REAL ESTATE REBOUND

03-28-2019

REAL ESTATE REBOUND

Existing-home sales increased 11.8% from January to February – the largest month-over-month gain since December 2015, according to the National Association of Realtors®. Three of the four major U.S. regions saw sales gains, while the Northeast remained unchanged from last month.

LASTING LOWS

Rates for a 30-year fixed rate mortgage trended downward again, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending March 21. Rates have dropped sharply since November 2018.

STRONG SPRING?

Increased affordability and inventory point to a strong spring housing market according to First American Financial Corporation Chief Economist Mark Fleming. “So far in 2019, we’ve seen mortgage rates decline and wages rise – both trends work to boost house-buying power and fuel greater market potential for home sales, setting the stage for a stronger than expected spring home-buying season. Additionally, millennials that were previously priced out of the market when rates were higher in 2018 are likely to jump back in,” Fleming said. Regarding inventory, Fleming notes that, “The decline in mortgage rates over the last three months may have encouraged some homeowners, who were ‘rate locked-in’ by rising mortgage rates, to re-enter the market.”

MORE MALLEABLE MORTGAGES?

Lenders are lowering qualification standards according to the Urban Institute’s Housing Finance Policy Center February Chartbook. The Chartbook’s median loan-to-value (LTV) ratio indicates that home buyers are getting into homes with smaller down payments and higher debt-to-income (DTI) ratios. Additionally, median FICO credit scores for nonbank loans average 713, while bank loan median scores are 745. Regarding the shift, Mortgage Bankers Association Chief Economist Mike Fratantoni says, “This is a reflection of the affordability challenges in the market right now.”

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