April 6th, 2021 8:15 AM by Richard Sardella MLO.100007700/NMLS 233568
Real estate barometer readings after a challenging year
As we begin experiencing the 1-year anniversary of pandemic-mandated stay-at-home orders that halted both home-buying and home-selling activity, it's time to review how the housing market has changed over the past year. According to Redfin's Tim Ellis, median home-sale prices increased 17% year over year to $335,613, an all-time high, while asking prices of newly listed homes rose 14% year-over-year to $353,500 yet another all-time high.
It's not surprising that pending home sales were up 38% from the same period in 2020 and up 28% from the same period 2019, which was a more typical year for the housing market. With an extremely limited inventory, new listings of homes for sale were down 2% from the same period in 2020 and down 5% from the same period in 2019, while active listings (the number of homes listed for sale at any point during the period) fell 42% from the same period in 2020 to a new all-time low. "This is the largest decrease on record in this data, which goes back through 2016," says Ellis.
Nearly 60% of homes that went under contract had an accepted offer within the first two weeks on the market, which represents a new all-time high for this measure since as far back as Redfin's data for this measure goes (2012). And during the 7-day period ending March 28, 61% of homes sold in two weeks or less.
And yes. It's still a jungle out there, with 41% of homes selling for more than their list price, an all-time high and 16 percentage points higher than the same period a year earlier, according to Ellis. "The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.4%, an all-time high and 2 percentage points higher than a year earlier," he adds.
Ellis quotes Redfin's Chief Economist Daryl Fairweather, who says, "Some homebuyers have reached their limit on bidding wars and soaring prices. Add to the mix a dwindling number of homes for sale and rising mortgage rates, and the typical family that is still searching for an affordable house may have missed the boat." She adds, "First-time homebuyers who were already stretching their budgets will have to make bigger compromises on size and location or resign to renting for another year. However, those who are flexible should look to the condo market where there's still a bit less competition."
Fairweather looks to the future, saying that the new administration's infrastructure plan evidently aims to incentivize zoning for multifamily homes, which could increase the supply of affordable homes and provide even more people a path to homeownership, but there is no guarantee the incentives would be enough for local governments to change their zoning practices.
Source: Redfin | TBWS
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 trending sideways this morning. Last week the MBS market worsened by -13 bps. This causes rates to mostly move sideways for the week. We saw moderate to high volatility through most of the week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Services, and 3) Inflation.
1) The Fed: We will hear from several key members of the Federal Reserve, including Powell this week. We will also hear from Ex Chair and Current Treas Sec Yellen. The bond market will be very sensitive to commentary related to inflation and rates. Here is this week's schedule:
2) Services: We saw a huge jump in jobs last Friday in the Services sector. Monday's ISM Services PMI will get a lot of attention from traders as this represents 2/3 of our economy.
3) Inflation: Friday's Producer Price Index (PPI) has been steadily growing but has yet to spill over into the Consumer Prices. However, that cannot last, and it's expected that the YOY Core number could reach a very hot 2.7%.
This Week's Potential Volatility: Average
Rate markets are trading sideways today on moderate volatility. We don't expect a lot of movement in rates this week. Rate markets will be paying close attention to the PPI reading along with Yell's and Powell's comments this week.
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.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
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.