Mortgage News

Residential Construction Fall and Builder Confidence Flattens in Uncertain Rate Environment
Tue, 16 Apr 2024 15:41:00 GMT
While builder confidence in the market for new residential construction improved in March, it remained flat in April and residential construction numbers showed a decline in momentum as well. Residential construction starts, which had surged in February, gave back all of those gains in March. The U.S. Census Bureau and the Department of Housing and Urban Development (HUD) report that construction began at a seasonally adjusted annual rate of 1.321 million housing units during the month, a decline of 14.7 percent from February’s level of 1.549 million units. Starts were 4.3 percent lower than their level in March 2023. Single-family starts fell 12.4 percent to an annual rate of 1.022 million and multifamily starts dived 20.8 percent to 290,000 units. The two categories were down 21.2 percent and 43.7 percent respectively year-over-year. Permits also declined. The annual rate was 4.3 percent lower at 1.458 million units compared to 1.523 million in February. Permits increased 1.5 percent on an annual basis. Single-family authorizations dropped from 1.032 million to 973,000, a 5.7 percent decline. This was still a 17.4 percent improvement from March of last year. Multifamily permits were unchanged at 433,000 units, down 22.1 percent year-over-year. Analysts polled by Econoday had forecast starts at 1,480 million and permits at 1.510 million, substantially overshooting both numbers. The National Association of Home Builders (NAHB) said the NAHB/Wells Fargo Housing Market Index (HMI) broke a four-month string of gains this month, remaining at the 51 level, unchanged from March, but still above the key breakeven point of 50.

Borrowers Pick Up Pace of Refinancing    
Wed, 10 Apr 2024 12:39:15 GMT
The interest rate for conforming 30-year fixed-rate mortgages (FRM) again topped 7 percent last week, but mortgage application activity still squeezed out a tiny gain.  The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 0.1 percent on a seasonally adjusted basis. On an unadjusted basis, the Index increased 0.2 percent compared with the previous week. But that tiny gain was due solely to a 10.0 percent increase in refinancing (plus 4.0 percent year-over-year) while the purchase mortgage level fell 5.0 percent on a seasonally adjusted basis. Refinancing accounted for 33.3 percent of applications during the week compared to 30.3 percent a week earlier. [refiappschart] The non-seasonally adjusted Purchase Index was 4.0 percent lower last week and down 23 percent from its level the same week one year ago. [purchaseappschart] “Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts. Inflation remains stubbornly above the Fed’s target, and the broader economy continues to show resiliency. Unexpectedly strong employment data released last week further added to the upward pressure on rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate increased to 7.01 percent, the highest in over a month. Purchase applications were down almost five percent to the lowest level since the end of February, but refinance applications were up 10 percent, driven particularly by VA refinance applications.”

Persistent High Rates Have Application Volume Stuck in Neutral
Wed, 03 Apr 2024 12:16:31 GMT
Mortgage application activity drifted lower again last week , the third straight week of mostly fractional declines. The Mortgage Bankers Association’s Market Composite Index, a measure of application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier and 0.1 percent before adjustment. The Refinance Index declined by 2.0 percent from the previous week and was 5.0 percent lower than the same week one year ago. The refinance share of mortgage activity slipped to 30.3 percent from 30.8 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index ticked down by 0.1 percent week over week but did move 1.0 percent higher on an unadjusted basis. Purchase activity was 13.0 percent lower than during the same week in 2023.    [purchaseappschart] “Mortgage rates moved lower last week, but that did little to ignite overall mortgage application activity. The 30-year fixed mortgage rate declined slightly to 6.91 percent, while the 15-year fixed-rate decreased to its lowest level in two months at 6.35 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Elevated mortgage rates continued to weigh down on home buying. Purchase applications were unchanged overall, although FHA purchases did pick up slightly over the week. Refinance applications decreased to fall 5 percent below last year’s pace.”  Other Highlights from MBA’s Weekly Mortgage Application Survey

Little Change in Mortgage Application Volume, Despite Lower Rates
Wed, 27 Mar 2024 12:42:44 GMT
The Mortgage Bankers Association said its Market Composite Index moved lower last week, apparently indifferent to a slight improvement in mortgage interest rates. The Index, which measures loan application volume, decreased 0.7 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index declined 0.4 percent compared with the previous week. The Refinance Index decreased 2.0 percent from the previous week and was 9.0 percent lower than the same week one year ago. The refinance share of mortgage activity accounted for 30.8 percent of total applications compared to 31.2 percent the previous week. [refiappschart] The Purchase Index ticked down 0.2 percent both before and after its seasonal adjustment.  It was 16.0 percent lower than the same week one year ago. [purchaseappschart] “Mortgage application activity was muted last week despite slightly lower mortgage rates. The 30-year fixed rate edged lower to 6.93 percent, but that was not enough to stimulate borrower demand,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market. Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually, as we forecast that rates will move toward 6 percent by the end of the year. Similarly, with rates remaining elevated, there is very little incentive right now for rate/term refinances.” 

