March 28, 2019 - Industry News & Trends
From Industry Sources
The Highest Rates in a Month Are Spooking Spring Buyers
Homebuyers had been brushing off the slight rise in rates during recent weeks, but as those rates move even higher, purchasers are now pulling back.
Overall mortgage application volume fell 7.3% last week from the previous week, but it was 6.6% higher than a year ago, thanks to stronger refinance volume, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.46% from 4.44%, with points increasing to 0.44 from 0.42 (including the origination fee) for loans with a 20% down payment. The rate has risen 10 basis points in the past three weeks and is now at its highest level in over a month.
Weekly Mortgage Applications for Homebuyers Hit Highest Level in 9 Years
Two weeks of rising rates are taking their toll on homeowners hoping to refinance, but homebuyers are not pulling back.
Mortgage applications to purchase a home rose 1% last week from the previous week and were 7% higher than a year ago. Purchase applications reached their highest level since April 2010.
Total mortgage application volume decreased 3.5% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 14% higher than a year ago.
Weekly Mortgage Refinances Spike 39% after Huge Rate Drop
The biggest one-week rate drop in a decade unleashed a run on refinances last week, although it did not especially spur spring buyers.
Mortgage application volume surged 18.6 percent from the previous week and 28 percent from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.
Refinance applications jumped 39 percent for the week to the highest level since January 2016. Volume was 58 percent higher than a year ago, when interest rates were higher. From Industry Sources
Home Prices in January See Smallest Gain in Nearly 4 Years
Home prices are rising, but the gains are shrinking, since fewer buyers are able to afford the homes available for sale.
Nationally, prices rose 4.3 percent annually in January, down from the 4.6 percent gain in December, according to the S&P CoreLogic Case-Shiller price index. The 10-city composite rose 3.2 percent, down from 3.7 percent in the previous month. The 20-city composite gained 3.6 percent year over year, down from 4.1 percent in December.
Mortgage Rates are Taking a Dive
The average rate on the 30-year fixed mortgage is falling again today, as investors rush into the bond market. Mortgage rates loosely follow the yield on the 10-year Treasury.
The average lender is offering a rate between 4.125 and 4.25 percent, with more aggressive lenders going to 3.875 percent for borrowers with pristine applications, according to Mortgage News Daily. The average rate was at 4.40 percent before the Federal Reserve’s announcement Wednesday that it would not raise interest rates this year and that it would start buying bonds again.
Home Sales Make Record Jump
Sales of existing homes skyrocketed a whopping 11.8 percent in February compared with January, according to the National Association of Realtors. That is the largest monthly jump ever, with the exception of a change in mortgage policy in 2015 that temporarily skewed the data.
Realtors pointed squarely to dropping mortgage rates and home prices for the increase in demand.
Mortgage Applications Set a Record
Lower rates are not giving mortgage demand any sizable boost, except when it comes to higher-end homes.
Total mortgage application volume rose 1.6 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 1.8 percent higher than a year ago.
The gains came mostly from refinance volume, which is highly rate-sensitive. Refinance applications rose 4 percent for the week and were 3.5 percent higher than a year ago. Interest rates had been higher last year, but as rates now fall, more borrowers can benefit from a refinance. From Industry Sources
Weekly Mortgage Applications Rise 3.6%
Mortgage application volume increased 3.6 percent last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
Applications to purchase a home increased 2 percent for the week — the first uptick in a month — a sign of optimism in the housing market.
"After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago — showing some promise as we edge closer to the spring homebuying season," said Joel Kan, MBA associate vice president.
Homebuilder Sentiment Rises as Interest Rates Stay in Check
The nation's homebuilders are feeling better about the state of their industry as lower interest rates boost consumer confidence.
Builder sentiment rose 4 points to 62 in February, according to a monthly survey from the National Association of Home Builders/Wells Fargo Housing Market Index. The survey stood at 71 last February. Anything above 50 on the index is considered positive.
Sentiment fell at the end of last year, largely because mortgage rates jumped in the fall, hurting affordability. Newly built homes come at a price premium to existing homes, so higher interest rates can have an outsize effect on the new construction market. Interest rates then fell sharply at the end of the year and have remained lower this year.
"Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment," said NAHB Chairman Randy Noel. "In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season." From Industry Sources
Home Prices Rise at a Slower Pace: S&P Case-Shiller
Home values increased 5.2 percent annually in November, slowing from 5.3 percent in October, according to the widely watched and most recent S&P CoreLogic Case-Shiller National Home Price Index.
The 10-city composite annual increase also fell to 4.3 percent, down from 4.7 percent in the previous month. The 20-city composite saw a 4.7 percent annual gain, down from 5.0 percent in October.
Home price gains have been slowing since last spring, as higher mortgage interest rates cut sharply into affordability. The gains are slowing the most in large metropolitan markets, where home prices had overheated over the past three years.
More Homes Are Available, but Fewer are Affordable
After falling to record lows, the supply of homes on the market is finally rising. But a growing share of those homes are still out of reach to most buyers.
In hot markets like Seattle, San Jose, California, Las Vegas and Portland, Oregon, the number of homes for sale rose last year. Even so, the share of affordable homes fell, thanks to rising home values and increasing mortgage interest rates.
