Category: Residential

Housing Market Update: One-Third of Homes Find Buyers Within a Week

This represents an uptick in the share of homes selling quickly, which is unexpected for this time of year. New listings fell 8% and sellers backed off from their record-high asking prices.

The share of homes selling within one or two weeks is on the rise during a time of year that typically sees the market slow down. A third of pending sales were under contract within a week, up 2.2 points from a month earlier. During the same period in 2019, this measure fell 0.4 points. The hot market is largely fueled by the ongoing crisis-level supply shortage. Over the past six weeks, active listings of homes for sale have dropped 5.9%, compared to a decline of just 1.6% over the same period in 2019.

“During the pandemic, a lot of my sellers were trying to get out of Seattle and take their equity to a lower priced market,” said Redfin listing agent David Palmer. “Most sellers who are on the market now are very motivated to move: landlords with vacant homes, families who already upgraded and need to sell their previous homes, couples splitting up. As homebuying demand declines into the fall, I’m only encouraging people who have urgency to sell now. Otherwise, I’m advising them to wait until the new year.”

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    Homebuilders growing very concerned about affordability

    Still, builder confidence increased for second month in a row

    Homebuilder confidence continued to rise in October despite increasing affordability issues due to rising material prices and ongoing shortages, according to the latest National Association of Home Builders (NAHB) and Wells Fargo Housing Market Index (HMI) report released on Monday.

    The report is based on a monthly survey of NAHB members, in which respondents are asked to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. Scores for each component of the survey are then used to calculate an index where any number over 50 indicates that more homebuilders view conditions as good than poor.

    Sentiment among homebuilders for newly build single-family homes rose four points in October to 80, the index’s highest reading since July 2021. Confidence among homebuilders began to steady in September, as the index rose one point after a three-month decline. While this October reading is positive, it is still 10 points lower than the index’s all-time high set in November 2020.

    NAHB attributes this increase to strong consumer demand for homes. As housing inventory remains low and buyers are continuing to face strong competition with one-third of homes going under contract within a week, many are becoming discouraged and have started looking for alternative options.

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      Housing Market Update: Homebuyers’ Average Monthly Mortgage Payment Rose $50 in the Last 6 Weeks

      Mortgage rates rose above 3% for the first time since June and asking prices set a record high, but homebuyers aren’t slowing down.

      The average homebuyer’s monthly mortgage payment rose $50 over the last six weeks as sellers’ median asking price increased 12% year over year to a new record-high and mortgage rates surpassed 3%. Despite rapidly declining affordability, many homes are still selling very quickly—nearly half find a buyer within 2 weeks. Although homes are still selling for about 1% above asking price on average, the share of listings with price drops is increasing, suggesting that price increases may be easing just slightly.

      Mortgage rates and asking prices are both on the rise, which translates to higher housing costs,” said Redfin Chief Economist Daryl Fairweather. “For now, mortgage rates are still hovering near 3% and demand remains strong. However, we are likely to see rates tick up into the winter months, and that could slow demand just like it did in late 2018. As that happens, sellers will have a harder time getting buyers to bite on their sky-high asking prices.”

      Key housing market takeaways for 400+ U.S. metro areas:

      Unless otherwise noted, the data in this report covers the four-week period ending October 3. Redfin’s housing market data goes back through 2012. Except where indicated otherwise, the housing market is generally experiencing seasonal cooling trends, similar to what was seen during this same period in 2019.

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        Share of Mortgage Loans in Forbearance Decreases to 2.62 Percent

        CONTACT
        Adam DeSanctis
        [email protected]
        (202) 557-2727

        WASHINGTON, D.C. (October 11, 2021) – The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 27 basis points from 2.89% of servicers’ portfolio volume in the prior week to 2.62% as of October 3, 2021. According to MBA’s estimate, 1.3 million homeowners are in forbearance plans.

        The share of Fannie Mae and Freddie Mac loans in forbearance decreased 17 basis points to 1.21%. Ginnie Mae loans in forbearance decreased 41 basis points to 2.94%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 35 basis points to 6.42%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 37 basis points relative to the prior week to 2.82%, and the percentage of loans in forbearance for depository servicers decreased 24 basis points to 2.69%.

        “Many borrowers reached the expiration of their forbearance term as we entered October. The pace of exits climbed to the fastest pace in over a year, and the share of loans in forbearance declined at the fastest rate since last October, dropping by 27 basis points. The decline was the largest for Ginnie Mae and portfolio/PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Payment performance has remained steady for those who have exited forbearance into a workout since 2020, with more than 85% of those borrowers current as of October. It also continues to be striking that so many homeowners in forbearance have continued to make their payments. Almost 16 percent of borrowers in forbearance as of October 3rd were current.”

