ATTOM released its second quarter 2023 U.S. Home Affordability Report This Week in Real Estate showing affordability hits lowest point since 2007 as the national median home price set a new record growing 10.2% from the first quarter of 2023. The 10.2% gain also represents the largest quarterly improvement since the second quarter of 2015. It has been one year since the real estate market recalibrated itself following the decade-long boom period lasting from 2012 into the middle of 2022 and there continues to be an imbalance in demand and supply. In the last week, the number of homes for sale fell below year-ago levels for the first time in 59 weeks. NAR chief economist, Lawrence Yun, said that there are approximately three offers for each listing. Below are a few newsworthy events from the fourth week of June that influence our business:
Home Affordability Worsens Across U.S. During Second Quarter of 2023 as Home Prices Tick Upwards. ATTOM released its second-quarter 2023 U.S. Home Affordability Report this week showing that affordability has worsened across the nation this quarter amid a renewed jump in home prices. The worsening picture facing home buyers reflects the second shift in the U.S. housing market in the past year, coming as the median single-family home price has shot up to a new record following three quarters of declines. Nationwide, the median single-family home value has risen 10 percent from the first to the second quarter of 2023 – one of the biggest quarterly increases in the past decade. The second-quarter median sits 2 percent above the previous peak hit a year earlier before the market stalled and prices dropped. Home values have jumped at a time when mortgage rates have settled down below 7 percent after more than doubling last year, and the U.S. consumer-price inflation rate has dropped by more than half, to around 4 percent. The stock market has also shown gains recently. All that has put more buying power into the pockets of house hunters, pushing prices up and affordability down. Read the full story here.
House Hunting is Already Tough. Guess What? It’s About to Get Harder. The number of homes for sale this month was actually 7% higher than in June of last year, according to Realtor.com. But, in just the last week, that comparison went negative, with the number of homes for sale falling below year-ago levels for the first time in 59 weeks. New listings in the last week of June were down 29% from the same week a year ago. An even tighter housing market ahead means home prices are unlikely to cool. Prices peaked last June, after rising over 45% from pre-pandemic levels. “Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” NAR’s chief economist, Lawrence Yun, said in a release. “The lack of housing inventory continues to prevent housing demand from being fully realized.” On the flip side, the nation’s homebuilders have been big beneficiaries of the tight market, seeing sales jump 12% in May from April, according to the U.S. Census. Higher mortgage rates have been less of a factor, as builders, some of whom have their own mortgage arms, have been buying down rates for buyers. In May, there were twice as many homes that were sold but hadn’t been started as there were a year ago. While single-family housing starts are finally increasing, they are still well below historical levels. Builders have also been underbuilding since the great recession, meaning the market was undersupplied well before the recent, pandemic-induced run-on housing. Read the full story here.
Mortgage App Volume Showing Signs of Life? For the third straight week, mortgage applications rose, not enough to overcome its big, long-running deficit, but a welcome sign of life. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 3.0 percent on a seasonally adjusted basis from one week earlier. The seasonally adjusted Purchase Index rose 3.0 percent, also a third straight gain. Joel Kan, MBA’s Vice President and Deputy Chief Economist said, “Mortgage rate changes varied across loan types as of last week, with the 30-year fixed rate increasing slightly to 6.75 percent. The spread between the jumbo and conforming rates widened to 16 basis points, the third week in a row that the jumbo rate was higher than the conforming rate. To put this into perspective, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points less than the conforming rate,” he said. “Purchase applications increased for the third consecutive week to the highest level of activity since early May. New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing home market. Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages.” Read the full story here.
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