Mortgage Applications Pull Back 2.7 Percent as Rates Turn Higher
After two weeks of sizable gains, mortgage demand cooled last week.
Total application volume fell 2.7 percent compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was 3.3 percent higher than a year ago.
Refinances, which are highly sensitive to weekly interest rate moves, pulled the volume lower. Applications to refinance a home loan fell 5 percent for the week and were 7 percent lower than a year ago but were still at the highest level since spring.
Borrowers saw a sharp drop in interest rates in December and jumped to take advantage at the start of this year. Last week, however, rates rose slightly. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.75 percent from 4.74 percent, with points decreasing to 0.44 from 0.45 (including the origination fee) for loans with a 20 percent down payment. From Industry Sources
Weekly Mortgage Applications Fall
Even with mortgage rates at the lowest level in three months, homebuyers are pulling away from the housing market.
Mortgage application volume fell 5.8 percent last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted report. Volume was 17 percent lower than a year ago.
Purchase volume drove the decline, falling 7 percent for the week, although it was 2 percent higher year over year. Buyers are still challenged by high prices and higher mortgage rates, and now some are clearly concerned about the steep drop in the stock market.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to its lowest level since September, 4.94 percent, from 4.96 percent, with points decreasing to 0.43 from 0.48 (including the origination fee) for loans with a 20 percent down payment. The recent drop in rates has not helped affordability much, as rates are still three-quarters of a percentage point higher now a year ago.
Single-Family Home Construction Tumbles
Each new housing data point is worse than the last, and they are prompting a leading industry analyst to say the market is in a correction.
Single-family housing starts fell more than 13 percent last month from a year earlier, according to the U.S. Census. Building permits, an indicator of future construction, were down nearly 2 percent.
This followed a sharp drop in homebuilder sentiment to the lowest level in more than three years, according to the National Association of Home Builders.
Homebuilder Sentiment Drops in December
Homebuilder sentiment dropped in December to its lowest point in more than three years while potential buyers hesitate to purchase new homes even as mortgage rates have pulled back in the past month.
According to the National Association of Home Builders/Wells Fargo Housing Market Index, homebuilder sentiment declined 4 points in December to 56. That is the lowest reading since May 2015 and well below December 2017's level of 74. This comes after an 8-point drop in November. Anything above 50, however, is considered positive sentiment. From Industry Sources
Home price gains shrink to the lowest level since January 2017: September S&P Case-Shiller index
Home values are still rising, but the gains have now shrunk to the lowest level since January 2017, as rising mortgage rates cut into affordability.
Prices increased 5.5 percent annually in September, down from 5.7 percent in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. The 10-City Composite annual increase came in at 4.8 percent, down from 5.2 percent in the previous month. The 20-City Composite rose 5.1 percent year-over-year, down from 5.5 in the previous month.
Mortgage refinance applications hit 18-year low
With no major move in interest rates and continued weakness in home affordability, there was not a lot of incentive for homebuyers to make a move last week, and there was even less for homeowners looking to save money on their mortgages.
Total mortgage application volume moved 0.1 percent lower last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was 22 percent lower than a year ago.
Homebuilder confidence plummets to the lowest level in more than two years as 'demand stalls'
Rising mortgage rates and continued home price growth are hurting affordability and fast becoming a toxic cocktail for the nation's homebuilders.
Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index. That is the lowest reading since August 2016, but anything above 50 is still considered positive. The index stood at 69 in November of last year and hit a cyclical high of 74 last December.
Pending Home Sales Rose 0.5% in September
Home sales managed a small gain in September, but the pace is still lower than last year, as affordability takes its toll on buyers. Signed contracts to buy existing homes rose 0.5 percent from August but were 1 percent lower than September 2017, according to the National Association of Realtors. This is the ninth straight month of annual sales declines.
"This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right," said Lawrence Yun, chief economist for the Realtors. "The general condition of the economy is excellent, it simply has not lifted home sales this year. Home prices are still rising, so people who are purchasing are still seeing wealth gains."
Mortgage Applications Weaken as Interest Rates Rise
The Columbus Day holiday appears to have messed around with the mortgage numbers, but a week later the numbers are now clearer, and so is the message. Higher interest rates are hitting homeowners hoping to refinance and homebuyers hoping to get in on the fall housing market.
Total mortgage application volume rose 4.9 percent last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. This followed a large drop the week before, when the mortgage numbers were not adjusted for the Columbus Day holiday. Taking that out now, mortgage volume is lower than it was two weeks ago for refinances and purchases. Volume was also 16 percent lower than the same week one year ago.
Mortgage applications to refinance jumped 10 percent for the week but were 32 percent lower than a year ago, when mortgage interest rates were a full percentage point lower. Fewer and fewer borrowers are now able to benefit from a refinance because so many already locked in lower rates a few years ago. Those wishing to take cash out of their homes now are more likely to do a second home equity loan, rather than lose their low interest rate.
