CHM Blog

Real Estate Market Insider May 23, 2022

May 23rd, 2022 12:00 PM by Richard Sardella MLO.100007700/NMLS 233568


Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Neutral

Higher

High
(by Sigma Research)
Real Estate Report

Existing Home Sales show continued surge in prices:

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slid 2.4% from March to a seasonally adjusted annual rate of 5.61 million in April. Year-over-year, sales dropped 5.9% (5.96 million in April 2021)

Part of the reason for the small slide in sales is that there is simply no inventory available to purchase. Total housing inventory at the end of April amounted to 1,030,000 units, up 10.8% from March and down 10.4% from one year ago (1.15 million). Unsold inventory sits at a 2.2-month supply at the current sales pace, up from 1.9 months in March and down from 2.3 months in April 2021.

The median existing-home price for all housing types in April was $391,200, up 14.8% from April 2021 ($340,700), as prices increased in each region. This marks 122 consecutive months of year-over-year increases, the longest-running streak on record.

Properties typically remained on the market for 17 days in April, equal to both the number of days in March 2022 and in April 2021. Eighty-eight percent of homes sold in April 2022 were on the market for less than a month.

First-time buyers were responsible for 28% of sales in April, down from 30% in March and from 31% in April 2021. NAR's 2021 Profile of Home Buyers and Sellers – released in late 20214 – reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 26% of transactions in April, down from 28% in March and up from the 25% recorded in April 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in April, down from 18% in March and equal to 17% in April 2021.

Distressed sales – foreclosures and short sales – represented less than 1% of sales in April, equal to the percentage seen in March and down from 2% in April 2021.

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +26 bps last week. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Davos and 3) The Fed.

1) Inflation: We get the Fed's key measure of inflation (Core PCE) on Friday. Both PPI and CPI were extremely high last time around but were just off of their YOY pace causing investors to trade on the "inflationary peak" theory. The higher this data set is on Friday, the worse it will be for rates, the lower it is, the better it will be for rates.

2) Davos: This week we have the World Economic Forum in Davos, Switzerland. The bond market will be sensitive to comments/speeches/white papers on inflation, economics etc.

3) The Fed: Taking center stage on Wednesday will be the release of the Minutes from the last FOMC meeting where they announced a 50BPS rate hike as well as a June 1 start to their "QT" program.

Treasury Sales: We have a series of shorter term note auctions this week.

05/24 2 year note

05/25 5 year note

05/26 7 year note

This Week's Potential Volatility: High

This morning markets are mostly treading water. Volatility is low to start but will likely spike later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on May 23rd, 2022 12:00 PM

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