New Home Sales Decline Slightly, Prices Too
Tue, 26 Mar 2024 17:53:26 GMT
Sales of newly constructed homes were virtually unchanged in February. The 662,000 seasonally adjusted annual units recorded in during the month was down by 2,000 units or 0.3 percent from the rate in January. This did, however, put sales 5.9 percent higher than they were in February 2023. The report from the U.S. Census Bureau and the Department of Housing and Urban Development estimated that, before adjustment, sales for the month totaled 60,000 units compared to 57,000 the previous month and 56,000 in February of last year. Thus far this year, sales of new homes are up 4.4 percent over the same period in 2023 at 117,000 units. The median price of houses sold during the reporting period was $400,500 and the average price was $485,000. In February 2023 the relative prices were $433,300 and $499,100. At the end of February there were an estimated 451,000 new homes available for sale. This is a projected 8.4-month supply at the current sales pace and is unchanged from the inventory level one year earlier. Robert Dietz, economist for the National Association of Home Builders noted, “Completed and ready-to-occupy inventory has increased 23 percent over the last year, rising to 85,000 homes. Homes advertised for sale but not started construction have increased almost 18 percent over the last year to 106,000. In contrast, homes available for sale that are under construction have declined 2 percent to 272,000.”

Existing Home Sales Shoot Higher; Inventory also Improves
Fri, 22 Mar 2024 17:44:21 GMT
Rather than easing back from the January level as expected, existing home sales shot significantly higher in February, The National Association of Realtors® (NAR) said pre-owned single-family houses, townhouses, condominiums, and cooperative apartments sold at a seasonally adjusted annual rate of 4.38 million units. This is an increase of 9.5 percent from the 4.0 million unit pace the previous month and the largest monthly increase since last February. Sales still trailed that month’s 4.53-million-unit rate by 3.3 percent. Analysts polled by Econoday had a consensus estimate for sales of 3.92 million units while Trading Economics had projected the rate at 3.94 million. Single-family home sales grew to a seasonally adjusted annual rate of 3.97 million in February, a 10.3 percent gain, but were down 2.7 percent year-over-year. The annual sales rate for condos and coops (410,000 units) was 2.5 percent higher than in January, but 8.9 percent below the February 2023 pace. Despite the increase in sales, the number of homes available for sale also climbed, rising 5.9 percent from January and 10.3 percent from the previous February to 1,07 million units. This is estimated at a 2.9-month supply at the current rate of sales. Still, inventory remains well below the five-to-six-month supply considered a balanced market. The median existing home price for all housing types in February was $384,500, an increase of 5.7 percent from $363,600 a year earlier. It was the eighth consecutive month of year-over-year price gains and was the highest price ever recorded for the month of February. The median price for a single-family home was $388,700, a 5.6 percent annual increase while condos appreciated by 6.7 percent to a median of $344,000.

Mortgage App Volume Retreats Slightly as Rates Rise
Wed, 20 Mar 2024 12:14:42 GMT
After rising a cumulative 17 percentage points over the prior two weeks, mortgage application volume slowed slightly last week. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, decreased 1.6 percent on a seasonally adjusted basis from one week earlier and was 1.0 percent lower on an unadjusted basis.   Both home purchasing and refinancing activity pulled back. The Refinance Index decreased 3 percent from the previous week and was 3.0 percent lower than the same week in 2023. The Purchase Index slid 1.0 percent both before and after adjustment and was 14 percent lower year-over-year. [refiappschart] [purchaseappschart] “Mortgage rates increased last week as incoming data showed inflation was still hotter than expected, which stoked concerns about the timing and extent to which the Fed might be able to reduce the fed funds rates this year. After three weeks of declines, the 30-year fixed mortgage rate increased to 6.97 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Mortgage applications continued to show sensitivity to rate movements , and both purchase and refinance activity decreased over the week. With housing supply low and prices high, the average loan size for purchase applications increased to the highest level since May 2022.” Other Data from MBA’s Weekly Mortgage Application Survey. The refinance share of mortgage activity decreased to 31.2 percent of total applications from 31.6 percent the previous week. Even though the size of purchase loans rose $1,200 to the new recent high of $445,000, the average for all loans dipped by about $1,000 to $389,800. FHA and VA loan applications each accounted for 12.1 percent of the total and the USDA share was 0.5 percent. All three were essentially unchanged from the prior week. The 6.97 percent interest rate for conforming 30-year mortgages (FRMs) represented an increase of 13 basis points from the previous week. Points decreased to 0.64 from 0.65. The average rate for jumbo 30-year FRM rose to 7.14 percent from 7.04 percent, with points increasing to 0.54 from 0.38. Thirty-year FRM with FHA backing had an average rate of 6.89 percent with 1.04 points. The prior week the rate was 6.77 percent with 0.95 point. The rate for 15-year FRM; rose 12 basis points to 6.49 percent while points decreased 0.70 from 0.77. The average rate for 5/1 adjustable-rate mortgages (ARMs) was 6.33 percent, declining from 6.38 percent a week earlier. Points averaged 0.55, up from 0.52. The ARM share of activity decreased to 7.2 percent of total applications from 7.7 percent in each of the prior two weeks.

