Pending home sales see historic jump, Pending Home Sales See Biggest Gain Since 2001, Little Movement Expected for Mortgage Rates in July
Mortgage News for 6/30/2020
Pending home sales see historic jump
Pending home sales soared in May after two down months due to the COVID-19 pandemic, reinforcing many observers’ confidence about the housing market’s resilience and role in the country’s economic revival.
The Pending Home Sales Index (PHSI), a metric based on contract signings developed by the National Association of Realtors (NAR), surged 44.3% to a reading of 99.6 in May. While contract signings dropped year over year 5.1%, the massive monthly jump is the highest month-over-month gain in the index’s history, going back to its inception in January of 2001.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist.
“This bounce-back also speaks to how the housing sector could lead the way for a broader economic recovery.”
All four of the NAR’s regional pending sales indices saw month-over-month improvement. The PHSI posted the biggest monthly gain in the West, where May’s index reading soared 56.2% to 89.2. In the Northeast, the index jumped 44.4% to a reading of 61.5 in May. The South region saw an increase of 43.3% month over month to an index reading of 125.5, while in the Midwest, the index rose 37.2% to a reading of 98.8. The Northeast’s index remained heavily down on an annual basis, registering 33.2% below last year’s May reading. The West and Midwest were down 2.5% and 1.4%, respectively, while the South’s market continued to show strength, with a May reading 1.9% higher than the same month last year.
Yun also noted that while more home construction is needed given the market’s continual undersupply, the number of listings is improving as the country reopens. Active listings were up by more than 10% in many large metros, including Honolulu; San Francisco; Denver; San Jose, California; and Colorado Springs, Colorado.
The NAR updated its full-year forecast to reflect the new developments, now projecting existing-home sales to reach 4.93 million units in 2020, with new home sales predicted at 690,000 units.
“The outlook has significantly improved, as new home sales are expected to be higher this year than last,” Yun said,
“and annual existing-home sales are now projected to be down by less than 10% – even after missing the spring buying season due to the pandemic lockdown.”
Yun added that “all figures ‘light up’ in 2021, with positive GDP, employment, housing starts and home sales.” The NAR forecast calls for 5.35 million existing-home units sold next year, along with 800,000 new homes.
Source: Scotsmans Guide 6-29-2020 Author: Arnie Aurellano
Pending Home Sales See Biggest Gain Since 2001
Pending home sales soared back in May, rising 44.3%—the highest monthly gain since 2001—the National Association of Realtors (NAR) reports.
Annually, contract signing fell 5.1%.
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s Chief Economist.
“This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
Yun added more listings are “continuously appearing” as the economy reopens. However, home construction is needed to “counter the persistent underproduction of homes over the past decade.”
The NAR previously reported that pending home sales fell 21.8% in April and annual contract signings fell 33.8%.
April was the second straight month of declines in the industry, with each major area in the nation reporting lesser numbers in both month-over-month contract activity, as well as far fewer year-over-year pending home sales transactions.
Danielle Hale, Chief Economist, realtor.com said buyers took advantage of low mortgages rates in May.
“New home sales took a similar upward turn last week, but today's pending data is a more important indicator of market activity since it covers existing homes which made up roughly 80 to 90% of sales in recent years. This move confirms that May closings could represent a low-point for home sales, with June and July numbers looking much better,” Hale said.
According to data from realtor.com, metros seeing active listings grow by more than 10% in May were Honolulu, Hawaii; San Francisco; San Jose, California; Denver; and Colorado Springs, Colorado.
“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10%—even after missing the spring buying season due to the pandemic lockdown,” Yun said.
The NAR now expects existing-home sales to reach 4.93 million units in 2020 and new home sales to hit 690,000.
Pending home sales in the northeast grew 44.4% in May but is still down 33.2% from last year.
Source: MReport 6-29-2020 Author: Mike Albanese
Little Movement Expected for Mortgage Rates in July
When it comes to money, who doesn’t like breaking records?
In June, the interest rate on the 30-year fixed-rate mortgage hovered near record lows. What’s more, it’s probably not moving in July, according to NerdWallet.
The interest rate on the 30-year fixed-rate mortgage remained near record lows in June and is likely to stay there in July.
In the first four weeks of June, the 30-year fixed averaged 3.33% APR—just below May’s 3.37% and April’s 3.36% APR. In the four-year history of NerdWallet's daily rate survey, June’s average was the lowest on record.
April through June, following the intervention of the Federal Reserve to simmer and lower rates, remarkably, mortgage rates were anchored from April through June.
The latest developments, including information on loan and payment relief, coping with and how to most effectively manage your personal finances, are tracked on NerdWallet's coronavirus resources page.
While the rebound in the economy’s uneven, the housing market’s one segment showing strength, said Sam Khater, Freddie Mac’s Chief Economist. Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009.
Mortgage rates have hit another record low due to declining inflationary pressures, putting many homebuyers in the buying mood.” That said, it will be difficult to sustain the momentum in demand as unsold inventory was at near-record lows coming into the pandemic and it has only dropped since then.”
During the week of June 18, 2020, the average rate for a 30-year fixed-rate mortgage last week was 3.21% and was 3.84%. The average 15-year fixed-rate mortgage was 3.25% last year.
According to the Mortgage Bankers Association, the week concluding June 19, the latest available data, mortgage refinance applications were at their lowest level in three weeks. Most mortgage refinancers primarily are motivated by securing a lower interest rate, tapping home equity with a cash-out refi, to purge mortgage insurance or to mor swiftly pay it off, are among other reasons to refinance a mortgage.
Source: MReport 6-29-2020 Author: Chuck Green
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