Lower Mortgage Rates May Sprout Early Spring Buying Season – Based on Freddie Mac reports, mortgage rates inched lower for the third consecutive week. Freddie Mac Chief Economist Sam Khater says the lower rates bode well for the spring home buying season, typically the busiest time of the year for home shopping. “Mortgage rates are continuing the general downward trend that began late last year,” Khater says. “Wages are growing on par with home prices for the first time in years, and with more inventory available, spring home sales should help the market begin to recover from the malaise of the last few months.” The National Association of REALTORS® reported this week that more houses were on the market in January, rising to 1.59 million nationwide and at a 3.9-month supply at the current sales pace.
Existing-Home Sales Roll Back to 2015 Levels – According to a report from the National Association of REALTORS® sales are down 8.5 percent from a year ago, and now are at the lowest level since November 2015. However, NAR Chief Economist Lawrence Yun expects a reversal in home sales soon. “Existing-home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” Yun says. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.” Here’s an overview of NAR’s latest housing report, based on January sales:
- Home prices: The median existing-home price for all housing types in January was $247,500, up 2.8 percent from a year ago. The median home price growth is at the slowest pace since February 2012, Yun says. “Lower mortgage rates from December 2018 had little impact on January sales; however, the lower rates will inevitably lead to more home sales,” he notes.
- Days on the market: Thirty-eight percent of homes sold in January were on the market for less than a month. On average, properties remained on the market for 49 days in January, up from 42 days a year ago.
- Housing inventories: At the end of January, the total housing inventory rose to 1.59 million, up from 1.52 million a year ago.
Study: Reluctant Refinancers Missed Out on Saving Thousands – Based on a new study in the February Issue of The Review of Financial Studies from Columbia Business School researchers, many homeowners show a reluctance toward refinancing, believing that some offers from banks may be “too good to be true.” But their suspicions may be costing them thousands of dollars in savings. Fifty-one percent of 550,000 borrowers who were sent preapproval applications through the Home Affordable Refinance Program chose not to refinance their mortgages, even though there were no monetary costs for them to do so and they could have lowered their mortgage rate, the study showed. For those who did not apply, they may have missed out on nearly $9,000 in savings, according to the study.
Millennials Prove Their Buying Force Has Arrived – According to a new study from realtor.com®, young adults are now taking on more mortgages than any other generation and increasing their purchase power in the housing market. Millennials represent 42 percent of all new-home loans, higher than both the baby boomers and Generation X, “Millennials are getting older, with better jobs and deeper pockets, allowing them to expand their collective purchase power and hence, their footprint in the market,” says Javier Vivas, director of economic research at realtor.com®. “The stereotype that millennials primarily choose to buy homes and live in large metro areas isn’t the reality. Results show millennials’ expansion is more heavily conditioned by affordability than in prior years, so their eyes are set on less traditional secondary markets where homes and jobs are now available and plentiful.” Affordability is key for millennial home buyers when choosing where to live. The costliness of an area is having more influence on determining the places for millennials to live than it has for other generations, the study showed.