Supply Chain Woes Slowing Home Builders – According to the Commerce Department’s recent report, fewer homes were built last month as builders reported material bottlenecks that were slowing the pipeline of adding more new home inventory. Housing starts fell 4.1% in January to a seasonally adjusted annual rate of 1.64 million units. Building permits remain at a solid pace, however, signaling that buyer demand remains high. Broken out, single-family housing starts fell 5.6% last month while the multifamily sector, which includes apartments and condos fell 0.8%. “The market needs more housing, but chronic production bottlenecks, including ongoing price increases for lumber and OSB (oriented strand board), continue to raise housing costs and harm housing affordability,” says Jerry Konter, chairman of the National Association of Home Builders. “In fact, the number of single-family homes under construction continues to rise as construction cycle times increase due to delivery delays with building materials.”
Source and link to the full article: National Association of Home Builders
Mortgage Rates Nearing 4% – Based on Freddie Mac reports, borrowing costs are climbing: The 30-year fixed-rate mortgage rose to a 3.92% average recently. “Mortgage rates jumped again due to high inflation and stronger than expected consumer spending,” says Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage is nearing four percent, reaching highs we have not seen since May 2019. As rates and house prices rise, affordability has become a substantial hurdle for potential home buyers, especially as inflation threatens to place a strain on consumer budgets.” As of now, however, the rising rates are sparking an urgency rather than a pause among house hunters, Nadia Evangelou, National Association of REALTORS®’ senior economist and director of forecasting, writes on the association’s blog. “Buyers are rushing to lock in lower rates as the outlook is for even higher mortgage rates in the following months,” she notes. Mortgage rates are still low by historical standards.
Source and link to the full article: Freddie Mac and “Instant Reaction: Mortgage Rates, February 17, 2022,” National Association of REALTORS® Economists’ Outlook blog
Home Sales Surged in January – According to the National Association of REALTORS®’ latest existing-home sales report, home buyers appeared in a rush to lock in mortgage rates ahead of further increases and to take advantage of any housing inventory they could find last month. Existing-home sales climbed 6.7% in January compared to the prior month, led by the strongest gains in the Southern region of the U.S. Sales rose even as housing inventories fell to an all-time low and home prices increased at a much swifter pace, NAR reports. Existing-home sales completed transactions for single-family homes, townhomes, condos, and co-ops increased to a seasonally adjusted annual rate of 6.50 million in January. Sales, however, are down 2.3% compared to a year ago, NAR reports. “Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” says Lawrence Yun, NAR’s chief economist. “Consequently, housing prices continue to move solidly higher.”
- Home prices: The median existing-home sales price increased at a stronger pace in January, climbing 15.4% annually to $350,300.
- Inventories: Total housing inventory at the end of January was 860,000 units, plunging nearly 17% from a year ago. Unsold inventory is at a 1.6-month supply at the current sales pace.
- Days on the market: Seventy-nine percent of homes sold in January were on the market for less than a month. Homes are selling faster than last year. Properties typically stayed on the market for 19 days in January, down from 21 days a year ago.
- First-time home buyers: First-time buyers accounted for 27% of sales in January, down from 33% in January 2021. As home prices increase and mortgage rates rise, first-time buyers could be getting priced out of the market.
- Investors and second-home buyers: Individual investors or second-home buyers purchased 22% of homes last month, up from 15% a year ago. They tend to account for the largest bulk of cash sales, which accounted for 27% of transactions in January.
Source and link to the full article: National Association of REALTORS®
Freddie Mac Tool Aims to Ease Mortgage Paperwork – Based on Freddie Mac’s announcement, they are planning to launch an automated method for lenders to assess prospective borrowers’ income that is paid through direct deposits. The tool is intended to help reduce the paper documentation burden on borrowers so loans can close faster, Freddie Mac says. The income assessment tool will be available to mortgage lenders nationwide and can be used, with a borrower’s permission, to assess income made by direct deposits into accounts. More than 93% of U.S. workers are paid by direct deposit, according to the American Payroll Association. The tool also can assess an applicant’s income from employer data and review tax return data for self-employed individuals. A Freddie Mac study recently showed how lenders using such tools can shorten average cycle times for processing loan requests by up to 15 days.
Source and link to the full article: Freddie Mac