Rising Incomes Provide More Buyer Relief – Industry Outlook

By May 16, 2018Industry Outlook

Rising Incomes Provide More Buyer Relief – According to the National Association of Home Builders Housing Opportunity Index, rising incomes are helping to offset recent increases in mortgage rates and gave a boost to housing affordability in the first quarter of this year. The index showed that 61.6 percent of new and existing homes sold between the beginning of January and the end of March were affordable to families earning the U.S. median income of $71,900. The median family income increased 5.7 percent to $71,900 in 2018, up from $68,000 a year ago. “This wage growth helped to boost housing affordability,” says Robert Dietz, the NAHB’s chief economist. “A growing economy, along with tight inventories and increasing household formations, will lift housing production in the year ahead. But we expect mortgage rates to continue to rise, and this will place downward pressure on affordability.”

Little Movement with Mortgage Rates – Based on Freddie Mac’s latest update, mortgage rates have mostly taken a pause after a series of increases in April. The 30-year fixed-rate mortgage averaged 4.55 percent recently. “The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth, and restrained inflation,” says Sam Khater, Freddie Mac’s chief economist. “As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season.”

Fannie Mae: Housing Confidence Hits Record High – According to Fannie Mae’s Home Purchase Sentiment Index, optimism for selling a home has helped increase the housing confidence index by 3.4 points last month to an all-time high of 91.7. Last month’s survey posted increases in five of six components that set out to measure Americans’ perceptions of the housing market. Consumers were also upbeat about home prices, job security, and their own personal finances. “The latest HPSI reading edged up to a new survey high, showing that consumer attitudes remain resilient going into the spring/summer buying season,” says Doug Duncan, Fannie Mae’s chief economist.  

CFBP Homes Are Fetching More Than Asking Price – Based on the the March 2018 REALTORS® Confidence Index Survey, high demand for homes for sale mixed with low inventories is prompting bidding wars. Thirty-seven percent of properties that closed in March sold at or above the list price. “Buyer demand continues to outpace the supply of homes being listed for sale in the market, sustaining the upward pressure on home prices,” the National Association of REALTORS® reports on its Economists’ Outlook blog. Seventeen percent of properties sold at a net premium in March, up from a 9 percent share in 2014 and 2015, according to NAR. Of the homes that were sold at a premium, 87 percent sold at 101 to 110 percent of the list price; 7 percent sold at a premium of 11 to 20 percent; and 5 percent sold at more than a 20 percent premium.

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