Buyers Losing Purchase Power
According to Zillow, the recent jump in mortgage interest rates, along with the continued rise in home prices, has increased monthly costs for homebuyers by 15 percent and reduced their purchasing power. That is an average, but all real estate is local, and in some markets, the rise is even steeper.
The average rate on the popular 30-year fixed mortgage is almost a full percentage point higher today than it was a year ago. It recently crossed the 5 percent line. Home prices are up 6.5 percent from a year ago, according to Zillow, so looking nationally, monthly mortgage payments for the typical home are 15.4 percent higher than they were in August 2017. Two-thirds of that jump is from interest rates, one-third from higher prices.
For the median-priced U.S. home, $216,700 in August per Zillow, a 1 percentage point increase to the current rate translates to about $1,200 more per year in mortgage payments when home prices remain the same. Climbing home values add to that increase.
From Industry Sources:
Weekly Mortgage Applications Rise
• Total mortgage application volume increased 1.6 percent last week compared with the previous week.
• Rising interest rates for home loans may be what’s getting borrowers back to their brokers.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to its highest level in more than seven years.
Home interest rates may be rising again, and that fear may be enticing more borrowers to either buy or refinance now.
According to the Mortgage Bankers Association’s latest seasonally adjusted report, total mortgage application volume increased 1.6 percent last week compared to the previous week. This rise was due in part to increasing refinance volume which rose 4 percent for the week.
Homeowners Sitting on $6 Trillion in Available Cash
• U.S homeowners were sitting on more than $6 trillion worth of collective tappable home equity at the end of June, according to Black Knight.
• Tappable equity is the amount most lenders will allow borrowers to cash out, while keeping 20 percent equity in the home.
• Approximately 44 million homeowners with mortgages can now access cash through cash-out refinances or home equity lines of credit (HELOCs).
As prices continue to rise, so too does the amount of home equity available for homeowners to tap; and it has now reached a record sum.
Home Sellers Slash Prices
• In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale has had a price drop.
• The supply of homes for sale increased annually in August for the first time in more than three years, according to the National Association of Realtors.
• The average rate on the popular 30-year fixed mortgage loan is up more than a quarter of a percentage point in the past month and is knocking on the door of 5 percent, a level not seen in nearly a decade.
After three years of soaring home prices, the heat is coming off the U.S. housing market. Home sellers are slashing prices at the highest rate in at least eight years, especially in the West, where the price gains were hottest.
From Industry Sources:
U.S. House Prices Rise 1.1 Percent in Second Quarter
U.S. home prices rose 1.1 percent in the second quarter of 2018 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.5 percent from the second quarter of 2017 to the second quarter of 2018. FHFA’s seasonally adjusted monthly index for June was up 0.2 percent from May.
The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
“Home prices rose in the second quarter but at a slower pace than we have seen for the past four years,” said Dr. William Doerner, Supervisory Economist. “Mortgage rates have increased by more than half a percentage point over the first six months of the year. Rates are still inexpensive from a historical standpoint, but their bump-up appears to have gently pressed the brakes on house price increases.”
Fannie Mae & Freddie Mac Refinance Volume Down in Second Quarter 2018
The Federal Housing Finance Agency (FHFA) today reported that Fannie Mae and Freddie Mac completed 299,466 refinances in the second quarter of 2018, compared with 356,002 in the first quarter. FHFA's second quarter Refinance Report also shows that 2,973 loans were refinanced through the Home Affordable Refinance Program (HARP), bringing the total number of HARP refinances to 3,491,140 since inception of the program in 2009.
Although HARP is scheduled to expire on December 31, 2018, according to new data released today, 49,094 borrowers could still benefit financially from a HARP refinance. These borrowers meet the basic HARP eligibility requirements and have a remaining balance of $50,000 or more on their mortgage, a remaining term on their loan of greater than 10 years, and a mortgage interest rate that is at least 1.5 percent higher than current market rates. These borrowers could save an average of $2,290 annually by refinancing their mortgage through HARP.
Weekly Mortgage Applications Drop as Homebuyers Drop Out
A small drop in mortgage interest rates was not enough to make pricey properties more enticing.
• Mortgage Interest Rates tick lower, but that wasn’t enough to entice homebuyers. • Total mortgage application volume fell, according to the Mortgage Banker Association’s seasonally adjusted report. • Home prices continue to climb amid sluggish growth in home supply.
Weekly Mortgage Applications Fall Again as Affordability Problems Persist
Mortgage demand from homebuyers has been falling for weeks and continued it slide yet again. That caused a 0.2 percent drop in mortgage application volume last week from the previous week.
Volume was 12.6 percent lower than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted data released last Wednesday.
Mortgage applications to purchase a home fell 1 percent for the week to the lowest level since May. Purchase volume, however, was 2 percent higher compared with a year ago. Given the increase in supply, purchase demand should be rising more, the National Association of Realtors said in a report last week.
Applications to refinance a home load did gain 1 percent for the week but were 30 percent lower than a year ago, when the average rate on the 30-year fixed mortgage was 60 basis points lower.
Homebuilder Sentiment, Still High, Stalls as Tariffs, Labor and Land Drive Up Costs
U. S. Homebuilders are heartened by the strong demand and tight supply in Last Weeks’s housing market, but they still can’t meet that demand as much as they might like. Consequently, their level of confidence is stuck in neutral.
