Mortgage Stabilization and the End of a Housing Slowdown

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Thanks to the lowest unemployment rate in 50 years, historically low-interest rates and responsible underwriting, the mortgage delinquency rate in the U.S. is the lowest in more than 20 years, according to a release from CoreLogic This Week in Real Estate. Below are a few highlights from the second week of July that influence our business:

Mortgage Rates Stabilize as U.S. Markets Respond to Improving Economic Conditions. 

This week, the 30-year, fixed-rate mortgage averaged 3.75%, holding steady from the previous week, according to the Freddie Mac Primary Mortgage Market Survey. Once again, the rate remains significantly lower than in the same time period in 2018 when it averaged 4.52%.  Freddie Mac Chief Economist Sam Khater said while rates have moderated, we’re still at near three-year lows, which is good news for buyers looking to purchase a home before school starts. “The recent stabilization in mortgage rates reflects modestly improving U.S. economic data and a more accommodative tone from the Federal Reserve to respond to the rising downside economic risk from trade tensions and soft global economic data,” Khater said. “On the housing front, the latest weekly purchase application data suggests homebuyer demand continues to rise, which is consistent with the slowly improving real estate data from the last two months.”

Americans Haven’t Been This Good at Paying Their Mortgages in More Than 20 Years. 

Americans are better now at paying their mortgages on time than they have been at any point in the last 20 years, a new report from CoreLogic shows. According to CoreLogic’s latest monthly Loan Performance Insights Report, the national delinquency rate (mortgages that are in some stage of delinquency, meaning those that 30 days or more past due and including loans in foreclosure) sat at 3.6% in April. That’s the lowest national delinquency rate in more than 20 years, CoreLogic said. It’s also a significant decline from the same time period last year, when the delinquency rate was 4.3%. According to CoreLogic’s report, the nation’s overall delinquency rate has fallen on a year-over-year basis for the last 16 consecutive months. “Thanks to a 50-year low in unemployment, rising home prices, and responsible underwriting, the U.S. overall delinquency rate is the lowest in more than 20 years,” said CoreLogic chief economist Frank Nothaft. According to the report, April’s serious delinquency rate of 1.3% was the lowest for any month since August 2005, when it was also 1.3%.

The Housing Slowdown May Be Ending. 

The much-discussed – and, in some quarters, much-feared – housing slowdown may be coming to an end. The real estate softening that began last summer, marked by a surge in homes hitting the market and fewer sales after years of crazy-high annual price growth, may show signs of reversing course by this fall, say housing experts. “I don’t think we’ll get back all the way to … the frenzy we saw at the beginning of 2018,” says Chief Economist Danielle Hale of realtor.com. But “it’s certainly a possibility that home sales and prices will pick up, especially if mortgage rates stay low.” One primary reason for the market revving up again: Mortgage interest rates falling below 4% again. Moreover, the number of homes available for sale is expected to decline again within the next few months, says Hale. That’s because the growth in inventory is starting to slow, slipping from 2.9% annual growth in May to 2.8% in June, according to realtor.com data. Experts predict it will fall even further this year. “It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen,” she explains. “There’s still plenty of pent-up demand from years of underbuilding and more millennials coming of age” and wanting a home of their own to raise their families in, says Hale. But “this year’s buyers seem a little more patient. They’re more willing to wait for a good property.”

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