Homebuyers showing resiliency to higher mortgage rates
It’s?Thursday May 12, and the story of the moment continues to be the volatility in markets, whether?stock,?crypto?—?or even?lumber ?(see the latest on that particular asset and how it's impacting homebuilders, below). Later today, the earnings report from Compass will effectively wrap up earnings season for residential real estate stocks, and we’ll be watching closely.
THE NEWS:?Homebuyers continue to show signs they won’t be deterred by?rising mortgage rates, with demand for purchase mortgages increasing for a second week in a row last week, according to a weekly survey of lenders by the Mortgage Bankers Association. Data from the MBA’s Weekly Mortgage Applications Survey released Wednesday showed demand for purchase loans was?up a seasonally adjusted 5 percent last week?compared to the week before, but down 8 percent from a year ago.
After rising more than two full percentage points this year — from 3.409 percent on Jan. 3 to 5.593 percent on May 6 — rates on 30-year fixed-rate mortgages declined Monday and Tuesday, retreating to?5.490 percent.?
THE NEWS:?The sky-high price of?lumber?fell?a bit closer to earth ?this week from its recent stratospheric highs, offering some cost relief to homebuilders, but no more clarity about the future. Lumber prices began the week by reaching their lowest point of the year, hitting $780 per thousand board feet on Monday. The?6 percent drop in a single day?continued the dizzying roller coaster of ups and downs for construction material prices that have plagued homebuilders and new-home buyers since the beginning of the pandemic.
The downward pressure in lumber prices has coincided with reports of?declining demand for newly built homes?as prices have continued to rise and mortgage rates have?snapped back ?from their historic lows of last year.?