A monthly sentiment survey from the National Association of Homebuilders was unchanged in July, standing at 68. Anything above 50 is considered positive sentiment. The survey was at 64 in July of 2017 and hit a cyclical high of 74 in December.
“Consumer demand for single-family homes is holding strong this summer, buoyed bt steady job growth, income gains and low unemployment in many parts of the country,” said NAHB chairman Randy Noel, a custom home builder from LaPlace, La.
But homebuilders are facing rising costs for land, labor and materials, especially with new tariffs on Chinese steel and aluminum in addition to duties imposed on Canadian lumber last year. The price of lumber spiked to a record high a few months ago and is still up over 50 percent in the past year.
Southeastern Evaluation President, J. Mark Chapman, has been appointed to the South Carolina Real Estate Appraisers Board. Mark has been in the appraisal business for more than 25 years. His term will be from 2018 to 2021.
From News Sources:
Mortgage Applications Jump 5.1%
Interest rate volatility has dissuaded borrowers for months, but some returned to the mortgage market last week.
Mortgage application volume increased from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted survey.
The gain was driven by applications to refinance a home loan, which rose 6 percent for the week but were still 31 percent lower than a year ago, when interest rates were lower. Refinance volume is highly sensitive to interest rate moves, and while there was no move last week, rates seem to be steading a bit after a rocky rise.
In May’s Red-hot Housing Market, Homes Sold in Record Time
If a “for sale” sign goes up in your neighborhood, don’t blink, you might miss it. The average home sold in May went under contract in just 34 days, according to real estate brokerage Redfin.
May’s number broke the previous month’s record of 36 days. Redfin began tracking this metric in 2010.
Homes are selling so quickly because there are so few for sale. More new listings did come on the market in May, 4.3 percent more than in May 2017. While that helped to increase the number of sales, it did not help the overall supply situation much because demand is so strong.
Weekly Mortgage Applications Drop 1.5% as Rates Turn Higher
The mortgage market found some new energy for a few weeks, when interest rates suddenly dropped, but it was remarkably short-lived.
Rates are on the move again, and that caused mortgage application volume to drop 1.5 percent last week from the previous week and 15.4 percent than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted report.
From the FHFA:
FHFA Index Shows Mortgage Rates Increased in April
Washington, D.C. - Nationally, interest rates on conventional purchase-money mortgages increased from March to April, according to several indices of new mortgage contracts.
The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 4.51 percent for loans closed in late April, up 2 basis points from 4.49 percent in March.
The average interest rate on all mortgage loans was 4.49 percent, up 7 basis points from 4.42 in March.
The average interest rate on conventional, 30-year, fixed-rate mortgages of $453,100 or less was 4.64 percent, up 10 basis points from 4.54 in March.
The effective interest rate on all mortgage loans was 4.63 percent in April, up 13 basis points from 4.50 in March. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.
The average loan amount for all loans was $312,900 in April, down $4,400 from $317,300 in March.
U.S. House Prices Rise 1.7 Percent in First Quarter
Washington, D.C. – U.S. house prices rose 1.7 percent in the first quarter of 2018 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.9 percent from the first quarter of 2017 to the first quarter of 2018. FHFA's seasonally adjusted monthly index for March was up 0.1 percent from February.
"Home prices continue to rise across the U.S. but there are signs of tapering," said Dr. William Doerner, Senior Economist. "Since housing markets began to rebound in 2012, house price appreciation has been positive because demand has outpaced supply. In the last month, however, some regions reflect a slowing or even flattening of house price growth."
Home prices rose in all 50 states and the District of Columbia between the first quarter of 2017 and the first quarter of 2018. The top five areas in annual appreciation were: 1) Nevada 13.7 percent; 2) Washington 13.1 percent; 3) Idaho 11.1 percent; 4) Colorado 10.6 percent; and 5) Utah 9.9 percent.
April 30, 2018 - HOME PRICES RISE
From the FHFA:
U.S. house prices rose in January, up 0.8 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported 0.3 percent increase in December was revised upward to 0.4 percent.
The FHFA is seeking comments on proposed amendments to its regulation on the Federal Home Loan Banks’ (FHLBanks) Affordable Housing Program (AHP).
The proposed amendments would authorize the FHLBank to redesign their project selection systems and create special targeted funds, which would allow the FHLBanks more flexibility to align their AHP funds with the distinct affordable housing needs in their district.
The FHFA recently released its fourth quarter Foreclosure Prevention Report, which showed that Fannie Mae and Freddie Mac completed 67,569 foreclosure actions in the fourth quarter of 2017, bringing the total number of homeowners helped to 4,040,258 since the start of the conservatorships in September 2008.
From CNBC News Sources:
Mortgage interest rates last week didn’t start to climb until the end of the week, but even a few days were enough to dampen demand.
Total mortgage application volume fell 0.2 percent for the week, according to the Mortgage Bankers Association. That was 0.8 percent lower than a year ago.
