Bidding Wars Reach Their Lowest Level This Year – According to a Redfin analysis, competition for homes on the market is lessening, which could provide an opening for home buyers who have been losing out amid this year’s bidding wars. In August, about 59% of offers on homes written by Redfin agents faced competition, which is a record low for this year and the lowest level since 2020. That’s down from a peak of 74% in April. There have been additional recent signs that the housing market is cooling somewhat: Contract signings in July dropped, mortgage applications for home purchases a gauge for future home buying has been easing, and more sellers are making price adjustments.
Source and link to the full article: “59% of Home Offers Written by Redfin Agents Faced Bidding Wars in August—the Lowest Level Since 2020,” Redfin (Sept. 13, 2021)
Building Material Costs Continue to Surge – Based on the Bureau of Labor Statistics Producer Price Index, a recent decline in lumber prices is helping to mitigate building costs, but that effect is being offset by numerous increases in other building materials that are surpassing records. Home building materials have climbed by up to 19% over the past year. The price change in steel mill products has been most notable, climbing 81% year over year. That follows an 11% increase in 2020. The median sales price of a new home in July was $390,500, an 18.4% increase compared to a year earlier, according to the Commerce Department. Builders say the higher prices are due to the increases in development costs including materials that are being passed along to home buyers.
The building materials that have seen the largest increases so far in 2021, according to the National Association of Home Builders’ Eye on Housing blog, include:
- Steel mill products
- Building paper and building board mill products
- Plastic water pipe
- Fertilizer materials
- Laminated veneer lumber
- Thermoplastic resins and plastics materials
- Structural metal joists and concrete reinforcing bars
- Wood window and door frames
- Copper pipe and tube
Source and link to the full article: “Building Material Prices: Large Increases Year to Date,” National Association of Home Builders’ Eye on Housing blog (Sept. 9, 2021)
Home Equity Hits Record High – According to a new report from Black Knight, Inc., housing equity surged nearly 40% compared to a year ago and is at a record high. The average mortgage holder now has $173,000 in equity. That marks an increase of $20,000 just from the end of the first quarter, the report notes. The increase in equity is being driven by surging home values over the last quarter, says Ben Graboske, Black Knight data analytics president. Home prices have jumped nearly 20% from a year earlier and by 7.4% in the second quarter alone, he notes. “This is by far the strongest growth we’ve ever seen,” he says. The added equity is helping those who are struggling to make their mortgage payments. About 98% of homeowners in forbearance now have at least 10% of equity in their homes, according to Black Knight.
Source and link to the full article: Black Knight Inc.
Economists: Job Growth May Fuel Higher Mortgage Rates – Based on Freddie Mac reports, mortgage rates remain below 3% for the eighth consecutive week, but economists believe job growth will determine how much longer they’ll likely stay so low. The 30-year fixed-rate mortgage averaged 2.87% recently. “Job growth seems to be very critical for the following several months as it will indicate when the Fed’s tapering will likely start,” Nadia Evangelou, a senior economist and director of forecasting for the National Association of REALTORS®, writes for the association’s blog. “There is ample talk about the Fed cutting its monthly bond purchases before the end of the year.” The Fed’s asset purchases have helped keep rates lower than they otherwise would be, Evangelou adds. “Expect mortgage rates to rise further when the Fed will raise interest rates since rising interest rates increase the cost of mortgages,” she notes. But “that won’t likely happen until the economy hits full employment.”
Source and link to the full article: Freddie Mac and “Instant Reaction: Mortgage Rates, September 2, 2021,” National Association of REALTORS® Economists’ Outlook blog (Sept. 2, 2021)