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Home equity gains slowed in Q3. Are prices stabilizing? https://ift.tt/hdsNMgb U.S. mortgage holders experienced a home equity increase in the third quarter of 2024 — up 2.5% year over year to a total of $17.5 trillion nationwide. But that was down from 8% growth in the second quarter, and negative equity also ramped up for the first time in two years, according to a CoreLogic report. CoreLogic’s Q3 2024 Homeowner Equity Insights report showed that the total number of mortgaged homes with negative equity rose by 3.5% from the second quarter. About 990,000 homes — or 1.8% of all U.S. properties — were considered “underwater” in Q3 2024, meaning their outstanding mortgage balance was more the value of the home. But CoreLogic noted that negative equity actually declined by 3% from Q3 2023. The national aggregate value of negative equity was $324 billion at the end of the third quarter. That’s up $4.3 billion from Q2 2024 and $9.1 billion higher than in Q3 2023. Conversely, positive homeowner equity increased by $425 billion since Q3 2023. What’s causing the growth in negative equity? CoreLogic cites fluctuating home prices as a driving factor. Home-price declines — which are typically a good thing for buyers — could hurt some current mortgage holders. Borrowers with positions near the break-even equity point were more likely to move into negative status as prices fell, according to CoreLogic. CoreLogic chief economist Selma Hepp also highlighted natural disasters as another factor behind the losses in equity. “As home prices flattened in the third quarter, home equity gains also slowed, even declined in some regions of the country,” Hepp said. “While home equity closely depends on home price changes, equity losses are also tied to natural disaster events since households can lose a lot of their equity following a catastrophe, particularly if not property insured.” Three states — Hawaii, Colorado and Idaho — saw significant home equity declines in Q3 2024. Hawaii saw the biggest decreases with an average loss of $34,000 per homeowner. Colorado and Idaho followed with average losses of $17,000 and $13,000, respectively. CoreLogic attributes the Aloha State’s equity decline to a catastrophic wildfire in 2023. “Following Maui’s 2023 devastating wildfire, Hawaii now tops the list with largest decline in home equity. Nevertheless, Hawaiian homeowners still rank high for homeowner equity, with equity averaging $700,000,” the report notes. Other states saw equity growth due to soaring home prices. Northeastern states saw the strongest equity gains and home-price growth. New Jersey (+8.1%) and Rhode Island (+7.5%) led the charge for home-price growth during the year ending in Q3 2024. New Jersey (+$43,000), Rhode Island (+$43,000) and New York (+$37,000) had the largest annual equity increases. On average, U.S. homeowners with mortgages gained $5,700 in equity compared to Q3 2023 — well below the annual gain of $25,400 seen in the...

As the lock-in effect eases, the market for new homes is shrinking https://ift.tt/zMFuKRk As high mortgage rates reshape the housing market, existing homes are making up a larger percentage of for-sale inventory, and homebuyers are taking notice. In the third quarter of 2024, newly built single-family homes made up just 28% of homes for sale, according to a recent Redfin report based on data from the National Association of Realtors (NAR) and the U.S. Census Bureau. This marked the lowest market share for new homes in three years. One year ago, new homes held a 30.5% market share, while first-quarter 2022 saw a record high of 34.4%. So, what’s driving the recent decline? An overdue shift in homeowner attitudes about selling their homes is a major factor, Redfin reported. The available inventory of existing homes rose by 22% year over year in Q3 2034. Recently, the “lock-in effect” has kept homeowners with historically low-rate mortgages from selling, but this effect is easing. Nearly 93% of homeowners with mortgages had rates below 6% in mid-2022, but that share dropped by roughly 4 percentage points at the start of the year, according to Redfin. This indicates that buyers and sellers alike are showing signs of frustration in waiting for rates to fall. NAR data shows that the annualized rate of existing-home sales dropped 1% from August to September, landing at 3.84 million units. The sales pace was down 3.5% year over year. But even with these declines, the outlook is becoming brighter. “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” NAR chief economist Lawrence Yun said in a statement. New construction inventory has grown in recent months. Homebuilders have ramped up incentives — like mortgage rate buydowns and cash rebates — to boost sales, and new-home sales rose 6.3% year over year in September. But the increase in sales means that inventory levels will start to decline as fewer new homes are being built. “Homebuilders have backed off since the pandemic-driven building boom, with high mortgage rates dampening demand; they’re focused on selling the new homes they have on the books rather than constructing new ones,” Redfin noted in the report. Builders permits for single-family homes declined by 2% year over year in September and are down 23% from their post-pandemic peak in 2021, when permits reached a 15-year high. New homes, however, still occupy a larger market share compared to pre-pandemic levels, with inventory rising from 17% of all listings in 2019 to nearly 30% in Q4 2021. As permits continue to decline, Redfin predicts that the new-home share of the market will fall further, leaving the door open for existing-home sales to take center stage in the market. via HousingWire...