March 31, 2018 - NEW HOME SALES FALL FOR THIRD STRAIGHT MONTH
Sales of new U.S. single-family homes unexpectedly fell for a third straight month in February, weighted down by steep declines in the Midwest and West. According to the Commerce Department, new home sales dropped 0.6 percent to a seasonally adjusted annual rate of 618,000 units.
Rents are Rising at the Fastest Pace in Almost Two Years
The medium rent in the United States rose 2.8 percent over the past year to $1,445, the fastest pace of appreciation since May 2016, according to Zillow.
Potential buyers are having an increasingly difficult time finding a home they can afford, so they are renting longer. Rising mortgage rates only exacerbate the problem, as they decrease affordability as well.
Homebuilder Confidence Retreats
The nation’s homebuilders are worried they will not be able to meet the rising demand for housing. A monthly survey of builder sentiment dropped 1 point in March, and February’s reading was revised down by 1 point. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) fell to 70, the lowest reading since last November.
Mortgage Refinances Fall to Decade Low
Mortgage Applications Stall
Total mortgage application volume was essentially flat last week, up just 0.3 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association.
February 28, 2018 - THE NATIONAL ASSOCIATION OF SECRETARIES OF STATE MOVES TOWARD A FULLY DIGITAL MORTGAGE
Recently, the National Association of Secretaries of State, a group that includes the secretaries of state for all 50 states, Washington, D.C., and the U.S. territories, adopted nationwide standards for online notarization.
The move is important because in most states, secretaries of state are the commissioning authority for notaries, granting them the authority to act as a notary.
This could remove one of the biggest hurdles to implementing a fully digital mortgage. Currently only four states allow online, remote notarization, which allows borrowers to “sign” their mortgage documents from anywhere, via secure video conferencing.
Hud and Census Bureau Report Residential Construction Activity in January 2018
Building Permits: Building permits were up 7.4 percent over December and the year-to-year rate.
Housing starts are up 7.7 percent year-to-year since 2017.
Housing completions are up 2.2 percent since December.
Sales of new single-family houses in December were at a seasonally adjusted annual rate of 625,000. This is 9.3 percent below the revised November rate of 689,000 but is 14.1 percent above the December 2016 estimate of 548,000.
The Median sales price of new houses sold in December was $335,400. The average sales price was $398,900.
The FHA seasonally adjusted estimate of new houses for sale at the end of December was 295,000. This represents a supply of 5.7 months at the current sales rate. The January report is scheduled for release on February 26, 2018.
DECEMBER 31, 2017 - MURRET BEGINS TERM, INCREASED MORTGAGE RATES
James L. Murrett, MIA, SRA of Hamburg, New York will begin his one-year term as president of the Appraisal Institute (AI) on Jan. 1. “I’m excited to help guide appraisers and the valuation profession on the path to future success,” Murrett said. “We’re faced with both challenges and opportunities, and the Appraisal Institute is uniquely positioned to maintain and enhance its leadership role.”
A new AI book … Subdivision Valuation, by Don M. Emerson, Jr. … will address subdivision valuation practices. It will provide a comprehensive overview of the methodology used in valuing existing and proposed single-unit residential subdivisions.
FHA to Halt Insuring Mortgages on Homes with Pace Asses
FHA to Halt Insuring Mortgages on Homes with Pace Assessments
After hitting a peak in March, the rate of monthly home price appreciation has fallen each month since. The annual gain stabilized at 6.2 percent beginning in July and seems to be holding.
FHFA Index Shows Mortgage Rates Increased in November
The effective interest rate on all mortgage loans was 4.06 percent in November, up 5 basis points from 4.01 in October. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage. The average loan amount for all loans was $307,800 in November, up $300 from $307,500 in October.
Home Sales Flatten in November
Sales of existing and newly built homes slowed during the summer but increased dramatically in October and November, surprising experts who point to a low supply of homes for sale as a drag on the market.
“The housing market is closing the year on a stronger note than earlier this summer, backed by solid job creation and an economy that has kicked into a higher gear,” said Lawrence Yun, chief economist for the NAR.
OCTOBER 31, 2017 - HOMEOWNERSHIP RATES RISE TO HIGHEST LEVEL SINCE 2014
The national homeownership rate continued its slow trek back above last year’s historic lows in the third quarter, rising to levels not seen since 2014.
The latest data from the U.S. Census Bureau, released this week, shows that the homeownership rate rose to 63.9% in the third quarter from 63.7% in the second quarter. In last year’s third quarter, the homeownership rate was 63.5%.
Case-Shiller Home Price Index Rises 5.9%, Beating Expectations
The U.S. National Home Price Index rose 5.9 percent from a year ago, beating estimates of economists as polled by Reuters. Seattle, Portland and Las Vegas reported the highest year-over-year gains.
High Home Prices May Be Hitting Their Limit
After hitting a peak in March, the rate of monthly home price appreciation has fallen each month since. The annual gain stabilized at 6.2 percent beginning in July and seems to be holding.
Pending Home Sales Drop to Lowest in Nearly 3 Years
Weekly Mortgage Applications Fall 4.6% as Rates Rise
SEPTEMBER 30, 2017 - THIRTY-YEAR FIXED MORTGAGE RATE RISES TO 3.83 PERCENT
WASHINGTON (AP) — Long-term mortgage rates rose this week, lifting the 30-year fixed mortgage from the lowest levels of 2017.
