While Sales Contract Prices Continue To Accelerate

This Week in Real Estate, the National Association of Realtors (NAR) reported a 4.3% decline in existing-home sales in March compared to the previous month, and a 3.7% decrease year-over-year. Single-family home sales also decreased by 4.3% from February and 2.8% from the prior year. While sales contracted prices continued to accelerate. The median existing-home price increased by 4.8% year-over-year for all types and by 4.7% for existing single-family homes. Fannie Mae’s latest Home Price Index (FNM-HPI) showed a 7.4% increase in single-family home prices from Q1 2023 to Q1 2024. The FNM-HPI tracks the average quarterly price change for all single-family properties in the U.S., excluding condos. In March, single-family housing starts and permits declined by 12.4% and 5.7%, respectively, compared to February, but realized increases of 21.2% and 17.4%, respectively, compared to the previous year. Mortgage applications for new home purchases rose by 6.2% year-over-year and by 1% from February. Despite mortgage rates reaching their highest level since December 2023, mortgage demand increased for the second consecutive week ending April 12, with the 30-year fixed rate averaging 7.13%. Additionally, both Fannie Mae and Freddie Mac confirmed that seller payment of buyer agent commissions will continue to be exempt from limits on seller concessions. Below are a few newsworthy events from the third week of April that influence our business:  
EXISTING-HOME SALES DESCENDED 4.3% IN MARCH. Total existing-home sales receded 4.3% from February to a seasonally adjusted annual rate of 4.19 million in March. Year-over-year, sales waned 3.7% (down from 4.35 million in March 2023). Single-family home sales declined to a seasonally adjusted annual rate of 3.8 million in March, down 4.3% from 3.97 million in February and 2.8% from the prior year. “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said NAR Chief Economist Lawrence Yun. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market.” Total housing inventory registered at the end of March was 1.11 million units, up 4.7% from February and 14.4% from one year ago (970,000). Unsold inventory sits at a 3.2-month supply at the current sales pace, up from 2.9 months in February and 2.7 months in March 2023. The median existing-home price for all housing types in March was $393,500, an increase of 4.8% from the previous year ($375,300). All four U.S. regions registered price gains. The median existing single-family home price was $397,200 in March, up 4.7% from March 2023. Read the full story here.
MORTGAGE DEMAND TICKS UP FOR THE SECOND CONSECUTIVE WEEK. Mortgage demand increased for the second week in a row on the back of a strong economy. Applications increased by 3.3% on a seasonally adjusted basis during the week ending April 12, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. “Rates increased for the second consecutive week, driven by incoming data indicating that the economy remains strong, and inflation is proving tougher to bring down. Mortgage rates increased across the board, with the 30-year fixed rate at 7.13% – reaching its highest level since December 2023,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise. Purchase loan application volume shot up by 10% from one week earlier, while refinance volume picked up by 3% from the prior week. Read the full story here.
HOUSING STARTS FALL ON INTEREST RATE, FINANCING CONCERNS. Housing starts fell in March with interest rates somewhat higher than expected last month as the latest inflation readings failed to show improvement. Builders are also still facing higher supply-side costs and tighter lending conditions. Overall housing starts decreased 14.7% in March to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The March reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 12.4% to a 1.02 million seasonally adjusted annual rate. Single-family starts are up 21.2% compared to a year ago. The three-month moving average (a useful gauge given recent volatility) is up to over 1.0 million starts.  As an indicator of the economic impact of housing, there are now 689,000 single-family homes under construction; this is 2.7% lower than a year ago. Overall permits decreased 4.3% to a 1.46-million-unit annualized rate in March but are up 1.5% compared to March 2023. Single-family permits decreased 5.7% to a 973,000-unit rate but are up 17.4% compared to the previous year.  Read the full story here.

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