How HousingWire’s 2025 market forecast compares to others https://ift.tt/GtQF1uX The 2024 housing market is shaping out to be one of the slowest in recent memory, but what can the industry expect in 2025? HousingWire Lead Analyst Logan Mohtashami and Altos Research Founder Mike Simonsen have compiled a comprehensive forecast for the 2025 housing market. The report offers hope that next year will be better than the last, but only to an extent. The pair project 4.2 million in existing home sales in 2025. This is a 5% increase over 2024, which is on pace for 4 million transactions, a number that would represent the fewest home sales since the housing bubble burst in 2008. For comparison, annual home sales over the last two decades have averaged 5.15 million, and sales topped out at 7 million in 2005. Mortgage rates are a tricky variable in any forecast, particularly at this moment when the Federal Reserve may be slowing its roll on future interest rate cuts. HousingWire assumes mortgage rates will stay in a range between 5.75% and 7.25%. With this assumption — in addition to ongoing affordability issues and low inventory — HousingWire’s analysts foresee home-price appreciation of 3.5%, less than the 5% growth seen in typical years. This forecast is higher than the average for the industry. A shortage of homes for sale has been a prime impediment to the 2024 housing market, but HousingWire expects 13% growth in inventory, with a peak in October of 800,000 before finishing the year at 720,000. This growth is in line with upward trends in inventory that began in 2022, when available homes for sale tanked to roughly 250,000. HousingWire isn’t the only organization that’s made a housing market forecast for 2025. HousingWire’s 2025 forecast of 3.5% home-price growth is at the higher end among the 13 examined, which averaged 2.6% growth. National Association of Realtors (NAR) Chief Economist Lawrence Yun projects a 2% rise in home prices in both 2025 and 2026. Fannie Mae expects its home price index to rise by 3%. The range for projections for home sales is a little tighter than for home prices. HousingWire’s expectation of 4.2 million existing home sales is in line with Goldman Sachs (4.2 million) and the Mortgage Bankers Association (4.3 million). NAR is at the top of the range of other forecasts with a projection of 4.9 million sales. via HousingWire https://ift.tt/hpbBCr2 November 20, 2024 at 04:00AM

Consumers think mortgage rates will improve, but they’re still pessimistic about buying https://ift.tt/EMeBxY8 Consumers are optimistic that mortgage rates and home prices will decline, but most are still pessimistic about buying homes. Fannie Mae’s home purchase sentiment index (HPSI) — which tracks the housing market and consumer confidence to sell or buy a home — rose 0.6 points to 72 in August. The full index is up 5.2 points year over year. In August, a survey-high 39% of consumers said they expect mortgage rates to decline in the next 12 months, up from 29% in July. And about 25% of consumers indicated they expect home prices to decrease over the next 12 months, up from 21% in July.  Despite the improved affordability outlook, consumer perception of homebuying conditions remained unchanged. A total of 17% of survey respondents said it’s a good time to buy.  “On a national level, housing sentiment was largely unchanged in August despite some positive developments for affordability, including a meaningful decline in actual mortgage rates and an uptick in home listings in certain markets, particularly in the Sunbelt,” Mark Palim, Fannie Mae’s vice president and deputy chief economist, said in a statement. Palim noted that 56% of survey respondents from the South indicated that it’s a “good time to sell,“ a decrease of 5 percentage points from July. This represented a strong divergence from the sense of home selling conditions in the Northeast (80%), Midwest (70%) and West (66%), where readings moved higher in August.  “This likely reflects in part the wide geographic variation in new home construction activity,” Palim said. “In the regions that had a stronger construction response following the pandemic, our latest survey data suggest that sellers may be losing some of their negotiating power due to the increased supply.“ On a national level, both single-family and multifamily housing starts were down in July from a year ago.  Single-family starts were down 14.1% from June and down 14.8% year over year to a seasonally adjusted annual rate of 851,000 units, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). Multifamily starts came in at a rate of 363,000, up 11.7% from June, but down 21.8% year over year. via HousingWire https://ift.tt/dx6egX8 September 09, 2024 at 08:11AM