Mortgage buyer Freddie Mac said Thursday the 30-year fixed mortgage rate was 3.83 percent, up from 3.78 percent last week and above last year’s average of 3.65 percent. The 15-year fixed rate, popular with homeowners who are refinancing their mortgages, rose to 3.13 percent from 3.08 percent last week.
Rates on long-term home loans typically track the yield on 10-year Treasury notes, which moved higher this week.
Rates on adjustable five-year mortgages rose to 3.17 percent from 3.13 percent last week.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was unchanged at 0.5 point. The fee on 15-year home loans also remained at 0.5 point. The fee on an adjustable five-year mortgage was unchanged at 0.4 point.
Fed announces a start to modestly reducing its bond holdings
WASHINGTON (AP) — The Federal Reserve is announcing that it will begin shrinking the enormous portfolio of bonds it amassed after the 2008 financial crisis to try to sustain a frail economy. The move reflects a strengthened economy and could mean higher rates on mortgages and other loans over time.
Yellen stays quiet on wanting 2nd term
WASHINGTON (AP) — Federal Reserve Chair Janet Yellen is staying mum about whether she wants a second term as the head of the U.S. central bank. Yellen says she intends to serve out her four-year term. That term ends Feb. 3, 2018. Yellen declined to say at a news conference whether she would like to serve a second term.
US home sales off 1.7 pct., hurt by Harvey and low supply
WASHINGTON (AP) — U.S. home sales fell 1.7 percent in August, pulled down by the effects of Hurricane Harvey and a worsening shortage of available properties. The National Association of Realtors says sales of existing homes sank last month to a seasonally adjusted annual rate of 5.35 million.
The Standard & Poor’s 500 index inched up 1.59 points, or 0.1 percent, to 2,508.24. The Dow Jones industrial average rose 41.79 points, or 0.2 percent, to 22,412.59. The modest gains nudged both indexes to record highs, extending a run of milestones that stretches back to last week. The Nasdaq composite lost 5.28 points, or 0.1 percent, to 6,456.04. The Russell 2000 index of smaller-company stocks added 5.02 points, or 0.4 percent, to 1,445.42. Benchmark U.S. crude added 93 cents, or 1.9 percent, to settle at $50.41 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, gained $1.15, or 2.1 percent, to $56.29 a barrel in London. Wholesale gasoline was little changed at $1.66 a gallon. Heating oil added 3 cents to $1.81 a gallon. Natural gas declined 3 cents to $3.09 per 1,000 cubic feet.
JULY 31, 2017 - HOMEBUILDER CONFIDENCE FALLS
Homebuilder Confidence Falls
A monthly index of homebuilder confidence in the single-family market fell 2 points in July. This is the lowest reading on the National Association of Home Builders/Well Fargo Housing Market Index since November 2016. “Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber,” NAHB chairman Granger MacDonald says.
Proposal to Raise Threshold for Commercial Real Estate Appraisals
The Federal Reserve Board, the FDIC and the Comptroller of the Currency in July issued a notice of proposed rulemaking to increase to $400,000 the threshold for commercial real estate transactions requiring an appraisal.
From CNBC Real Estate:
Controversial Law Set for Repeal A controversial Louisiana law that governed how much appraisal management companies pay real estate appraisers for their work is now set to be repealed after the state’s governor took action in response to the Federal Trade Commission accusing the state of Price-fixing.
JUNE 30, 2017 - THE MEDIUM FICO SCORE FOR ORIGINATIONS PLUMMETED IN APRIL ACCORDING TO THE URBAN INSTITUTE:
The medium FICO score for originations plummeted in April according to the Urban Institute. FICO scores for agency originations dropped a full 17 points from 742 in June 2016 to 725 in April.
The majority of the drop came from refinance originations, which fell 27 points from 752 in October last year to April’s 725. Comparatively, purchase FICOs dropped by four points during that same period from 729 to 725.
Urban Institute suggests that as mortgage interest rates rise and refinance volumes fall, lenders began accepting borrowers with lower FICO scores in order to increase the margin of financeable borrowers.
Inventory Woes Force Faster Buying Pace
According to Trulia, more home buyers are making an offer before actually seeing the house.
Housing inventory dropped for nine consecutive quarters (see Housing Starts Take A Nosedive), and is currently down a full 20% from Inventory levels of five years ago.
Now, homeowners are snatching up homes at the fastest pace since Trulia began tracking in 2012. While 57 percent of homes were still on the market after two months in 2012, today that number has shrunk to 47 percent.
Competition is so fierce, that 33 percent of American’s who bought a home in the last year made an offer without even seeing the home in person according to a survey from Redfin, an online real estate brokerage.
Home Purchase Sentiment Index Drops
The Fannie Mae Home Purchase Sentiment Index decreased slightly as consumers express diverging opinions on home buying and selling.
The share of Americans who said now is a good time to buy a home dropped to a record low of 27% after falling eight percentage points in May. And, the share of those who reported now is a good time to sell reached a record high, increasing six percentage points to 32 percent.
