Weekly Report

Keeping you updated on the market!

For the week of

November 15, 2021

MARKET RECAP

Home Selling Sentiment at Record High

Consumer attitudes toward both buying and selling improved in October, although the number who feel it is a good time to buy a home remains at record lows. The increases helped Fannie Mae's Home Purchase Sentiment Index (HPSI) eke out a 1-point gain from its September level, rising to 75.5. This is 6.2 points lower than the index in October 2020.

The HPSI, is based on a subset of questions from Fannie Mae's National Housing Survey (NHS). The question regarding whether or not it is a good time to buy a home received positive responses from 30 percent of those surveyed for a net positive of -35 percent. This is 3 percentage points higher than in the September survey, but 60 points lower than a year ago.

Asked the same question about selling a home, 77 percent said it was a good time, a 60 percent net. This is 5 points higher than the prior month and 36 points higher than in October 2020.

Two other of the six questions included in the Index were up as well. Thirty-nine percent of respondents expect home prices will continue to rise, a net of 17 percent and a 4-point change in a month. That component is 3 points lower on an annual basis.

The net positive number of persons who reported they are not concerned about losing their job in the next 12 months also increased. The net of 69 percent is 4 points higher than in September and 11 points higher year-over-year.

The number of consumers who expect a reduction in mortgage rates continues to shrink. In October only 5.0 percent expected any rate relief while 55 percent expect rates to rise, and 33 percent think they will be unchanged. This left a net positive of -50 percent, 7 points lower than last month and 29 fewer points than a year ago.

The last component, change in household income, was also down. A net of 11 percent of respondents said their household income had increased over the last year, down 3 from September but up 8 points year-over-year.

"The HPSI remained relatively flat this month, staying within the general bounds it began to set in June 2020 - following the initial shock of the pandemic to the index," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "While homebuying and home-selling sentiment remain at historically low and high levels, respectively, more consumers now expect that their personal financial situation will not improve over the next 12 months. This is particularly true among surveyed homeowners and older age groups."

Duncan continued: "In October, consumers also reported greater concern about the direction of the economy, with 'right track' sentiment reaching its lowest level since October 2013. We believe the uptick in negative economic sentiment is likely a function of ongoing supply chain disruptions and inflation concerns. However, while economic uncertainty could potentially dampen mortgage demand over the longer term, we believe current market conditions remain conducive to home purchase activity, as demand for homes continues to far outstrip the supply available for sale."

The National Housing Survey from which the HPSI is constructed, is conducted monthly by telephone among 1,000 consumers, both homeowners and renters. In addition to the six questions that are the framework of the index, respondents are asked questions about the economy, personal finances, attitudes about getting a mortgage, and questions to track attitudinal shifts.

Source: Mortgage News Daily | Jann Swanson

Looking Ahead: Upcoming Key Market Dates

Tuesday, November 16, 2021NAHB Home Builders’ IndexWednesday, November 17, 2021Housing Starts (SAAR)

Mortgage Rates Fall—but Prices are Rising

Home buyers are seeing a break from rising mortgage rates as the bond market finds its equilibrium, but that doesn’t mean most Americans will save money when they purchase property.

“Despite the re-acceleration of economic growth, the recent bond rally drove mortgage rates down for the second consecutive week,” Freddie Mac chief economist Sam Khater said in the report. “These low mortgage rates, combined with the tailwind of first-time homebuyers entering the market, means that purchase demand will remain strong into next year.”

But as Khater cautioned, affordability concerns remain for home buyers. And that has everything to do with rising home prices.

The median sale price for single-family existing homes increased during the third quarter in 99% of the nearly 200 markets that the National Association of Realtors tracks through its quarterly Metropolitan Median Area Prices and Affordability Index. And in 78% of markets, home prices rose by double digits, percentagewise.

“For the third quarter—and for 2021 as a whole—home affordability declined for many potential buyers,” Lawrence Yun, chief economist for National Association of Realtors, said in the report. “While the higher prices made it extremely difficult for typical families to afford a home, in some cases the historically-low mortgage rates helped offset the asking price.”

However, Yun, like many other real-estate economists, expects mortgage rates will rise in the coming months and beyond. Higher rates, combined with a potential increase in the number of homes on the market, should slow the pace of home-price growth, he suggested.

Source: Realtor.com? | Jacob Passy