30 Second Market Update - Housing is Consistently Strong

The S&P CoreLogic Case-Schiller Home Price Index (HPI) was released this month showing that national home prices continue to appreciate at a level of 5.5% for the year.   This number was in-line with last month, but still points to continued housing strength.  Some of the highest levels of appreciation were seen in the following cities: Las Vegas (12.8%), San Francisco (7.9%), Phoenix (7.7%), Seattle (7.3%) and Tampa (6.4%). The HPI tracks residential, single family real estate values.

The Federal Housing Finance Agency (FHFA) Home Price Index also tracks single family housing data.  For this release, the FHFA reported that national home prices have appreciated at a rate of 5.7% annually. Even though this number is slightly tamer from last month, it is again pointing to continued housing strength.  The data contained in this report analyzes homes that were purchased via conforming, conventional mortgages that utilized Fannie Mae and/or Freddie Mac guidelines.  VA and USDA mortgages are excluded from this report. 

Both of these reports point to a consistently strong national housing market.  Both show national levels of appreciation for the year of over 5%.  We understand there are some markets that aren’t seeing strong levels of appreciation, but where appreciation is found it is helping families increase wealth and is continuing to make home ownership a great financial opportunity.




Continued Healthy Housing Market

The Consumer Price Index (CPI) was released showing flat levels of inflation on the consumer level month-to-month.  Annually, CPI decreased by 0.3%, but when stripping out food and energy costs, the CPI number actually increased very slightly by just 0.1%

The CPI is a report that measures the change in prices on goods and services.  By analyzing this number, we can take a peak into the level of inflation down to the consumer level.  The energy component dipped because gasoline dropped in price by 4.2%, and medical care increased by 0.4%.  Housing, which is a major component, showed an increase of about 0.3%.  It is important to keep an eye on inflation data because it affects mortgage interest rates negatively when it is increasing.

Speaking of housing, it is encouraging to see that mortgage delinquencies across the U.S. in September fell to their lowest levels in about 18 years, at a rate of only 4.4%!  This time last year it was at 5%.  

With tamer levels of inflation, lower levels of delinquencies and continual home appreciation, we see the makings of a healthy and strong housing market.  Homeownership continues to be a strong investment, and a great mechanism to build wealth.



30-Second Update:  Stock Market Volatility Pushes Mortgage Rates to 2-Month Low

Rates for home loans have tumbled for a third straight week, and now represent a 2-month low during the week of December 6th.  Freddie Mac’s Chief Economist Sam Khater said, “this week’s rate reaction to the volatile stock market is a welcome relief to prospective homebuyers who have recently experienced rising rates and rising home prices.”  For the week ending December 7th, the Dow 30 was down 559 points, or 2.2%, the S&P 500 was off by 63 (2.3%), and tech-heavy NASDAQ fared the worst of the lot, tumbling 219 points (3.1%).

This recent pullback in mortgage rates not only represents a reprieve for homeowners in the market to purchase, but also for homeowners looking to refinance or take cash-out of their current residence.  Amid the recent pullback in rates and volatility in the stock market, the Federal Reserve officials have continued their indication that their will be a December rate hike at its next meeting, taking place on December 18th and 19th.  In addition to the expected December hike, the Federal Open Market Committee is projecting three more hikes in 2019. 

Holiday Version: Did you know? 3.1% of the world’s children live in America, but they own 40% of the toys consumed globally!




30-Second Update - Fannie Mae and Freddie Mac Raise Conforming Loan Limits

For the third year in a row, the Federal Housing Finance Agency has raised the conforming loan limit for Fannie Mae and Freddie Mac in nearly every part of the U.S.  The three-year increase follows a ten-year period where the FHFA kept the conforming loan limit the same.   The decision to continuously raise loan limits over the past three years is a direct result of rising home values.  The FHFA’s third quarter 2018 House Price Index report, which estimates the increase in the average U.S. value for the last four quarters, showed that home prices increased 6.9% on average, between the third quarters of 2017 and 2018.  As a result, the maximum conforming loan limit will increase in 2019 by the same percentage, going up from $453,100 to $484,350

In addition, loan limits will also increase in “high cost areas”.  These are areas where 115% of the local median home value exceeds the baseline loan limit.  The new ceiling loan limit in these areas is calculated as 150% of the conforming loan limit, which comes to $726,375.  The previous high cost ceiling was $679,650.  

***The Federal Housing Administration (FHA) will set its own loan limits for 2019, but those numbers are still pending. 

Did You Know? According to a survey by the Census Bureau, an American will move 11.4 times, on average, during his or her lifetime. 


Housing Market Slows but Still Steady


The National Association of Home Builders (NAHB) released their Housing Market Index (HMI) for the month of November.  With this release, we see the number drop from 68 down to 60.  This number is the lowest in roughly two years, however it is still higher than its 30-year average of about 50.  The HMI is based on a monthly survey of NAHB members designed to gauge the single-family housing market.  The survey rates the sale of new homes at present time, the amount of sales in the next six months and new traffic of new home buyers.

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development recently announced their construction data.  This report is broken down into the following:

Housing Starts – This measures the number of residential new construction projects that have “started” in the given month.  For this month’s report we see starts increase by 1.5% from September to October.

Building Permits – National permits to “break ground” dipped slightly by 0.6% from September to October.  A large drag on this number comes from the Midwest where permits are about 17% lower from this time last year.

Housing Completions – This measures the number of new homes that have been built and made ready to be occupied.  There were about 1.1 million privately-owned completions for the month of October, which is about 3.3% lower than September.  Single-family completions also dipped, but only by 1.2%. 

So what does this all mean?

There is a slight builder slowdown occurring, but housing is still pushing along and performing steadily.  With the seasons changing and demand lessoning, builders are slowing, but are still optimistic for the future.  This may be a great time to take advantage of a lull and invest in a property where you may be able to purchase at a discount.



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