OfflineRecent data shows that home values up nearly 8 percent annually nationwide, with some markets experiencing growth as high as 25%. Home price growth was expected, but few predicted the rapid run-up which has characterized much of the last year.
According to last year's Fannie Mae Housing Market Survey, consumers thought home prices would rise just two percent over the same 12-month period.
Consumers are expecting a similar increase between now and January 2015. The average expectation is that home values will increase 2.0 percent this year, down from 3.2 percent in December's survey.
For buyers, the downgrade may present an opportunity.
In January, 38% of those surveyed said now "would be a good time to sell", which is a five-percentage-point uptick from the month prior. Spikes like this suggest that U.S. homes sellers may be losing confidence in their ability to get top-dollar for their homes.
Data suggests otherwise, however.
The U.S. home inventory remains tight and constricted; and home supply is well below 6.0 months -- the line which separate a Buyer's Market from a seller's one.
Competition remains fierce for right-priced homes and, with mortgage rates down, home buyers are shopping with more purchasing power than during any time since late-October.
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Few Expect Mortgage Rates To Fall In 2014
Fannie Mae's monthly survey also shows U.S. households expecting higher mortgage rates into 2015. Just 5 percent of consumers believe mortgage rates will fall over the next 12 months.
Market momentum is working against that prediction.
Since peaking in late-December, U.S. mortgage rates have now dropped six consecutive weeks and have moved to a 3-month best. Home buyers have regained last quarter's lost purchasing power, and homeowners with existing mortgages are now able to refinance into lower rates.
Freddie Mac reports that the average 30-year conventional fixed rate mortgage rate is now 4.23% nationwide for borrowers willing to pay discount points. 15-year fixed rate mortgage rates now average 3.33%.
With mortgage rates dropping, the typical HARP refinance now saves a homeowner 26% annually, and homeowners with existing FHA loans now meet Net Tangible Savings requirements more easily.
Savings are big via the VA Streamline Refinance program, too.
Even better for shoppers is that, with the economy showing weakness through the winter months, mortgage rates could stay low until spring, at least. The economy is adding fewer jobs than expected and the Federal Reserve plans to keep its stimulus taper at-pace.
Snow cover and cold weather can't last forever, but their effects may be felt for months. Mortgage rates may not fall into the 3-percent-range from two years ago, but pricing should remain ultra-low for at least the next few weeks.dgreen
NAR: Existing-home sales drop in Jan. but prices continue to rise
WASHINGTON – Feb. 21, 2014 – Existing-home sales fell in January to the lowest level in a year-and-a-half, but ongoing inventory shortages continue to lift prices in much of the U.S., according to the National Association of Realtors® (NAR).
Total existing home sales – completed transactions that include single-family homes, town-homes, condominiums and co-ops – dropped 5.1 percent to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December – 5.1 percent below the 4.87 million-unit pace in January 2013.
Last month’s level of activity was the slowest since July 2012, when it stood at 4.59 million.
“Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception,” says NAR Chief Economist Lawrence Yun. “Some housing activity will be delayed until spring. At the same time, we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”
The median existing-home price for all housing types in January was $188,900, up 10.7 percent from January 2013. Distressed homes – foreclosures and short sales – accounted for 15 percent of January sales, compared with 14 percent in December and 24 percent in January 2013.
Eleven percent of January sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in January, while short sales were discounted 13 percent. Total housing inventory at the end of January rose 2.2 percent to 1.90 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, up from 4.6 months in December. Unsold inventory is 7.3 percent above a year ago, when there was a 4.4-month supply. A supply of 6.0 to 6.5 months represents a rough balance between buyers and sellers.
According to Freddie Mac, the national average commitment for a 30-year, conventional, fixed-rate mortgage slipped to 4.43 percent in January from 4.46 percent in December; the rate was 3.41 percent in January 2013.
NAR President Steve Brown said that in addition to disruptive weather, higher flood insurance rates are impacting the market in areas designated as flood zones, which account for roughly 8 to 9 percent of sales.
“Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” says Brown. “Since going into effect on Oct. 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring.”
Congress is considering legislation to halt new flood insurance rates so the Federal Emergency Management Agency (FEMA) can complete an affordability study and determine the full impact of the law.
The median time on market for all homes was 67 days in January, down from 72 days in December and 71 days on market in December 2013. Short sales were on the market for a median of 150 days in January, while foreclosures typically sold in 58 days and non-distressed homes took 66 days. Thirty-one percent of homes sold in January were on the market for less than a month.
First-time buyers accounted for 26 percent of purchases in January, down from 27 percent in December and 30 percent in January 2013. This is the lowest market share for first-time buyers since NAR began monthly measurement in October 2008; normally, they should be closer to 40 percent.
All-cash sales comprised 33 percent of transactions in January, up from 32 percent in December and 28 percent in January 2013. Individual investors, who account for many cash sales, purchased 20 percent of homes in January, compared with 21 percent in December and 19 percent in January 2013. Seven out of 10 investors paid cash in January.
Single-family home sales fell 5.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 4.30 million in December – 6.0 percent below the 4.31 million-unit pace in January 2013. The median existing single-family home price was $188,900 in January, up 10.4 percent from a year ago.
Existing condominium and co-op sales were unchanged at an annual rate of 570,000 units in January, and are 1.8 percent above a year ago. The median existing condo price was $188,700 in January, which is 13.0 percent above January 2013.
Regionally, existing-home sales in the Northeast declined 3.1 percent to an annual rate of 620,000 in January, and 3.1 percent below January 2013. The median price in the Northeast was $241,100, up 6.6 percent from a year ago.
Existing-home sales in the Midwest dropped 7.1 percent in January to a pace of 1.04 million, 8.8 percent below a year ago. The median price in the Midwest was $140,300, which is 7.6 percent higher than January 2013.
In the South, existing-home sales declined 3.5 percent to an annual level of 1.95 million in January, but they were 1.6 percent higher than January 2013. The median price in the South was $161,500, up 9.4 percent from a year ago.
Existing-home sales in the West dropped 7.3 percent to a pace of 1.01 million in January, and 13.7 percent below a year ago. Sales in the West are attenuated by tight inventory in many areas, pushing the median price to $273,500, up 14.6 percent from January 2013. jmcswain
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