New-Home Costs Rising at Unparalleled Rate
Based on Bank of America’s Who Builds the House report, inflation is pushing up homebuilding costs at an unprecedented rate. Supply-chain disruptions and labor shortages are adding pressure to rising prices. The average cost for materials to build a single-family home jumped 42% from 2018 to 2021, adding thousands of dollars to the price of a new home, according to the report. The median sales price of a new home in April reached a record $450,600, a 20% hike from a year earlier, Commerce Department data shows. The higher material costs have been passed along to home buyers, who are facing the double whammy of rapidly rising mortgage rates. First-time buyers are increasingly becoming priced out of the new-home market, with only about 10% of new homes in April on the market priced at less than $300,000, according to the National Association of Home Builders. A year prior, that share was 25%.
Source and link to the full article: New-Home Costs Rising at Unparalleled Rate | Realtor Magazine
Home Buying Is 5% Cheaper
According to economists at the National Association of REALTORS® Economists’ Outlook blog, mortgage rates are falling, at least for now after posting rapid jumps in June. Over the last two weeks, the 30-year fixed-rate mortgage has dropped by one-half of a percentage point. Home buying is about 5% more affordable, translating to about $100 less in monthly mortgage payments. Rates are dropping as concerns mount over a possible economic recession, says Sam Khater, Freddie Mac’s chief economist. “While the drop provides minor relief to buyers, the housing market will continue to normalize if home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” Khater says.
Source and link to the full article: Home Buying Is 5% Cheaper Than a Week Ago | Realtor Magazine
Home-Sale Cancellations Jumped in June as Buyers Backed Away
Based on an analysis by Redfin Corporation, the US housing market saw a rise in the percentage of deals cancelled in June as rising mortgage rates made homes more expensive, pushing some buyers to walk away from deals. Across the country, nearly 60,000 home sales fell through. That was equal to 15% of transactions that went into contract that month, the highest share of cancellations since April 2020, when early Covid lockdowns froze the housing market. Even in a more normal time, deals can fall through for a wide range of reasons. Mortgage applications get denied and inspections reveal the need for expensive repairs. Sometimes a buyer just gets cold feet. In June 2021, when buyers were waiving contingencies and flooding into open houses, the number of canceled transactions equaled roughly 11% of contracts entered that month.
Source and link to the full article: US Housing Market: Home-Sale Cancellations Jump in June as Buyers Back Away – Bloomberg
Demand for Adjustable-Rate Mortgages Surges, as Interest Rates Make Biggest Jump in 13 Years
According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications to purchase a home rose 8% recently bolstered in part by demand for adjustable-rate mortgages. Applications, however, were 10% lower than they were in the same week one year ago. A big jump in mortgage rates may have actually spurred homebuyer demand, perhaps as consumers worried rates would move even higher. Mortgage rates surged to the highest level since 2008, while making their biggest one-week jump recently in 13 years. Meanwhile the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.98% from 5.65%, with points rising to 0.77 from 0.71 (including the origination fee) for loans with a 20% down payment. Rates are now nearly double what they were one year ago.
Source and link to the full article: Demand for adjustable-rate mortgages surges, as interest rates jump (cnbc.com)