May 25 2023

The number of contracts to purchase pre-owned homes was unchanged in April. The National Association of Realtors® (NAR) said its Pending Home Sales Index (PHSI), a forward-looking indicator of existing home sales, remained at the March level of 78.9. The index had seen some improvement over the first three months of the year but is now down 20.3 percent on an annual basis. [pendinghomesdata] NAR Chief Economist Lawrence Yun attributed the lackluster sales during what is usually residential real estate’s most active season is due in part to ongoing inventory restraints. He added, “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving. ” While three of the four major regions saw an uptick in new sales contracts, those changes were negated by a sizeable decline in the fourth. The PHSI in the Northeast fell 11.3 percent from March to 59.1 and was 21.8 percent lower than the prior April. The Midwest’s index improved 3.6 percent to 78.4 which was down 21.4 percent on an annual basis.   Pending sales in the South rose 0.1 percent to 99.6 in April while sinking by 16.7 percent year-over-year. A 4.7 percent increase in the West took that PHSI to 62.2, a 26.0 percent decline from April 2022. The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes which are usually finalized within one or two months.  The PHSI was benchmarked at 100 in 2001, a number equal to the average level of contract activity during that year.

May 24 2023

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 4.6 percent on a seasonally adjusted basis during the week ended May 19 and was 5 percent lower than the previous week on an unadjusted basis. It was the second consecutive weekly decline. The Refinance Index was down 5 percent and was 44 percent lower than the same week one year ago. The refinance share of applications was unchanged at 27.4 percent.   [refiappschart] The seasonally adjusted Purchase Index fell 4 percent . The unadjusted version was 5 percent lower week-over-week and 30 percent lower on an annual basis. [purchaseappschart] “ Mortgage applications declined almost five percent last week as borrowers remained sensitive to higher rates . The 30-year fixed rate increased to 6.69 percent, the highest level since March,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications. Refinance activity remains limited, with the refinance index falling to its lowest level in two months and more than 40 percent below last year’s pace.”  Kan added, “Investors remained attuned to the uncertainty around the U.S. debt ceiling and communication from several Federal Reserve officials last week, which sent Treasury yields higher, along with mortgage rates. Economic data released over the past week have also pointed to a still-resilient economy. The housing market received positive data on new residential construction – which is seen as a key solution to the lack of housing inventory.”

May 18 2023

Existing home sales account for the lion's share of all home sales in the U.S.  Unlike "New Home Sales," this data series tracks previously sold homes.   The massive rate spike in 2022 (and possibly the compounding of affordability issues due to excessive price growth) caused a sharp drop to long term lows by the end of that year.  A nice, little bounce ensued to start 2023, but it's increasingly proving to be short-lived. The sales outlook is challenging due to an obscene lack of inventory.  It may be slightly positive in year-over-year terms (blue line in the chart below from Calculated Risk), but  still near super long term lows in outright terms (red line). Tight inventory is keeping prices higher.  Combine that with stubbornly high rates and it's easy to blame "affordability" as one of the key reasons for the sales staying low. Other highlights from today's data: Median prices are down 1.7% from last year (388k vs 395.5k) Average days on market = 22 down from 29 First time buyers = 29% of market, up from 28% All-Cash buyers 28% up from 27% Investor share steady at 17%