise, we are seeing a lot of strength in the housing market.  It is a great time to purchase or refinance a home.


30-Second Update:  Home Builder Confidence hits Seven Month High

The latest National Association of Home Builders Housing Market Index, which measures builder’s confidence in newly built, single-family homes, rose three points to 66 in May.  This is the highest reading since October of 2018.  To keep things in perspective, any reading above 50 is considered positive.  This report is a direct reflection of strong reported home sales, allowing builders to be more optimistic about the housing market.   Economists use this index to gauge the status of the home building industry.  If builders are more confident in the housing market, they will be more likely to break ground on more houses, which would lead to more jobs and improve the economy as a whole.

Economists continue to cite the low interest rate environment, along with a strong labor market, and rising wages as key factors propelling the housing market.  Michael Murray, Chief Operating Officer of D.R. Horton stated, “We see that some of the demand that was displaced in the fall will probably elongate a selling season this year in the spring and into the early summer as those buyers have returned and more continue to come into the market, seeing it’s still a great time to buy a home.”   


Great Time to Purchase a Home

CoreLogic has just reported their national Home Price Index, and it shows that home prices are forecasted to increase by 4.8% over the next year.  Their last annual forecast was 4.7%, so this indicates that they are seeing continued demand and strength in the housing market.

Looking in the rearview mirror, national home prices have increased by 3.7% over the last year.  This is a good number and shows strong annual home appreciation.  Based on their data, a $300,000, home on average, should have gained $11,100 in value!  (Note: This is a general example that can fluctuate depending on the region of the country, but this is a strong national increase nonetheless.)

Home appreciation is proven to be a great way for households to increase their wealth. Looking at forecasts of what is to come, the picture is getting even better.  Low interest rates and strong levels of appreciation make this a great time to purchase a home.


30-second update:  Federal Reserve Leaves Rates Unchanged

At the Federal Reserve’s most recent meeting on May 1st, the Fed voted unanimously to keep its benchmark interest rate in a range of 2.25% to 2.5%.  The benchmark interest rate influences the cost of borrowing for mortgages and various other consumer and business loans.   Fed Chairman Jerome Powell went on to state that, “The Federal Reserve feels comfortable with current policy and is likely to keep interest rates steady for an extended period of time.”  In addition, President Donald Trump has even been pushing the Fed to lower rates, and that a one percentage point cut would be in order.   The President has cited low inflation as a key reason for the possible Fed cut to interest rates. 

Overall, the economy continues to grow at a solid rate, and with the welcoming news that we will most likely remain in a low interest rate environment for the rest of the year, current homeowners and those looking to buy are reaping the benefits.   With the spring housing market in full swing, now seems to be the perfect time to take advantage of these lower rates, by refinancing your current mortgage or purchasing a new home. 



New Construction Up and Values Still Rising

Newly constructed homes with a signed contract are on the rise.  For the month of March, new home sales increased to 692,000 from 667,000 in February.  This new rate of increase is at its highest level since 2017 and proves there are still large amounts of demand and competitive interest rates.  The largest gains in new home sales came from the west and south regions of the U.S.  When new homes sell, they open up consumers to purchase items to make it a “home,” such as furniture, blinds, appliances, etc.  Because of this, higher home sale numbers point to increased consumer purchasing and stronger economic conditions.

Every month, the Federal Housing Finance Agency (FHFA) reports on the level of appreciation across the nation.  For this month’s release, its Home Price Index, or HPI, reported on February’s data, and we see appreciation at a level of 4.9%.  Even though this number is lower than its HPI for January (5.6%), it is still a positive number and means that homes are appreciating at a strong rate.  The homes that this report focus on are single family with conforming, conventional mortgages.  FHA and VA mortgages with higher loan amounts are excluded from this report.


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