This is only the second time in the Survey’s history that the net share of those saying it’s a good time to sell surpassed those saying it’s a good time to buy.
MAY 31, 2017 - THIS WEEK PER WASHINGTON AP NEWS REPORTS:
Long-term U.S. mortgage rates were flat to slightly lower this week, as the key 30-year rate marked a new low for the year.
Mortgage buyer Freddie Mac said the average rate on 30-year fixed-rate home loans slipped to 3.94 percent from 3.95 percent last week. The rate stood at 3.66 percent a year ago and averaged 3.65 percent in 2016. The lowest level in records dating to 1971.
The rate on 15-year mortgages held steady at 3.19 percent.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was unchanged at 0.5 point. The fee on 15-year loans also held steady at 0.5 point. Rates on adjustable five-year loans rose to 3.11 percent from 3.07 percent. The fee increased to 0.5 point from 0.4 point.
APRIL 30, 2017 - SUPREME COURTS RULES CITIES CAN SUE BANKS:
The Supreme Court recently handed down a landmark ruling stating that cities can sue banks for discriminatory mortgage lending practices. In a 5-3 ruling, the Supreme Court rules cities hold the right to sue banks over the banks’ lending practices, if an alleged violation of the Fair Housing Act is Claimed.
The ruling is a result of a lawsuit brought by the City of Miami, which sued Bank of America, Wells Fargo, and Citigroup claiming the banks engaged in predatory lending to minority borrowers in the city.
Residential Construction Spending Continues to Rise:
Construction Spending dipped slightly in March, although privately funded spending held its ground and residential construction activity was at a higher pace than in February. The U.S. Census Bureau said that construction of all types was put in place at a seasonally adjusted annual rate of $1.22 trillion in March, down 0.2 percent from February but 3.6 percent higher than the estimate of $1.8 trillion in March 2016.
Rates Tick Down in March:
Following four consecutive monthly increases, results from the Mortgage Interest Rate Survey (MIRS) released by the Federal Housing Finance Agency (FIFA) indicate that mortgage rates fell in March. Over the month, contact rates on mortgages used tp purchase single-family newly constructed homes declined by 6 basis points to 4.12 percent. Despite the decline, rates remain above the low of 3.54 percent in October 2016, however, even at this level rates remain historically low.
MARCH 31, 2017 - UPCOMING REFORMS
Our December Newsletter, explored the differences between urban and rural mortgage lending. In February, the Appraisal Institute released a new textbook to fill “a void in the current literature of rural property appraisal.”
Rural Property Valuation is the first new textbook by the Appraisal Institute in 16 years and is devoted to the topic of rural property appraisals. The book provides up-to-date information on the many forces that affect agricultural and ranch properties and offers specific data and analytical tools appraisers can use in their daily work.
“Understanding the uses, characteristics and value of rural land can be challenging for those who work the land and for the real estate professionals who value it,” Appraisal Institute 2016 President Scott Robinson wrote in the book’s forward. “While the need for agricultural products to feed, and clothe the population may be relatively stable, the demand for land for recreational and residential use continues to expand.”
This book is an invaluable tool for anyone interested in rural land appraisal.
In other Industry News:
Home flipping just reached a 10-year high, according to the 2016 Year-End U.S. Home Flipping Report by ATTOM Data Solutions.
The report shows that 193,009 single family homes and condos were flipped, or sold in an arms-length transfer for the second time in a 12-month period, in 2016. This is an increase from 2015 to the highest level since 2006.
The Mortgage Bankers Association projects commercial and multifamily mortgage originations to grow to $515 billion in 2017, an increase of 3 percent from $502 billion in 2016 estimated volumes.
Mortgage banker originations of multifamily mortgages, specifically, are forecast at $219 billion in 2017, with total multifamily lending at $267 billion.
“Nationally, commercial real estate fundamentals and prices remain strong, “said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “That overall strength is expected to continue to support active sales and mortgage markets.”
FEBRUARY 28, 2017 - UPCOMING REFORMS
On February 24, President Trump signed an executive order in support of his promise to significantly cut government regulations. The order directs federal agencies to create “regulatory reform” task forces to evaluate existing federal rules and to recommend whether to keep, repeal, or change them according to CNCB’s Jacob Pramuk. In keeping with past executive orders, Trump signed the latest order on a Friday afternoon surrounded by business executives in the White House.
GSE Reform Update:
U.S. Department of the Treasury Secretary Steven Mnuchin says housing reform is still on his agenda reaffirming his desire to reform Fannie Mae and Freddie Mac.
“I’m, committed that under this administration we’re going to have housing reform so that we don’t just leave these entities the way they are,” Mnuchin said. “They’ve been sitting there for too long of a period of time and we need a solution.”
He went on to say than when saying that change is on the horizon, that it may not come as soon as some would hope. He further stated that tax reform is much higher on the agenda, but that GSE reform remains a high priority.
New Home Sales Slow in January:
According to Bloomberg News, new home sales in January were slower than forecast. This may indicate that an increase in mortgage rates is giving some potential buyers pause.