Builder Confidence and Construction Activity Both Go Up
Tue, 19 Mar 2024 16:51:00 GMT
Builder confidence rose for the fourth straight month and residential construction stats may now be trying to catch up. Both construction permits and housing starts rose in February compared to both January and February 2023 levels. The U.S. Census Bureau and the Department of Housing and Urban Development  (HUD) said new residential construction began on a seasonally adjusted pace of 1.521 million units last month. This is 10.7 percent higher than the 1.374 million units reported in January and 5.9 percent more than the level a year earlier. Single-family starts rose 11.6 percent for the month to a rate of 1.129 million units and were up 35.2 percent year-over-year while multifamily starts increased by 8.5 percent. They retreated however by 35.9 percent on an annual basis. On a non-seasonally adjusted basis, construction started on 108,100 units during the month, 79,200 of which were single-family houses. The January numbers were 97,400 and 69,700 respectively. Permitting also increased, although not as dramatically. Authorizations were at a seasonally adjusted level of 1.518 million, 1.9 percent higher than the 1.489 million estimate the previous month. The year-over-year change was +2.4 percent. Single-family permits were up 1.0 percent to 1.031 million, 29.5 percent higher than a year earlier. Multifamily permits increased 2.4 percent but lagged the prior February by 32.8 percent. Permits issued during the month totaled 118,300, up from 114,800. Single-family permits increased from 75,900 to 79,300.

Rate Drop Prompts Jump in Refi Application Volume
Wed, 13 Mar 2024 12:54:45 GMT
A surge in refinance applications drove mortgage application volume higher for the second straight time last week. The Mortgage Bankers Association said its Market Composite Index, a measure of that volume, increased 7.1 percent on a seasonally adjusted basis, 8.0 percent before adjustment.   Refinancing was 12.0 percent higher than the previous week and surpassed the Refinancing Index level during the same week in 2024 by 5.0 percent. Refinancing accounted for 31.6 percent of applications, up from 30.2 percent the previous week. [refiappschart] The seasonally adjusted Purchase Index rose 5.0 percent from one week earlier and was 6.0 percent higher unadjusted, remaining 11 percent lower than the same week one year ago.   [purchaseappschart] “Mortgage rates dropped below 7 percent last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase application volume increased for the week but remains about 11 percent below last year’s level. By contrast, refinance volume picked up by 12 percent, with a larger, 24 percent increase in the government refinance index. While these percentage increases are large, the level of refinance activity remains quite low, and we expect that most of this activity reflects borrowers who took out a loan at or near the peak of rates in the past two years .”

Housing Data Showing Positive Signs, Mortgage Apps Up 9.7%
Wed, 06 Mar 2024 13:59:25 GMT
Whether prompted by a tiny improvement in mortgage rates or the first stirrings of a spring market, mortgage activity reversed course last week. The Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of application volume, increased 9.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12.0 percent. The Refinance Index gained 8.0 percent during the week ended March 1, trailing the same week in 2023 by 2.0 percent. The refinance share of mortgage activity decreased to 30.2 percent from 31.2 percent the previous week. [refiappschart] The index measuring purchase applications jumped 11,0 percent higher on a seasonally adjusted basis and 13.0 percent before adjustment. The index was 8.0 percent lower than the same week one year ago. [purchaseappschart] "The latest data on inflation was not markedly better nor worse than expected, which was enough to bring mortgage rates down a bit, with the 30-year fixed mortgage rate declining slightly last week to 7.02 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Mortgage applications were up considerably relative to the prior week, which included the President's Day holiday. Of note, purchase volume – particularly for FHA loans – was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates. Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory. "