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          BLACK KNIGHT’S FIRST LOOK AT AUGUST 2021 MORTGAGE DATA

          With Moratoria Lifted, Foreclosure Starts Edge Higher, But Still 80% Below Pre-Pandemic Levels; Delinquency Rate Falls to 4% For First Time Since Early 2020

          • The national delinquency rate on first lien mortgages fell to 4.00% in August, the lowest it’s been since pandemic-related impacts caused mortgage delinquencies to spike in early 2020
          • Serious delinquencies – including those in active forbearance – fell by 108,000 from July and, though down by more than 1 million from last August, are still roughly 930,000 above pre-pandemic levels
          • August’s 7,100 foreclosure starts represented the largest such volume in eight months after foreclosure moratoria on federally backed loans were lifted at the end of July
          • Despite the increase – which was driven primarily by restarting the process on loans that had been in foreclosure prior to the moratoria – start volumes remain 80% below August 2019 levels
          • Though the number of loans in active foreclosure saw the first monthly rise of 2021 (+2,000), volumes remain near record lows and are still down 44% (-97,000) from pre-pandemic levels
          • Prepayment activity rose by nearly 9% in the month with interest rates – which have held below 3% in recent months – continuing to spur both refinance and purchase activity

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            Existing home sales fall 2% as first-time buyers are priced out

            The median price of an existing home sold in August was $356,700, an increase of 14.9% from August of 2020.

            Sales of previously owned homes declined 2% in August from July to a seasonally adjusted annualized rate of 5.88 million units, according to the National Association of Realtors.

            Sales were 1.5% lower than August 2020 for the first annual decline in 14 months. Sales, however, are still above pre-pandemic levels.

            These numbers are a count of home closings and are based on contracts likely signed in June and July.

            “The housing sector is clearly settling down,” said Lawrence Yun, chief economist for the Realtors, who called last year’s super surge “an anomaly.”

            The supply of homes for sale fell 1.5% month to month to 1.29 million at the end of August. Compared with August 2020, inventory is down 13%, but that comparison has been steadily shrinking for several months. At the current sales pace there was a 2.6-month supply.

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              Housing Market Update: Median Home Price Up 16% From 2020

              Homebuying demand has softened somewhat and the share of home sellers dropping their price each week rose to 5.1%, but pending sales are still 10% above this time last year.

              Although the share of home sellers dropping their asking price each week continues to increase, so does the median home sale price, which was up 16% from a year ago. Pending sales are declining seasonally but are still up 10% from a year ago. Overall homebuying demand is still very strong. The market frenzy of 2021 has cooled somewhat, but home sellers are still very much in the driver’s seat in the housing market today.

              “Demand for homes is making a comeback because even though home prices are high and competition is still steep, homebuyers don’t have many alternatives but to keep trying,” said Redfin Chief Economist Daryl Fairweather. “This continued demand for homes is enticing more homeowners to sell in order to avoid the fear of missing out on historically high prices. This enthusiasm from both buyers and sellers is translating into continued growth in pending sales compared to last year.”

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                Homebuyers sign fewer contracts in July, as high prices chill the summer market

                Pending home sales dropped 1.8% in July from June.

                Signed contracts to purchase previously owned homes fell 1.8% in July from June, according to the National Association of Realtors.

                Sky-high home prices have caused affordability to drop dramatically in the last several months. The median price of an existing home was up 18% in July, according to the Realtors. Much of that was due to the fact that there was far more activity on the higher end of the market, which skewed that median higher.

                Pending sales are a forward-looking indicator of sales that close in one to two months.

                “The market may be starting to cool slightly, but at the moment there is not enough supply to match the demand from would-be buyers,” Realtors chief economist Lawrence Yun said in a release. “That said, inventory is slowly increasing and home shoppers should begin to see more options in the coming months.”

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                  Housing Market Update: 5% of Home Sellers Dropped Their Price in Recent Weeks

                  As demand eases and sellers adjust their price expectations, the housing market is slowly aligning to typical seasonal patterns.

                  The average share of homes with price drops each week is rapidly climbing during a time of year when it is usually relatively flat. This measure has now passed 5%—its highest level since the four-week period ending October 10, 2019.

                  That said, home prices are still rising and homes are selling very quickly, just slightly slower than before. Homebuying demand remains strong and the market is tipped heavily in sellers’ favor. However, home sellers can still overprice their homes, and those that do are quickly getting the memo—a week or two on the market without any bids—and adjusting their asking prices accordingly.

                  “The housing market is less hectic than it was in early spring, but it’s still far from typical. The move to a less imbalanced market is happening slowly,” said Redfin Chief Economist Daryl Fairweather. “As we approach the beginning of back-to-school season, home prices typically cool, supply winds down, and homes take longer to sell. All that’s happening, just very slowly. I don’t think the housing market will return to a fully typical state anytime soon, but we are starting to trend in that direction.”

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                    Housing Market Update: Pending Sales Dip, Price Drops Becoming More Common

                    Over 4% of homes for sale had price drops, and pending sales are down more than 10% from their 2021 peak.

                    The average weekly share of homes for sale with a price drop passed 4% for the first time since September, another signal that the hyper-competitive housing market is cooling. Other indicators corroborate the slowdown: the share of homes sold over list price, the share of homes sold within a week and median days on market are all also either cooling off or plateauing.

                    Pending sales were up 11% from a year ago, but down 11% from the 2021 peak, and asking prices have been relatively flat since late May. Even amid this shift, sellers remain in the driver’s seat, as home prices continued to rise more than 20% from a year ago and the number of homes for sale sits 30% below the same time last year.

                    Looking ahead, some indicators of early-stage homebuyer interest like tour activity, mortgage purchase applications and requests for service from Redfin agents have shown signs of picking back up. It’s too early to call it a trend, but we’ll continue to track whether this continues and leads to sales and competition heating back up.

                    Unless otherwise noted, the data in this report covers the four-week period ending July 11. Redfin’s housing market data goes back through 2012.

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