More Home Buyers Expect Rosier 2025 Housing Outlook December 12, 2024 Sellers, First-Time Homebuyers, Buyers Leading economists weigh in at NAR’s Real Estate Forecast Summit on what to expect for: home sales? mortgage rates? home prices? The housing market could open up more opportunities to home buyers in the new year and lead to a housing rebound after two years of sluggish sales, housing economists said on Thursday during the National Association of REALTORS®’ Real Estate Forecast Summit. During the virtual summit, NAR released its 2025 housing forecast, predicting stronger home sales (rebounding after hitting a 15-year low this summer), moderating but still increasing home prices, a greater number of homes coming up For Sale—both newly built and existing—as well as stabilizing mortgage rates. “Home buyers will have more success next year,” said Lawrence Yun, NAR’s chief economist. “The worst of the affordability challenges are over as more inventory, stable mortgage rates and continued job and incoming growth pave the way for more Americans to achieve homeownership.” NAR research shows that if mortgage rates fall to 6%—as NAR predicts they likely will in 2025—homeownership could be made more affordable to about 6.2 million more prospective buyers than when rates were near 7%. Already, some early signs are popping up that more home buyers are re-emerging: Sales activity picked up this fall as mortgage rates began to slightly ease from multi-decade highs that surpassed 7% to a drop in the mid to upper 6% ranges. “I’m optimistic about the spring of 2025—all the factors are lining up that we could really see increases … with the increase in inventory really being one to focus on,” said Michael Frantantoni, chief economist at the Mortgage Bankers Association. Snapshot of Housing Market Outlook for 2025 and Beyond Existing-Home Sales 2025: +7% to 12% 2026: +10% to 15% New Home Sales 2025: +11% 2026: +8% Median Home Price 2025: +2% ($410,700) 2026: +2% ($420,000) Mortgage Rates 2025: Near 6% 2026: Near 6% Job Gains 2025: Near 2 million 2026: Near 2 million More Listings, But Is It Enough? Housing inventories have been making sizable gains, with listings up about 20% annually in October. Economists predict that the upswing will continue in 2025 as more homeowners—who may have delayed selling—finally get more motivated, due to stabilizing mortgage rates and improving market conditions. “I’m most optimistic about the growing inventory,” said Danielle Hale, chief economist for realtor.com®. “That’s going to make the market better not just for buyers but also sellers—many of whom turn around and become buyers, too. Sellers will still be in a good position with home prices expected to go up but that improving market balance should help to facilitate more transactions … A housing market that is better balanced works bett ..full article: https://lnkd.in/gr5peSqy

Housing market info produced by various sources that was shared to us by Stessa, a Roofstock company: Redfin reports on pending home sales, which jumped 3.2% year-over-year, the largest increase since 2021, driven by a dip in mortgage rates in late September. However, rising mortgage rates, now averaging 6.32%, and increasing home prices are beginning to slow buyer demand, with home tours and mortgage-purchase applications flattening. New listings are also growing more slowly, up just 3.6% from last year. NMP reports on the above Redfin data, highlighting notable gains in home sales in California and Portland. However, rising prices and rates, now at 6.44%, are starting to cool demand. Redfin’s Homebuyer Demand Index dropped slightly from a recent high, and mortgage-purchase applications declined 7% week-over-week. Despite this, buyers are negotiating more aggressively to offset high rates, and sellers are increasingly willing to accept lower offers as they aim to close deals before the holiday season. ResiClub reports on different sales data, noting that despite an improvement in housing affordability over the past year, existing home sales remain relatively flat and could finish below 2023 levels. Morgan Stanley’s Jim Egan attributes this to the "lock-in effect," where homeowners with low pandemic-era mortgage rates are reluctant to sell or refinance. While affordability typically boosts home sales, Egan predicts only a modest 5% increase over the next year, as most borrowers still hold lower-rate loans. Zillow Research recently released a home sales forecast, predicting a modest 2% rise in home values for 2024. Further softening is expected as inventory builds and dampens price growth. Existing home sales are projected to increase gradually, reaching 4.4 million transactions in 2025, up from 4.1 million in 2023 and 2024. Lower mortgage rates and rising inventory are expected to drive this growth. ATTOM Data Solutions also released a home equity report, showing that home seller profit margins dropped slightly in the third quarter of 2024, with typical returns at 55.6%, down by one percentage point from the previous quarter and two points from the same period last year. Despite this dip, profits remain historically high, with the median raw profit holding steady at just under $130,000. The national median home price leveled off at around $360,000, contributing to the gradual margin decline since peaking at 64% in 2022. Sources referenced.