Mortgage rates picked up since early November spurred on by speculation that the economy will strengthen and Federal Reserve policy makers will keep raising interest rate in 2017.
The average rate on a 30-year fixed mortgage was at 4.16% in the week ended Feb. 23, according to Freddie Mac figures. That’s up 3.54%.
Housing Prices Rise in Fourth Quarter:
According to the latest FHFA HPI releases, U.S. house prices rose 1.5 percent in the fourth quarter of 2016. This is a 6.4 percent over the same quarter in 2015 and up .04 percent in December from November.
House prices rose in 46 of the 50 states with Oregon, Colorado, Florida, Washington, and Nevada leading the way.
JANUARY 31, 2017 - HUD Announces Additional Funds
As an update to our October Newsletter story about the devastation wrought by Hurricane Matthew, former HUD Secretary Castro announced in December additional funds to the weather-weary region – Louisiana, West Virginia, Texas, North Carolina, South Caroline and Florida – to aid recover efforts.
This spending measure, which was signed into law in early December, allocates $1.8 billion “in the most impacted and distressed areas.” These grants are in addition to the $500 million allocated in October and are not subject to the new administration’s “freeze” on new programs.
Also earlier this month, HUD and the U.S. Census released the results of the 2015 American Housing Survey focusing on 25 metropolitan areas across the country. The data includes detailed information on everything from monthly housing costs, hunger, and neighborhood characteristics including crime and the prevalence of rodents and cockroaches.
The survey is the most comprehensive of its kind and covers a variety of “core” housing topics and neighborhood conditions. And for the first time in its 42-year history includes questions on food security status. The report can be viewed at: https://www.census.gov/programs-surveys/ahs/
And finally, in Hud news Dr. Ben Carson has been confirmed as the next HUD Secretary replacing Julian Castro.
In other industry news:
The latest FHFA index shows that mortgage rates increased in December. According to FHFA, interest rates on conventional purchase-money mortgages increased from November to December. Highlights of the index show:
FHFA will release January index values Tuesday, February 28, 2017.
NOVEMBER 23, 2016 - FHA Clarifies Appliance Inspection Rules
Often, properties bought or refinanced with an FHA loan require a more stringent review by the appraiser than similar conventional loan products. With conventional loan products, the appraiser is responsible for determining the fair market value of the home. With an FHA-insured loan, the appraiser not only determines the fair market value but also inspects the home to ensure it meets certain minimum property standards.
When the Federal Housing Administration’s Office of Single Family Housing issued its latest overhaul to the Single Family Housing Policy Handbook (SF Handbook) last year, many in the appraisal community were concerned that its requirements to operate and physically observe appliances as part of the valuation process blurred the lines between the appraiser’s responsibility and the responsibility of home inspectors.
“Appraisers have a lot on their plate, and their work is important to ensuring buyers, sellers, lenders and everyone else involved in a transaction has a credible source to turn to when determining the value of a property,” said National Association of Realtors President Tom Salomone. “Requiring appraisers to perform duties that are better left to a home inspector only slows the process while potentially adding unnecessary costs.”
To address these concerns, the FHA recently released updates (September 30, 2016) to their SF Handbook that clarify this requirement. Accordingly, the update states that appraisers must note that certain appliances that contribute to the market value of the property are physically present. The update does not change what the appraiser is being asked to do, it simply describes what the appraiser must do as part of the process. The handbook now states specifically an appliance includes:
The definition of “appliance”’ was previously unclear leading many appraisers to include spas, trash compactors, sound systems, security systems, garage door openers, etc. in their reports. The update also clarifies “when” appliances are required to be operational stating “[a]ppliances that are to remain and that contribute to the market value opinion must be operational.”
If an appliance is not included in the sale of the property, it is not required to be operational. In addition, if the appliance is not included in the appraiser’s market value it too is not required to be operational. The bottom line is if an appliance is not real property, then the appraiser is not required to operate it.
In response, Salonone further states that the “FHA did appraisers and consumers a big favor by clarifying appraiser duties and specifically listing the appliances to which this new guidance applies.”
OCTOBER 20, 2016 - FHFA Announces a New Refinance Offering
The Federal Housing Finance Agency (FHFA) announced in August that Fannie Mae and Freddie Mac (the Enterprises) will implement a new streamlined refinance offering for borrowers with high loan-to-value (LTV) ratios. The program will provide much-needed liquidity to borrowers who are current on their mortgage but exceed maximum LTV limits through traditional refinance programs.
“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the Enterprises, “said FHFA director Melvin l. Watt.” This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”
To qualify for the new offering, borrowers:
The new offering has many similarities to the HARP program. In both offerings there is no minimum credit score and no maximum debt-to-income ratio or LTV. But unlike HARP there are no eligibility cut-off dates. Borrowers will also be able to refinance their mortgage more than one time.
The new offering will not be available to borrowers until October of 2017. To avoid leaving eligible borrowers without refinance offerings, the FHFA is extending the HARP program through September 30, 2017. HARP was originally scheduled to end on December 31, 2016.
AUGUST 14, 2016 - U.S. House Prices Rise 1.2 Percent in Second Quarter; Some Signs of Deceleration