Home Prices Are Finally Going Down

Keeping you updated on the market!

For the week of: September 16, 2019

MARKET RECAP

Home Prices Are Finally Going Down

Typically, home prices surge over the summer months. Buyers don't mind schlepping to open houses when the weather is warm and they don't have to slog through snow, and families are motivated to move before the kids start school. This year, with very low mortgage interest rates, the expectation was that August would be business as usual. That didn't happen.

Instead, with both buyers and sellers worried that a recession could be headed our way, home list prices fell to $309,000 nationally in August, according to a recent realtor.com? report. That's down 1.8% from July, but up 4.9% year over year.

Those fears of a downturn could become a self-fulfilling prophecy: If one does materialize, about 56% of home shoppers are expected to put their search on hold until it passes, according to a recent realtor.com survey.

“What it tells us is, fall came earlier than expected,” says Senior Economist George Ratiu of realtor.com. Prices usually cool in tandem with the weather, starting to decline in the autumn.

The number of homes on the market also fell, making August the first month with inventory decline within a year.

"A lot of the homes on the market are too expensive, and a lot of buyers are taking a break," Ratiu says. Meanwhile, sellers are "concerned they might have missed the high-water market," so they want to wait out the current climate.

Affordably priced homes get snapped up fast, as they're in short supply. That means potential homeowners on a tight budget who didn't act fast enough can consider only homes well outside their price range.

In addition, worries that the country could be headed for another economic downturn is making many buyers think twice. Some are worried about their jobs, while others want to see if prices will fall. (Unlike the last recession, prices aren’t likely to fall far in another downturn.)

And since mortgage interest rates don't seem likely to rise significantly any time soon, there's no urgency.

The lack of buyers has forced many sellers to resort to price cuts if they don't want to wait it out or to just pull their properties off the market.

“The impact from price cuts at the upper end is trickling down, lowering prices overall," Ratiu says.

Source: Realtor.com | Clare Trapasso

Looking Ahead: Upcoming Key Market Dates

Tuesday, September 17, 2019Home Builder’s IndexWednesday, September 18, 2019Housing StartsWednesday, September 18, 2019Building PermitsThursday, September 19, 2019Existing Home Sales

Weekly mortgage applications rise as buyer’s market takes hold

Homebuyers are taking advantage of lower mortgage rates and a slow summer for sellers, and that is driving mortgage applications higher.

Total mortgage application volume rose 2% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was up 69% compared with the same week one year ago, when interest rates were much higher. The week’s results included an adjustment for the Labor Day holiday.

Low rates, combined with more moderate home prices and more desperate sellers, are all bringing buyers back to the market. Mortgage applications to purchase a home increased 5% for the week and were 9% higher than the same week one year ago. More homes usually come on the market after the Labor Day holiday, marking an end of the summer slump. Some agents say the spring was particularly slow, so a lot of that demand may have been pushed forward to the fall.

Dallas real estate agent Kelley McMahon said she is seeing a stronger fall but a pickier buyer.

“I feel like there’s more inventory than there has been in the past. Usually in the fall I’m a little slower, but I have not slowed down at all,” said McMahon. “I feel like there are a lot of homes hitting the market, but if they’re not priced right they’re going to sit for a bit.”

The lowest mortgage rates in about three years did not push applications to refinance a home loan much higher, at least for the week.

“Refinances were essentially unchanged, but August overall was the strongest month of activity so far in 2019,” said Joel Kan, an MBA economist.

Mortgage rates fell throughout much of last week, and some lenders say that is precisely when potential refinancers hold off, hoping they will go even lower. By the end of the week, however, rates popped higher, and they are now at the highest level in over a month.

“This most recent break from long-term lows has been far more threatening with 2 of the past 4 business days bringing the biggest single-day jumps in several months,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “As a result, the average lender is now back to offering rates last seen in early August.”

The sudden move higher may reinvigorate the refinance market this week, as borrowers fear the recent lows may be over for a while.

Source: CNBC | Diane Olick

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