Housing market info produced by various sources that was shared to us by Stessa, a Roofstock company: Redfin reports on pending home sales, which jumped 3.2% year-over-year, the largest increase since 2021, driven by a dip in mortgage rates in late September. However, rising mortgage rates, now averaging 6.32%, and increasing home prices are beginning to slow buyer demand, with home tours and mortgage-purchase applications flattening. New listings are also growing more slowly, up just 3.6% from last year. NMP reports on the above Redfin data, highlighting notable gains in home sales in California and Portland. However, rising prices and rates, now at 6.44%, are starting to cool demand. Redfin’s Homebuyer Demand Index dropped slightly from a recent high, and mortgage-purchase applications declined 7% week-over-week. Despite this, buyers are negotiating more aggressively to offset high rates, and sellers are increasingly willing to accept lower offers as they aim to close deals before the holiday season. ResiClub reports on different sales data, noting that despite an improvement in housing affordability over the past year, existing home sales remain relatively flat and could finish below 2023 levels. Morgan Stanley’s Jim Egan attributes this to the "lock-in effect," where homeowners with low pandemic-era mortgage rates are reluctant to sell or refinance. While affordability typically boosts home sales, Egan predicts only a modest 5% increase over the next year, as most borrowers still hold lower-rate loans. Zillow Research recently released a home sales forecast, predicting a modest 2% rise in home values for 2024. Further softening is expected as inventory builds and dampens price growth. Existing home sales are projected to increase gradually, reaching 4.4 million transactions in 2025, up from 4.1 million in 2023 and 2024. Lower mortgage rates and rising inventory are expected to drive this growth. ATTOM Data Solutions also released a home equity report, showing that home seller profit margins dropped slightly in the third quarter of 2024, with typical returns at 55.6%, down by one percentage point from the previous quarter and two points from the same period last year. Despite this dip, profits remain historically high, with the median raw profit holding steady at just under $130,000. The national median home price leveled off at around $360,000, contributing to the gradual margin decline since peaking at 64% in 2022. Sources referenced.

Home affordability hasn't improved as much as anticipated so far this year — a huge letdown for buyers hoping to secure a place of their own. Buying a home was a historic challenge last year because of sky-high listing values and the highest mortgage rates since the turn of the century. In fact, the third quarter of 2023 was the least affordable market in nearly 40 years, according to the National Association of Realtors. Heading into 2024, the consensus among real-estate mavens is that affordability will get substantially better, largely due to declining mortgage rates. Lower inflation would allow the Federal Reserve to cut interest rates at least a half-dozen times throughout the year, the thinking went, which would bring down homebuyers' borrowing costs as well. Instead, an unexpectedly strong economy has helped keep inflation afloat, making rate cuts less likely. In turn, mortgage rates are now headed in the wrong direction, steadily rising from 6.6% late last year to nearly 6.9% as of mid-April. All else equal, higher borrowing costs should translate to lower property prices because of lower demand from buyers. However, the long-standing housing supply shortage has kept prices from falling, forcing buyers in most markets to either pay up and refinance later or hold out for a better deal. Neither option is ideal, as those who continue to rent are giving landlords even more leverage. Home prices rose from the prior year in 87 of the 104 largest US real-estate markets in February, according to data from real-estate site Point2 shared with Business Insider in mid-April. Only a dozen real-estate markets fitting that description saw property prices fall by more than 1%. Even more startling for buyers is that prices rose by at least 10% in 27 markets, led by Jersey City, New Jersey's 26.5% gain. The firm's researchers noted that property values in the New York-adjacent city have doubled in less than seven years — the ninth-fastest rate in the nation. Significant price gains were noticeable from the Northeast to the Southwest and every region in between, though the most expensive markets were almost exclusively in the West. Thirteen of the 14 priciest markets were west of the Rocky Mountains, and seven of the eight costliest cities were in California. Unsurprisingly, Manhattan, New York, was the exception. Below are the 27 US real-estate markets where property prices have risen by at least 10% in the last year, according to Point2 data, along with each market's year-over-year price growth and price difference, as well as the median home prices for February 2024 and 2023.

