Lower Mortgage Rates Drive Sales Turnaround – Industry Outlook

By August 30, 2019Industry Outlook

Mortgage Rates Back to 2016 Territory – Based on Freddie Mac reports, the 30-year fixed-rate mortgage averaged 3.55% recently, the lowest average since November 2016. The lower mortgage rates are boding well for the housing market. “The drop in mortgage rates continues to stimulate the real estate market and the economy,” says Sam Khater, Freddie Mac’s chief economist. “Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months, while refinances surged to their highest share in three and a half years.” Households that refinanced in the second quarter of 2019 will save an average of $1,700 a year, or about $140 each month, Khater says. “The benefit of lower mortgage rates is not only shoring up home sales but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity,” Khater says.

Source and link to the full article:  Freddie Mac

Recession Fears Grow, But Economists Say Housing Is OK – According to Realtor.com, recession fears are growing, and that may prompt some Americans who are still haunted by the last one to get skittish about the housing market. Don’t expect another “real estate fire sale” if the economy heads into another recession, economists say. “This is going to be a much shorter recession than the last one,” George Ratiu, senior economist with realtor.com®. “I don’t think the next recession will be a repeat of 2008. The housing market is in a better position.” Just 2% of economists, strategists, academics, and policymakers surveyed believe a recession will occur this year, based on a survey of more than 200 members of the National Association for Business Economics. Thirty-eight percent believe a recession will begin in 2020, while 25% say by 2021. Fourteen percent don’t expect a recession until after 2021.
Source and link to the full article:  “As Recession Fears Rise, Here’s the Lowdown for Real Estate,” realtor.com® (Aug. 26, 2019)

Lower Mortgage Rates Drive Sales Turnaround – Based on the National Association of REALTORS® recent report, existing-home sales showed improvement in July, a welcome sign for what has been a mostly sluggish summer real estate market. Reversing course last month, sales climbed 2.5% over June. The Northeast was the only major region of the U.S. to see sales decline in July. The bulk of sales growth was attributed to the West. “Falling mortgage rates are improving housing affordability and nudging buyers into the market,” says Lawrence Yun, NAR’s chief economist. But a shortage of supply in the lower price brackets continues to limit sales growth, he adds. “The shortage of lower-priced homes have markedly pushed up home prices.” “Clearly, the inventory of moderately priced homes is inadequate and more home building is needed,” Yun says. “Some new apartments could be converted into condominiums thereby helping with the supply, especially in light of new federal rules permitting wider use of Federal Housing Administration mortgages to buy condo properties.”

Source and link to the full article:  National Association of REALTORS®

Federal Regulators Propose Expanding Digital Appraisals – According to Federal Regulators latest proposal, the majority of U.S. homes could soon be exempt from current requirements for human-conducted appraisals. The proposal, which makes way for more appraisals to be performed by computer models, has been approved by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. The proposal is awaiting final approval from the Federal Reserve before taking effect. More than two-thirds of homes nationwide sell for $400,000 or less according to Census Bureau and the National Association of REALTORS® data. Lenders say the change will save home buyers money and could speed up closings, but appraisers and consumer advocacy groups argue that the changes could introduce risks to the $10.9 trillion home loan market.
Source and link to the full article:  “Your Next Home Might Be Appraised by a Robot,” The Wall Street Journal (Aug. 24, 2019)

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