Emerging Buyer’s Market Lifts Home Sales in May – According to the National Association of REALTORS®, for the first time in two months, existing-home sales rose in May as consumers rushed to take advantage of lower mortgage rates and greater inventory. Total existing home sales completed transactions including single-family homes, townhomes, condos, and co-ops jumped 2.5% month over month in May, reaching a seasonally adjusted annual rate of 5.34 million. All four major regions of the U.S. saw an increase in sales last month, led by the Northeast. “The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding,” says NAR Chief Economist Lawrence Yun. However, total sales are still down 1.1% compared to a year ago. Homes are selling at a brisk pace, an average of 26 days in May and Yun continues to call for more new-home construction to meet growing demand. “More new homes need to be built,” Yun says. “Otherwise, we risk worsening the housing shortage, and an increasing number of middle-class families will be unable to achieve homeownership.”
Mortgage Rates Continue to Hover Near 2-Year Lows – Based on Freddie Mac reports, lower mortgage rates are proving to be a boon for home shoppers this summer. The 30-year fixed-rate loan has stayed near a 3.8% average for the third consecutive week, after consistent declines in late spring. “While the continued drop in mortgage rates has paused, home buyer demand has not,” says Sam Khater, Freddie Mac’s chief economist. “This is evident in increased purchase activity and loan amounts, indicating that home buyers still have the willingness and capacity to purchase homes. Today’s low rates, strong job market, solid wage growth, and consumer confidence are typically important drivers of home sales.”
© REALTOR® MAGAZINE
Consumers Are Perplexed About How to Qualify for a Mortgage – According to a recent Fannie Mae survey, consumers continue to be under a lot of wrong assumptions about what it takes to get a mortgage and that may be holding some back from even trying. Even though a lot of mortgage information is now available online, most consumers still overestimate the minimum credit score and down payment needed to qualify for a mortgage. They also remain unfamiliar with low-down-payment programs. More consumers also report seeing their credit scores recently, yet nearly half still cannot recall what it is. The lack of knowledge of the requirements for a mortgage is pervasive, even among current homeowners, the study notes. “Current sources of mortgage education and information are insufficient,” said Mark Palim, Fannie Mae’s vice president and deputy chief economist, and Sarah Shahdad, a market insights researcher at Fannie Mae. “Even those actively planning to become homeowners in the next few years (i.e., those who should be exposed to more information) are only slightly more confident or knowledgeable than others.”
Expectation vs. Reality: Planning for Ownership – According to a new survey from Porch.com, one in five parents say they expect their child to own a home by age 25, yet this doesn’t match up to reality. Younger adults tend to feel the most pressure to own a home, but they’re still waiting on their own time terms. Porch.com surveyed nearly 1,000 individuals between the ages of 18 to 81. Millennials thought that 30 is the ideal age to buy a home; Gen Xers said 28; and baby boomers said age 27 was the best for buying a home. Millennials between the ages of 25 to 34 have been slow to catch up to the rates of homeownership that Gen Xers or baby boomers showed at the same age, Urban Institute data shows. Millennials are marrying at later ages and have high student debt to blame for delaying their debut into homeownership. They now represent the largest buying force in the housing industry, according to research this year from the National Association of REALTORS®.