Mortgage Rate Optimism is at a 30-Month High – So Why Aren't Homes Selling? Consumer optimism that mortgage rates will fall over the next year has pushed housing confidence to a 30-month high, according to Fannie Mae. The latest Fannie Mae Home Purchase Sentiment Index (HPSI) rose 1.8 points in September to 73.9, its highest level since 2021. Yet, despite this renewed confidence, the increase in positivity has yet to translate into a significant rise in home sales. A record 42% of survey respondents believe mortgage rates will decline over the next 12 months, up from 39% in August and 24% in June. Meanwhile, 31% expect rates to remain unchanged, and 27% think they will increase. This growing optimism about rate cuts is helping to boost overall housing sentiment. "Although most consumers continue to think it's a 'bad time' to buy a home, the recent shift in attitude toward mortgage rates is pushing overall housing sentiment higher, and a growing share are now pointing to high home prices rather than high mortgage rates as the primary sticking point for affordability," Fannie Mae chief economist Mark Palim said in the report. Roughly 39% of respondents expect home prices to rise over the next year, which would dampen some of the affordability benefits from lower mortgage rates. That’s up from 37% in August. Those expecting prices to fall dropped from 25% to 23%, while 37% expect prices to remain the same. Although the HPSI spiked to a 30-month high, Palim said we've yet to see consumers' newfound rate optimism translate into a meaningful increase in home sales activity. “Instead, as we noted in our latest housing forecast, existing home sales are on pace to record their lowest annual total since 1995,” he added. “This signals to us that consumers are paying attention to the easing interest rate environment but still feel stymied by the considerable run-up in home prices over the last four years." Only 19% of respondents said it's a good time to buy a home, up 2% from the previous month but still near record lows. Meanwhile, 65% of consumers feel it's a good time to sell, which has remained unchanged since August. Housing sentiment among renters has also improved at a similar pace to that of homeowners. Over the last three months, the percentage of renters who believe it’s a good time to buy a home increased from 13% to 20%, while the share expecting mortgage rates to fall jumped from 16% to 30%. "While these numbers are still relatively low, we think the improvement may signal that some potential homebuyers who have been waiting for mortgage rates to come down may be closer to coming off the sidelines, despite their ongoing concerns about home prices," Palim noted. The HPSI report also touched on other key factors impacting consumer sentiment. Concern about job security remained relatively steady, with 22% of respondents worried about losing their job in the next 12 months, while 77% expressed no concerns.

2024 will soon be in the rearview mirror. It has been one of the toughest years for the housing market in recent memory; higher mortgage rates, resilient housing prices, and a continuing trend of low inventory have made affordability a real challenge for many consumers.    So, what’s in store for the real estate market in 2025?   Home Sales Home sales nationwide saw a 3% gain year-over-year in September, which is the lowest we’ve seen since 2010. Lawrence Yun, chief economist at the National Association of Realtors, suggests that “maybe the worst is over”. He also predicts that we will see existing home sales rise by 9% in 2025, and new home sales increase by 11%.   Price Appreciation CoreLogic, a major data resource for real estate, forecasts that home prices will appreciate by 2% nationwide in 2025. They also predict Denver, Miami, and Boston among the top markets for price increases next year. Goldman Sachs researchers forecast a 4.4% increase in home prices next year.   Mortgage Rates According to Freddie Mac, the average 30-year fixed rate mortgage has ranged from 6.08% to 7.44% over the last year, and Lawrence Yun says “rates should stabilize at the low end of that range for 2025”. Without an exact percentage, Bernard Markstein, chief economist at Markstein Advisors said that “rates will be lower than current levels…[which] will unleash some of the pent-up demand for housing in 2025”.   Overall, many experts are predicting that affordability will remain a challenge next year. However, if rates go lower than expected, or if we see a notable increase in inventory across new and existing homes, that would help stimulate more activity from buyers. Compared to other areas across the country, Colorado’s housing market has lower inventory and higher demand, so it’s likely that price appreciation may outpace the national average, especially in more urban areas.    What other factors could influence the housing market in 2025?    The job market always plays a major role in the real estate industry. The unemployment rate is currently sitting at 4.1%, and forecasts suggest unemployment rates to hover between 4.1% and 4.4% over 2025. However, Lawrence Yun predicts an increase of 2 million jobs next year; any improvement we see with the jobs market would be good for the housing market.   The ‘lock in effect’ is still a factor across the real estate industry; many would-be sellers are staying put with the lower mortgage rates they locked in over the pandemic. As rates decrease, this would soften the ‘lock in effect’, but there likely won’t be enough of a change to unlock any notable amounts of inventory. On the other hand, new home construction could add some needed housing and provide more opportunities for buyers struggling with affordability. New construction permits are forecasted to increase each quarter as we head into 2025, according to researchers at the National Association of Realtors.